New Stanford Innovation Lab podcast series — Episode 1: Succeed by Failing “Ferrari Fast”

I’m delighted to share ECorner’s new podcast series, Stanford Innovation Lab. The first episode is called, How to Succeed by Failing Ferrari Fast. My guest is Alberto Savoia, who is a master as avoiding failure. Based on his experiences founding two companies, as well as his time at Google and Sun Microsystems, Alberto discusses different types of failure, and how specific practices can be used to fail faster and more efficiently using a concept he calls “pretotyping.”

I’m a huge fan of Alberto’s work, and write about it in my book, Insight Out: Get Ideas Out of Your Head and Into the World. Here is an excerpt from the book about pretotyping:

Alberto observed that most people fall in love with their ideas, dive in, and commit way too much time and money before figuring out whether people actually want what’s been proposed. He refers to the “pretotyping” process as “testing before investing,” to figure out if you should make the product in the first place. As Alberto says, “In pretotyping, our assumption is that we are wrong, so we don’t really want to act confidently, but cautiously, testing our hypotheses before jumping in.”

Most people know the value of prototyping to create samples of what they intend to build. Prototypes allow you to test parameters, such as size, weight, and the overall user experience of products, websites, and services.
They are designed to answer questions such as, “Can we build it?” But what if you’re doing the wrong thing in the first place?

Pretotypes are made before you dive into building prototypes, and are designed to be experiments to determine whether you’re even going in the right direction. As Alberto says in his book on pretotyping (which is itself a pretotype!):

Pretotypes make it possible to collect valuable usage and market data to make a go/no-go decision on a new idea at a fraction of the cost of prototypes: hours or days instead of weeks or months, and pennies instead
of dollars. Pretotyping helps you fail fast, recover fast and leaves you plenty of time, money, energy and enthusiasm to explore new tweaks or ideas until you hit on something that people seem to want.

There is another important value of pretotypes: you don’t need much motivation to do a quick experiment. With only a small seed of commitment to an idea, you can do a pretotype to see if the idea has wings. Furthermore, since most new ideas fail, it behooves us all to do tests as early as possible to see if we’re going in the right direction. Alberto outlines a set of informative experiments that can be used to give ideas a test drive. Below are a few examples:

The Mechanical Turk. With this method, you replace a complicated computation task with a human being. The term originated in Europe in the late eighteenth century. An inventor crafted a mechanical man, dressed in Turkish robes and a turban, that he claimed could play chess. Actually, though, there was a live person under the table who remotely moved the mannequin. This concept is still used today. You can use services, such as Amazon Mechanical Turk, to outsource repetitive tasks that can be done only by humans, such as sorting photos or reviewing transcripts. The Mechanical Turk approach to pretotyping is exactly the same — instead of building a complex and expensive tool, you first try it out with a person doing the task. For example, instead of designing sophisticated photo recognition software, see whether people want this service by employing a group of kids to do the task for a few bucks.

The Pinocchio Technique. This technique involves creating a “wooden” mockup of your idea — that is, you use an inexpensive stand-in. It’s great for determining how a product or service might fit into someone’s life. A great example comes from an often-used project assigned to middle school students. They are asked to carry around a raw egg in a basket for a week, making sure it doesn’t crack. The objective is to give these youngsters a small taste of the experience of being a parent, so that they understand how much work it is to be responsible for a delicate baby twenty-four hours a day. This simple pretotype is incredibly effective in demonstrating how much work it is to care for a baby, without having to enlist and endanger several dozen real infants.

The Facade. In this case you advertise a product or service that doesn’t yet exist to gauge the level of interest. You can do this by putting test ads online, on the radio, or in a newspaper or a flier and see whether people respond. The response rate is a great indicator of actual interest. A super example comes from Bill Gross, who runs Idealab. Years ago, before e-commerce was well accepted, he wanted to know whether people would buy a car online. He set up a website to sell cars — with nothing but a page that offered cars for sale!

Here is the story in Bill Gross’s words:
In 1999, we started CarsDirect. Back then people worried about putting credit cards online; here I wanted to sell a car online! We put a site up on a Wednesday night; by Thursday morning, we had four orders. We quickly shut the site down (we’d have to buy four cars at retail and deliver them to these four customers at a loss) but proved the thesis. Only then did we start building the real site and company.

The most important goal of all these pretotyping techniques is to gather data. Even when pretotypes don’t work out as hoped, they provide valuable lessons that can be applied to the next round of experiments. Because they are done quickly, there is minimal harm done. Since pretotypes don’t require much effort, they also don’t require a huge commitment. If you approach your life, your education, and your business as a series of experiments, then all results serve as data to inform the next round of experiments.

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