How to systematically reduce the risk & uncertainty of new ideas

Alex Osterwalder
December 6, 2017
#
 min read
topics
Testing Business Ideas
Customer Insights

As an innovator & entrepreneur your #1 task is to reduce the risk and uncertainty of new business ideas before you invest big and scale. In this post we outline one of the several big ideas we’ve developed in a project on innovation metrics with three large multinational companies and an SME.

A diagram showing levels of Uncertainty and risk during the ideation and execution phases

We’ve borrowed a concept that IDEO uses to test industrial design, and overlay it on the Business Model Canvas to test desirability, viability, and feasibility. That gives us three major areas of uncertainty: Do customers want it (desirability), can we build & implement it (feasibility), and can we earn more money with it than we spend (viability). Yet, those three areas are still pretty broad, so we further break it down into smaller chunks of uncertainty that are testable.

Here’s the breakdown:

     
  • Desirability. You reduce customer-related uncertainty by testing assumptions around the “problem” (jobs, pains, gains), solution (value creation), acquisition, and retention strategy.
  •  
  • Viability. You uncover the financial opportunity and reduce the financial risk by testing assumptions around the financial aspects of your idea (revenue, pricing, and cost).  
  •  
  • Feasibility. You reduce the implementation risk by testing available or potential technology and resources, activities, and partners.

Every area requires different types of experiments to reduce the uncertainty of your idea. In fact, we’re developing a testing library to address this challenge as part of the metrics project we are running with three large multinational companies. It’s important that companies have the tools and metrics to manage and facilitate testing in all three of these crucial areas if they’re serious about reducing the risk of innovation.

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About the speakers

Alex Osterwalder
Entrepreneur, speaker and business theorist

Dr. Alexander (Alex) Osterwalder is one of the world’s most influential innovation experts, a leading author, entrepreneur and in-demand speaker whose work has changed the way established companies do business and how new ventures get started.

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Alex Osterwalder
December 6, 2017
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How to systematically reduce the risk & uncertainty of new ideas
Insights

How to systematically reduce the risk & uncertainty of new ideas

How to systematically reduce the risk & uncertainty of new ideas
Insights

How to systematically reduce the risk & uncertainty of new ideas

December 6, 2017
#
 min read
topics
Testing Business Ideas
Customer Insights

As an innovator & entrepreneur your #1 task is to reduce the risk and uncertainty of new business ideas before you invest big and scale. In this post we outline one of the several big ideas we’ve developed in a project on innovation metrics with three large multinational companies and an SME.

A diagram showing levels of Uncertainty and risk during the ideation and execution phases

We’ve borrowed a concept that IDEO uses to test industrial design, and overlay it on the Business Model Canvas to test desirability, viability, and feasibility. That gives us three major areas of uncertainty: Do customers want it (desirability), can we build & implement it (feasibility), and can we earn more money with it than we spend (viability). Yet, those three areas are still pretty broad, so we further break it down into smaller chunks of uncertainty that are testable.

Here’s the breakdown:

     
  • Desirability. You reduce customer-related uncertainty by testing assumptions around the “problem” (jobs, pains, gains), solution (value creation), acquisition, and retention strategy.
  •  
  • Viability. You uncover the financial opportunity and reduce the financial risk by testing assumptions around the financial aspects of your idea (revenue, pricing, and cost).  
  •  
  • Feasibility. You reduce the implementation risk by testing available or potential technology and resources, activities, and partners.

Every area requires different types of experiments to reduce the uncertainty of your idea. In fact, we’re developing a testing library to address this challenge as part of the metrics project we are running with three large multinational companies. It’s important that companies have the tools and metrics to manage and facilitate testing in all three of these crucial areas if they’re serious about reducing the risk of innovation.

related reads
No items found.
How to systematically reduce the risk & uncertainty of new ideas

As an innovator & entrepreneur your #1 task is to reduce the risk and uncertainty of new business ideas before you invest big and scale. In this post we outline one of the several big ideas we’ve developed in a project on innovation metrics with three large multinational companies and an SME.

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How to systematically reduce the risk & uncertainty of new ideas
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Whether you’re looking for more information or you’re ready to start a project, we’re ready to help.
Thanks for your interest in our solutions. We will be in touch with you soon.