An idea can turn into a startup if they pass this test
Which idea should we pursue to build a product? Statistically, only few products win and most others fail. In absence of any data our idea is just a hypothesis to start with.
Broadly speaking, product’s success depends on potential market of idea and how well we build our product. Belief in our passion or following our gut feeling doesn’t determine success of the product. Asset of an entrepreneur, is his ability to gather data around the hypothesis.
We have identified these 6 steps which will enable us to see through our idea, and to bring data to the decision table. It will help us to take calculated risk of investing in idea, or abandoning it.
- Define problem statement — Construct a definitive problem statement which synthesizes your ideas, research, and observation. Statement must be concise, clear and specific. In absence of a crisp problem statement, brainstorm.
- Identify Value proposition -A clear value proposition defines customer benefits which we offer. It is specific and unique. It’s a promise which we will deliver to our customer. Our entire product is built around the value proposition.
- Consistent communication — Our customer won’t reach to our product directly. Our customer must have read, heard, searched about us to come to know about our website/app store. Often time from many different sources. So we must give content strategy. Each message should communicate the core value proposition precisely. It sets clear expectation of product in user’s mind.
- Design, Prototype, and iterate — We understand better when we see it. Even better when we use it. It’s time to design product features which will deliver product benefits to it’s user. Once designed, create a prototype and put it in front of its intended users. Observe how easy or tough for user to understand our app. It’s a cheap and effective method to learn user behavior and to capture customer’s feedback. We iterate design based on learnings.
- Meet prospective customer and take feedback — Identify customers, make their list and pitch value proposition to them. If you have a working prototype, show them. Discover customer’s key challenges and learn their concerns. Many customer give us insights which points us towards a deeper problem to chase. This is very important as we get to know the perspective of our actual customer. You can avoid hitting the wall by getting early customer feedback before launching product in the market .
- Financial plan — It consists of estimated market size, business expense, the cost of market acquisition, and various such elements. We make initial financial projection relying on limited research data and assumptions. We crunch these numbers to calculate return on investment of product. If the ROI justifies the investment, then we go ahead and develop our product.
If gathered data is unfavourable, learn from it. We can make changes in either product, message, or business model and test it again. We must keep in mind to test our critical assumptions at an early stage of product development.
Entire exercise is to confirm market demand and product fit with the limited budget. Once we have identified a product-market fit, we can pursue the idea with conviction.