• Monday, March 04, 2024
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BusinessDay

How to market test a new idea

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It’s very rare that innovation decisions are black and white. Occasionally results are so overwhelmingly positive that it doesn’t take too much thought to say full steam ahead. But often you can make convincing arguments for any number of next steps: keep moving forward, make adjustments based on the data or stop because the results weren’t what you expected.

This can spark frustration for companies where experience has created robust decision rules that remove almost all need for debate and discussion. Still, that doesn’t mean that executives have to make decisions blind. Start by properly designing experiments. Formulate a hypothesis to be tested. Determine specific objectives for the test. Make a prediction, even if it is just a wild guess, as to what should happen. Then execute in a way that enables you to accurately measure your prediction.

Next, involve a dispassionate outsider in the process, ideally one who has learned through experience how to handle decisions with imperfect information. Someone who helps you honestly see weak spots can play a very helpful role in making good decisions.

Avoid considering an idea in isolation. In the absence of choice, you will almost always be able to develop a compelling argument about why to proceed with an innovation project. So instead of asking whether you should invest in a specific project, ask if you are more excited about investing in Project X than in other projects.

Finally, ensure there is some kind of constraint, such as time, forcing a decision. If you force decisions in what seems like artificially short time period, you will imbue your team with a strong bias to action, which is valuable because the best learning comes from getting as close to the market as possible. Remember, one of your options is to run another round of experiments, so a calendar constraint on each experiment doesn’t force you to rush to judgment prematurely.

This is a vital discipline to develop: If you don’t make firm decisions at some point, you have made the decision to fail by default.

(Scott Anthony is the managing partner of the innovation and growth consulting firm Innosight. He is the author, most recently, of “The First Mile.”)