Defining & Prioritizing Hypotheses to Test
Turn fuzzy assumptions into testable hypotheses, then rank them.
Attributed to Steve Blank (customer development methodology within Lean Startup)
What it is
Defining and prioritizing hypotheses is crucial for testing assumptions underlying new ideas or initiatives, thereby reducing the risk of failure. A well-formed business hypothesis must be testable, precise, and discrete, focusing on assumptions central to a value proposition, business model, or strategy. Hypotheses can generally be categorized into Desirability, Feasibility, and Viability. Desirability hypotheses explore whether customers want the proposed solution and if the market is sufficient. Feasibility hypotheses examine if the organization has the capabilities and resources to deliver the solution. Viability hypotheses assess if the business can generate anticipated revenue and manage costs to be sustainable. The primary goal for innovators is to validate these underlying assumptions, not merely to generate ideas.
When to use it
- When developing new products or services to validate underlying assumptions.
- When assessing the potential success of a new business model or strategic initiative.
- To systematically reduce risk before significant investment in an idea.
- When needing to understand customer needs, market fit, and operational capabilities.
- As part of an innovation sprint or lean startup methodology.
- To translate problem/solution pairs or external disruption/internal reaction pairs into testable statements.
How to use it
- 1
Formulate Initial Assumptions
- 2
Translate Assumptions into Hypotheses
- 3
Utilize the Business Model Canvas
- 4
Prioritize Hypotheses with an Assumptions Map
- 5
Select Appropriate Experiment Methods
- 6
Design and Conduct Experiments
- 7
Track and Document Learning
Key concepts
Hypothesis
An assumption underlying a value proposition, business model, or strategy that needs to be tested to determine its validity.
Desirability Hypothesis
A type of hypothesis that investigates whether target customers want the proposed solution and if the market is large enough.
Feasibility Hypothesis
A type of hypothesis that assesses whether the necessary resources, technology, IP, and key activities are accessible or manageable to deliver the solution.
Viability Hypothesis
A type of hypothesis that determines whether the business can generate expected revenue and manage costs to be sustainable.
Assumptions Map
A tool used to prioritize hypotheses based on their importance and the amount of evidence available to support them, guiding the sequence of testing.
Common pitfalls
- Confusing motion with action; simply sending out surveys or emails without engaging in two-way communication to validate or invalidate hypotheses.
- Relying solely on surveys for data collection, which can lead to insufficient responses and limited insights, especially in early stages.
- Failing to define hypotheses as testable, precise, and discrete statements, making validation difficult or impossible.
- Ignoring the categorization of hypotheses (desirability, feasibility, viability), which can lead to an unprioritized and disorganized testing approach.
- Settling for compliments from potential customers instead of seeking honest feedback that uncovers critical information and potential flaws.
Further reading
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