Do you test your hypotheses?
No matter how smart we are, as entrepreneurs what we have on day one is a faith based enterprise. Devote one minute and forty two seconds to hear what Steve Blank, serial entrepreneur and Stanford consulting professor, has to say about swiftly turning your vision into a sustainable business model:
Startups are, to quote Blank, religious enterprises. Catch is 95% of the time entrepreneurial visions are hallucinations. And as we all know, entrepreneurial minds are prone to have ideas the world is not yet ready for. It’s hence of essence to make sure we are not ahead of time. Or simply have an idea the market does not want.
So how do entrepreneurs swiftly find out if they are hallucinating?
Steve Blank’s suggestion is to break down the vision into a business model. Then get out in a fairly formal way and test your hypothesis with your customers.
Why should we test our visions?
Because we are not smarter than the collective opinion of our customers, is Steve Blank’s answer. And he is definitely right about that.
If we find out that we are wrong we then make minor changes or, if necessary, a pivot, i.e. a substantial change, to one or more of the business model components. Then we keep on making minor changes or pivots until we have a sustainable business model.
The alternative is to passionately go ahead and try to make an idea that’s not sustainable succeed. Far too many entrepreneurs make that mistake. Some even go bankrupt as a result. Probably most frustration is caused by having ideas that the market isn’t yet ready for. Not least because someone else will launch it in the future. Testing your hypothesis enables you to wait until the timing is right and do something else in the meantime. Or, if possible, gradually launch your idea.
Do you agree with Steve Blank that 95% of the time entrepreneurs are hallucinating? Is it essential to go out and test your hypotheses with your customers? Have you ever tested your visions the way Blank suggests? If so, did you make changes the way he recommends and ended up with a sustainable business model? After hearing what he has to say, will you now go out and test your hypothesis and then make the changes necessary? Or are you of the opinion that the vision you believe in will succeed, provided that you work hard at it?
Video: StanfordBusiness – You Tube