Best way to test a value proposition? Get out and do it!

There are lots of ways to test a value proposition: elevator pitches, prototypes, A/B testing to name a few.

All of these techniques are useful and can help an entrepreneur shape their offer and positioning prior to launching a business. None of these, however, is quite as good as actually “delivering” the value proposition to your target segment out in the real world.

Here is what I am taking about:

Lets say you are working on a business that is aiming to update the dry cleaning industry for the on-demand generation. You intend to do this by offering a pick-up and delivery service for customers around their schedules using a mobile app as the interface.

What will often happen is that an entrepreneur will first start working on wireframes for the application and then put them in front of users for feedback. If they are ambitious they will compliment this effort with some adwords tests and other techniques to see if the idea resonates with their expected audience. Once they receive what they deem to be sufficient feedback they will quickly move to designing and coding the application.

What rarely happens is an entrepreneur starting the process of developing the solution by actually preforming the service they are intending automate.

In the case of our dry cleaning business, this could be something as simple as working with a few neighborhood dry cleaners and potential local customers – along with text messages and email – and actually picking-up and delivering peoples clothes for a month or so to learn about how the process works (or should work).

Running the business in a low-tech (or no-tech) way provides an entrepreneur with some very crucial insights on his/her business:

  1. It enables them to experience first-hand what the process is like for users on both sides of the business model (in this case: dry cleaners and customers), thereby building greater empathy into the design process
  2. It helps identify some of the “unknown unknowns” that exist in the proposed business model (maybe unexpected steps present themselves, unanticipated resistance based on having people come to their homes, or more attention needing to be paid to the service experience etc.)
  3. It helps you learn the language of the customer – the terms they use, how they refer to their unmet needs, what their workarounds are – all can be crucial when it comes to marketing and positioning in the future
  4. Ideally entrepreneurs running these tests will be PAID for their effort – providing much-needed clarity and certainty around revenue models (as well as perhaps some much-needed cash!) Really – what could be better than telling an investor that you have been running the business in a low-tech way for the past 6 months and are already cash flow positive!?
  5. On the flip side , entrepreneurs will also quickly learn if the revenue model (and costs) indicate a business model worth doing before they invest a single dollar into a line of code. Which leads to the last point…
  6. By performing the value proposition with real customers entrepreneurs will discover whether or not you have in fact found a real problem in need of solution. Many new businesses are in fact “solutions looking for problems” and its best to find out if you fall into this camp sooner rather than later.

The purpose of running these “concierge” tests (to borrow a term du jour) is not to test the business economics at scale, nor is it to be used to validate whether a business can grow quickly, compete with other emerging offers and is worth investing buckets of money in to. The purpose is simply this: to gain authentic insight and rich perspective on product-market fit, and learn what a business model must do in order to deliver its offer effectively to users.

Thanks to Rick Desai for coming in to class last week and inspiring this post.

Calling an Audible

Carter and I were sharing embarrassing stories of our own well-intended presentations gone awry and we decided to write a quick blog about it.

Great quarterbacks in football tend to have a handful of attributes in common, not the least of which are a mastery of the playbook, the ability to read defenses and an on-the-spot ability to improvise based on what they see. (Just watch Peyton Manning make constant play adjustments as he barks orders on the line of scrimmage)

Like quarterbacks, good business leaders (be they entrepreneurs or otherwise) tend to possess similar improvisational qualities. They too have an ability to read their audiences and throw out the playbook and improvise based on what they see going on around them.

It’s this last point that we want to focus on – the ability to read your audience and “call an audible” if you don’t like how your message is being received. In some cases mastery of the playbook and reading an audience can be in direct opposition to each other. Mastery can sometimes become reliance on the playbook, and this can cause problems. Or mastery can lead to overconfidence, resulting in a lack of flexibility in adapting your message to the circumstances you’re facing.

Here are examples from each of us:

David’s recent experience:

This past month I gave a presentation to a group of executives. They were interested in a topic that I’ve spoken on a number of times, and my material on this subject was… if I may say so… pretty damn good.

I had delivered this presentation dozens of times and it had never once failed me.

Things started off decently, but it wasn’t long before I could see that I was losing the audience. I hadn’t adapted my material for their specific interests or vantage point at all, it was a tough time of day to talk to them (after lunch), and I could tell that the one-directional way in which I was delivering the content was not engaging them at all.

 Having read the situation, I had two choices:

  1. Stick to my material and my script and hope that eventually they would join me on my wavelength
  2. Stop what I was doing and change the game plan on the fly with some unrehearsed Q&A, stories or other conversational ideas in an attempt to reengage them

I wish that I could tell you I went with choice B, but I didn’t. I proceeded forward with more-or-less my original plan and probably brought about one-third of the audience along with me while other two-thirds silently stared at their smartphones.

If I were to have a do-over, I clearly would have done it differently. I would have stopped the presentation the moment I saw it going sideways, acknowledged it and asked for the audience to offer-up some stories/examples of their own, or even to share some contrary opinions – just to get a real conversation going. If I were particularly bold, I might even try to throw in some kind of an exercise to get them interacting.

Carter’s recent experience:

Actually I have two: one where I just chugged along (poorly) without making any adjustments, and one where things were going so badly that I did call an audible. In the first example, only a week ago, I delivered what I generally consider to be my best lecture, my signature move. Oh the pearl that were dripping from my lips! Bang! Pow! Zowee! How do you like me now?! There was only one problem: midway through delivering my magic, I noticed that people were giving me this certain “I’m digesting my Thanksgiving meal” look, eyes glazed over, arms crossed over bellies. It was like they were being held hostage to a Kenny G song.

What did I do? Like a person sinking in quick-sand, I thrashed about harder, increasing my decibel level and gesturing about wildly, like I was swatting at a bee. It didn’t work. A student came up to me after the lecture and said, “Professor Cast, that’s a long time to hold our attention in the middle of the afternoon.”

Here’s my second experience. Last fall I was at the Allen Center, delivering a lecture to a group of eMBA students who had just taken their final class exam and were ready to graduate. I’d decided to talk about Joseph Campbell and The Hero Journey. Good stuff, right? What’s not to like about the dragon-slaying message of The Hero Journey to a group of students about ready to walk out into the working world, armed with MBAs?

 Well, in this case I was worried from the get-go. These eMBA students had been celebrating the completion of their curriculum with a glass of wine and they were in a festive mood. I wondered if it was the right time and place to deliver a lecture. Nevertheless, I gamely started. But about eight minutes into my one hour lecture, I noticed that people were swiping through their smartphones, getting up to find more wine, even talking quietly to one another. So I did two things. I first politely asked one fellow in the front row to please remove his feet from the desk and put them back on the ground and then I turned off the projector and said, “This isn’t working. What do you guys want to talk about, if anything?” We ended up having a really good free-form conversation about career management and career direction…

These experiences got us thinking about past presentations, customer meetings, investor interactions and other important “playbook” moments. Funny enough, we both realized that some of our most effective and successful sessions were ones where we allowed ourselves to make unscripted, on-the-fly changes.

No question that these types of “audibles” come with inherent risk, and moving off script can be scary – especially when you’ve rehearsed a lot and feel like you have a really sound playbook. Yet there are few (any?) scripted plays that are more effective than having a genuine connection with the individual or group you’re speaking with, even if it comes at the expense of polish.

Oh well, we live and learn. We both feel like we can’t train for these moments. We just have to stay aware of our surroundings and remain flexible…just like a good quarterback.