Today we'll take a moment (with MeRv) to address the question;
What's the best approach toward validating my product and business idea?
If I had the magic sauce recipe for getting this right every time, I'd write a book about it and not merely a blog. There are many prescribed approaches to validating a digital product proposition and its respective business. Techniques or methods like Bullseye Marketing are useful to enable you to test how messages resonate with an audience and allow you to discover the most cost-efficient and effective means to reach such an audience. Other methodologies, such as Goal-Directed Design (GDD), will allow you to surface requirements, context, behaviour, motivations and incumbent frustrations of eventual end-users of your tangible software product. However, such methods are merely part of a tool kit required to solve a puzzle.
I'd argue that while a structured approach to validating a proposition is needed, a critical boilerplate ingredient in the mix will be the attitude and persistence of the promoter. If you're reading this blog, I suspect that you may be a promoter of sorts. Perhaps you're a domain expert within an industry vertical that has not taken advantage of digital products, and as such you see an opening to create your own digital offering. Alternatively, you may be a product manager within an established company that is looking for a mechanism to maintain longevity and secure some new scalable sources of revenue for your employer.
Regardless of which profile you are, it will be essential that you are ready to be challenged as you validate a proposition. You must be willing to entertain the prospect that your fondly held belief in the value of your proposition may be misplaced. You may, of course, find that you were 100% correct with all the initial assumptions around your proposition's value add and respective business model - you would be a unicorn in this context if the latter scenario reigns true.
Right, so to the point, what's the best way to validate your proposition? Well, to not build it and hope that they (your customer) will come. Instead, involve your target customers and stakeholders in the journey of building your product.
What does this mean, you ask? Hands-on experience (and the powerful learning that comes with such a job) with venture building alongside entrepreneurs and intrapreneurs have taught me that it's paramount to the success of your product that you involve customers in the very definition of your digital offering. I mean this in terms of its tangible form & behaviour, but also in terms of monetising it.
By involving your customer early in the process of defining your product, you will benefit by having an objective critic in the room. After all, you are also going to ask them to pay for using the result of your executed ambition—money talks.
I know what you're thinking- wouldn't involving the customer when I have a mere idea ruin the surprise of eventual product readiness and present an opportunity for them to steal my idea as their own? I guess the answer is yes to both of those questions, but the risks associated with not involving them justifies the intellectual property risk and absence of surprise (Mutual non-disclosure agreements, MNDAs, can help alleviate some concern here). Involving the customer from the get-go will allow you to get your product mostly right on the first attempt.
Having customers and stakeholders around the table as you define your product will allow you and your extended team (e.g. designers, developers, sales personnel, etc.) to share empathy with the customer. You will better understand the circumstances and context in which your customers live. You will have an opportunity to share with them the notional value of your proposition. You will witness their response to your value proposition first hand and be enlightened to nuances or opposing perspectives that, as noted earlier, will transform your baseline assumptions into facts or discredit them and allow you to adapt or pivot accordingly.
With customers involved in the conversation, you can test your value proposition's business model against the perceived benefits (i.e. cost savings or new revenue streams) for your would-be paying client. For instance, to incentivise your customers to make the leap and to become a paying customer, you might conclude that the right course of action is to remove significant upfront payment requirements and instead claw back your income with transactional or recurring revenue over time. Why? Your customer may see the monetary benefits of your offering over time. Therefore, they may be better inclined to sign up for your offering, only if they can pay you as they see benefits manifest for themselves. To determine what the return on investment (ROI) is for your client, you must understand how the monetary benefits materialise in tandem with the use of your product.
You must uncover how your offering compares to the competition or alternative. Yes, I'm sure there is a proposition out there that has no competition, but I've yet to see it. In its most basic form, the status quo is your competition. You need to understand what that means for your customer, monetarily in terms of cost and lost revenue opportunity, not to have your product. You must also look to the competition in the market, in the form of other digital offerings, professional services or internal IT departments, etc. You must comprehend how your offering will differentiate itself in terms of placement, messaging and business model or more importantly, ROI for the customer.
With direct customer interaction, you will also be able to refine designs, the form and behaviour, and test those designs for intuitiveness and usability before submitting those designs into the development machine. Again, this helps you to get your product more right the first time and will avoid potentially expensive reworking of the digital product due to what were preventable oversights in design.
With all the above said, I'll get back to one of my opening arguments. A key enabler toward objectively validating your digital proposition will be your attitude and persistence as a promoter. While challenging, you will need to be open to exposing the core of your product and business idea to your customers. You will need to resist the urge to move as quickly as possible and instead take the time to open client doors and involve them in the definition of your product and business.
If you are successful with your validation and involvement of potential clients, you might find that you have paying customers before you even have a product. Can that be true? Yes, it is. That, to me, is a real validation of a proposition, and this has routinely become the result of validation exercises that I've witnessed.