Two phenomenon still hold companies back from systematically testing and iterating ideas with customers from their inception to launch: the vision trap and the business plan trap.
The vision trap
Let’s use the Segway as an illustration. Dean Kamen, its creator is an incredible inventor who believed so strongly in his vision that he failed to listen to customers carefully enough to turn the Segway into a market success. He overcame all technical challenges, only to fail in the face of customer disinterest.
In the vision trap the vision is so strong that failure is seen as an impossibility. Hence, the visionary sees no need to test ideas early.
The business plan trap
Better Place is a good illustration. The startup had a powerful vision for the future of transportation based on electric cars and battery swapping stations. The company detailed this vision in a polished business plan that they "sold" to professional investors. In 2013 the company filed for bankruptcy and lost an estimated $850 million. Among several reasons for failure an important one was that customers didn’t care about the cars they were selling.
In the business plan trap detailed descriptions, thoughtfulness, and polished numbers mask the fact that ideas are virtually untested with customers. Thinking is preferred over early market testing. Unfortunately, this is still common in large companies. Teams spend time and energy on refining and polishing ideas before exposing them to the market.
Risk cheap failure to avoid big failure
At Strategyzer we strongly believe in the principles of Customer Development and Lean Startup of testing ideas early rather then refining them too early. More precisely, we believe that uncertainty is at its maximum when organisations launch new ideas. Failure is highly likely.
At this stage companies should conduct small and inexpensive experiments rather than writing business plans or launching products. Failure is OK, because it's cheap and provides you with hard facts that reduce uncertainty. With decreasing uncertainty you can also increase your spending until you understand what customers want.
We try to apply this approach for anything we create at Strategyzer, even for small things. We recently tested several titles for our upcoming book on value propositions and selected the one that got most traction: “Value Proposition Design”. Some of our earlier ideas were "violently" rejected by potential readers.
At our company we know that failure is inevitable. Yet, we learned how to minimize the impact of failure by keeping our experiments quick and cheap when uncertainty is high. Then we gradually increase our spending on testing and developing ideas the more we learn.
How does your organization deal with failure? Are you able to instrumentalize it and use it to succeed?
