Take a Chance on Experimenting

By Julie Toscano Sequeira

Disruptive innovation is often fraught with unknowns and assumptions. But that doesn't mean it has to be risky business. By using an approach that systematically attacks the most critical unknowns with tailored, low-cost experiments, innovators can "de-risk" their strategies and thereby increase their chances of success—while lowering the associated costs.

When working in high-assumption, low-knowledge environments, it is prudent to take a disruptive path to market by systematically testing assumptions and shifting the path forward as necessary. The goal is to run early experiments to gain critical pieces of information that can enable flexibility and increase the odds of success at a lower price tag.

The further from the core an idea ventures, the more critical it becomes to follow an emergent strategy. "Test and learn" is the mantra. "Invest a little and learn a lot" is the approach.

Test Your Assumptions

Not sure of where to begin? A good first step involves detailing the inherent assumptions. The key question: "What would have to be true in order to make this innovation a success?" Think expansively about the different categories of assumptions involved—consumer, solution, profit system, channel. Be willing to get down to details, but don't worry about perfection as this process will naturally involve iteration. If you get stuck, pull in others to get their perspectives.

Once you have a list of assumptions that you feel pretty good about, the second step is to prioritize. Ask three questions of each assumption:

• How important is it for this assumption to be true?
• How confident are we in this assumption?
• How easy would it be to test this assumption?

The goal in this exercise is to identify the top two to four "killer assumptions," or the most critical assumptions to which both these statements apply: "This assumption would have to be true for success to happen" (a high-risk assumption) and "This is an assumption in which we have the least confidence" (a low-knowledge assumption).

Read the full article on Bloomberg BusinessWeek