Disclaimer: This is a super long post admittedly but meant to be a roadmap for your experiments. So here is the TLDR version aka the PDF of the article. Also you can download the MP3 audio recording and slides from the original presentation here.
Your business is just one big continual experiment, with many parts that you will be testing, over and over, almost daily. And you are the scientist!
It’s also a system — a series of processes, parts and people that are designed and assembled to provide products in order to make money.
I also look at the entrepreneurial experiment like a big machine that you’ve engineered to produce something. It has a bunch of moving parts. There is an input and an output. And it has levers and dials that you can adjust how the machine works, along with a dashboard that measures what goes on in the machine. (All for the goal of maintaining a “well-oiled machine” — one that makes money by serving customers.)
When I started to approach our business just like this (as an experiment, system or machine), I could step back and look at it in a whole different way that was fun and exhilarating, but also constantly being optimized and tuned for maximum efficiency.
By the way, in business, EVERYTHING is an experiment. What worked yesterday might not work today. Every single aspect of our business is simply an ongoing experiment for what works — what helps our machine run smoothly and efficiently.
THE KEY BENEFITS
As I was thinking of this topic, it occurred to me that there are real benefits to approaching business as an experiment but the key one is this:
Failure isn’t the end of the world. It is just an opportunity to learn.
In fact failure is actually progress toward success. It’s not a dead end. It’s just one step closer to see what could work.
All your grand plans and ideas are simply assumptions to test in the experiment.
None of us have a crystal ball to look into the future and see exactly what will work. All we have are educated hunches to test. Once I realized I didn’t have everything figured out but simply those hunches or ideas to test, I let the results drive our business versus my hopeful dreams of grandeur or idealistic notions based only in the clouds.
The goal of the experiment is learning what does work and doing more of that. That specifically means finding out what will make enough money to sustain the continued operations of your business.
But it also means finding out what actually can make the most impact of your limited resources (time, talent, treasure) for achieving your goals and making customer’s lives awesome.
Then when you test a theory or idea and it works, you can start optimizing that for even more success. That’s why it’s a continual process.
And if you approach your business as an experiment to test over and over again and tweak and optimize, it can drastically relieve you from the burden of what we typically see as gloom and doom.
THE GREAT ENTREPRENEURIAL EXPERIMENT
So I’m calling this The Great Entrepreneurial Experiment.
You are the mad scientist (or maybe you’re Beaker).
Your business idea is your specimen to test.
The lights are bright. The liquids are bubbling and gas is brewing. You’ve got your safety glasses on.
Now it’s time to walk through the 6 steps of tweaking your business like an experiment.
The 6 Steps of the Experiment:
1. Identify
2. Build
3. Launch
4. Measure
5. Refine
6. Repeat
1. IDENTIFY
In the first stage of your entrepreneurial experiment, you start to identify the ideas and plans for what you’re going to offer, who you’re going to offer it to, how you’re going to offer it and what it’s going to take to do all that.
The Product
What do you want to offer? What is your cure, solution, pain reliever, image enhancer, time saver you want to offer the world and test in your experiment?
For me at iThemes, in January 2008, it was something I wanted myself — WordPress themes that were for websites (not just blogs) that had dropdown menus, multiple page templates, easy to change graphics and a sharp design. And at that time, it didn’t really exist.
Because this is an experiment to test to see if people will pay for your idea, you need to anticipate the needs of your prospective customer base (who we’ll get to next).
To have a better concept to test, find out what the pain points and frustrations are with the current offerings on the market. Do Google searches on competing product like “problems with [competing product].” See what people complain about on social media, or in forums. Make note of how people review products and what the knocks are.
All this goes into helping you build a better first experiment.
The Customer
Once you’ve identified the product you’re going to offer, you need to be able to identify who you’re going to offer it to.
The key here is finding an easily identifiable AND accessible group of customers to offer your product to.
After all, you might create a revolutionary product, but if you can’t identify and reach those people with marketing messages about the product, then your product could collect dust for a long time while you create that group of people.
For us, it was WordPress users. Then more specifically web designers and developers using WordPress as their preferred choice of content management systems. We know that WordPress users ask questions on forums, read blogs about it, attend WordCamps and thus were easier to identify and market to.
It could be a subset group of people (like doctors, or real estate agents, or college students) or an organization (like nonprofits, Oklahoma rural small businesses, or Fortune 500 companies).
Marketing and Delivery
In the Identify stage, you also need to think about how you’re going to offer it to this group of people.
There are two parts of this: marketing and delivery.
For this part, marketing means how are you going to get the news of what your product can do for them to them? Can you start a blog and build an audience, or purchase advertising in trade magazine or online via a pay-per-click ad campaign? Do you need to find trade shows or conferences to attend?
Delivery is how you’re going to get the product to the customer. This is frequently assumed but needs to be mentioned here. Do you have a software product and you’re going to digitally deliver it online via your website? Or via an App Store or iTunes? Or do you have a physical product that needs to be shipped?
Materials Needed to Build
Now what it’s going to take to build and offer it to those prospective customers?
Think about the initial features you want to offer and what time, money, skill, energy it will take to do it.
And in this stage, I also try to think through the problems, issues, complications I can possibly foresee having with the initial product and prospective customer base.
Warning
Don’t get stuck in the Identify stage. Too many people just sit and dream about what they would offer. Don’t be a daydreamer. Be a doer.
You can easily dream and plan and dream and plan and spin off into 500 other directions of dreams and possibilities, but do your due diligence, make a decision and ACT on it.
You’ve gotta move past the identify stage at some point or else this isn’t an experiment at all, it’s just vapor. There’s no real substance to it and it’s definitely not an business.
2. BUILD
There are two key parts to the Build stage of your entrepreneurial experiment: audience and product.
Building an Audience
Building an audience gets overlooked in the excitement of building a product. You may already have an audience (of prospective customers) but if you don’t have an audience for your product, you’ll likely launch to crickets.
Two of the best ways to build an audience and buzz with your prospective customers is content marketing and specifically blogging and email newsletters.
Content marketing is about educating and training your customers with great content (from ebooks, to webinars, to blog posts).
Blogging is an extremely effective way to building an audience around your content … while building an email database of those prospective customers.
Email is a vital marketing strategy no matter what business you’re in. We launched iThemes with around 400 people on our initial list. And have systematically grown our business leveraging email. It’s one of the most valuable assets of our organization.
When building an audience for your product, which you should be doing simultaneously as you’re building your product, look for platforms and ponds.
It’s often easier to build on someone else’s platform (in our case WordPress and its popularity) or to fish for customers in someone else’s well stocked pond than it is to build something from scratch.
In terms of platforms and ponds, think about iTunes for musicians, the App Store, niche forums and blogs, industry or niche specific publications and social networks as some examples.
By doing so, you’re able to save time and energy by leveraging those audiences and following the principle of “Fishing where the fish are biting.”
Building the Product
As you’re building audience, you obviously need to be building your product offering at the same time. I know it’s not an easy task, but it’s vital to do both.
In this case, what good is an audience if you don’t have a shippable product to test on them?
But let me clarify in this part of the Build stage, here’s what you’re actually seeking to build: The BETA version of your product.
Eric Reis calls this the “minimal viable product.” It’s the minimal set of features your product needs to have in order to see if you’re on the right path to a product customers would be willing to pay for.
You’re trying to prove that what you’re building is a VIABLE product.
Thus, you need to focus on building a beta version of your product or at most a version 1. Do not build version 20 of it. If you try to do that, you’ll never ship.
Focus on building a shippable beta product. Again, just a reminder: this is why we’re calling this an experiment.
This means you need to build something that allows you to get enough feedback to test your idea and to see if the fish bite on it.
The ultimate goal is to build something with enough value that customers will pay for it.
Paying customers is a HUGE key indicator for you … so focus on building something with that goal in mind.
Ask yourself: What is the basic product I can build in the shortest amount of time, with the least resources that offers value enough that someone would actually pay for?
Remember: Build just the Beta version first.
Warning
Craftsmen get stuck here. Perfectionists get lost here. And perfectionism is evil.
If you don’t move on to the next stage — Launch — then you have nothing to test.
I think of craftsmen as people who are like woodworkers who build beautiful furniture.
Craftsmen want to tweak and tweak and polish and polish the product WAY past what you really need. And thus, you delay launch for too long. Craftsmen typically focus on the few flaws they see and miss the entire goal of getting a shippable product out that allows them to test if people will pay for it.
To craftsmen and perfectionists I’m going to say something truly blasphemous to you though: Your “good enough” is other people’s “GREAT!”
Ship something good enough.
Then iterate and make it better based on feedback, not self indulgence.
Get accountability for this if you need it. Schedule milestones and benchmarks.
And then SHIP IT!
Because if you don’t ship, you don’t know if it’ll work. It’s just theory.
If you don’t ship, you are simply creating a narcissistic art project for yourself. And that’s not a business but an art gallery for one.
If you don’t ship, you don’t eat.
Write those things on a post-it note near your workbench as a reminder.
3. LAUNCH
Now for the moment of truth: THE LAUNCH!
You have to get to the launch stage to start testing your experiment and to get feedback on what’s working and what’s not.
Launch your product to the audience you’ve built in the last stage.
Offer it to your prospective customer group, inner circle, or beta group.
You can do it!
Hit send, or publish, or GO. Fire the rockets. Whatever. But put your product into the wild as fast as you can in order to move on to the next.
Warning
Some of you will get to this phase and be scared to hit the launch button.
Close your eyes. Grit your teeth. And hit launch.
It’s like jumping off the high dive for the first time. Take the plunge.
4. MEASURE
This is the fun stage — seeing if your experiment is working or not. I love getting to this stage because you get to find real results of what’s working or not.
Sometimes you won’t see ANY results. Nothing will move the needle. But again, this is why you test your ideas and experiments.
But what you’re looking for here in the measure stage is: fuzzy gut reactions and actual metrics. They both work.
But I want any feedback I can get (emails, forum posts, phone calls, site traffic, hate mail, whatever).
Of course the best way to gauge feedback is in dollar signs.
Revenue — or people paying you money for your product/service — is a foundational indicator of whether you’re onto something or not.
But here’s some questions to seek to answer in this phase:
- Who are your initial customers?
- What do they like and love?
- What do they loathe and hate?
- What don’t they even care about?
- What questions do they ask?
- What are their objections? Holdups? Hangups?
- What surprises you?
- What findings can and should you explore further?
Warning
Don’t overly obsess over feedback and stats to the point of distraction and stall the process.
Get enough data to get a good picture for future refinement and experimenting. Be sure to allow enough time to adequately test and measure results. (But not so much time that you don’t refine and test again.)
And although we want hunches, actual customer feedback and real numbers in this process, they can also lie. They can sometimes not tell the whole story. That’s why you keep testing your experiments and optimizing those tests.
Get what you need to measure in order to refine and move on to the next stage.
5. REFINE
Once you’ve gathered good feedback and measurements about your experiment, now it’s time to start refining and tweaking your experiment for the next round.
Here are some questions to ask yourself in this stage:
- What can be improved?
- What can be eliminated?
- What can be clarified or communicated better?
- What can be enhanced?
- What needs to be highlighted or prioritized?
Prioritize your list based on what you think would make a biggest impact toward success and further testing.
And start implementing again for the next version of your product.
6. REPEAT
Now it’s time to rinse and repeat. Based on what you’ve found start it over and test your new version again.
Your experiment has not ended, it’s just begun.
Remember the goal is to find what works, makes money, maximizes your limited resources … to do more of that!
WHERE ARE YOU IN YOUR EXPERIMENT?
Now, let me ask a couple of questions of where you are in the experiment.
- What step are you on currently?
- What are you learning about your product & customer?
- Is it working? Not working?
- What roadblocks & obstacles have you hit?
- Where are you stuck?
Please post your updates and findings in the Lab forums. And good luck with your entrepreneurial experiments!
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PRESENTATION RECORDING OF THE GREAT ENTREPRENEURIAL EXPERIMENT
I presented this topic in one of our monthly training opportunities recently.
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