One Big Question with Scott Benjamin
Q: How do I know if I have a great business idea?
It is natural to see a problem in our everyday lives and think, “I could solve that by creating this product and the market would be willing to pay for it.”
The problem is—the only thing we have at this point is a hypothesis.
To answer this question, we need to go beyond the hypothesis and draw upon the scientific method. In order to know if we have a great business idea, we must test our hypothesis and analyze our data. The only way to test if the market wants and needs our product is to “ask” the market and validate our hypothesis. This process, coined by Steve Blank, is known as customer discovery and validation.
While market research surveys are convenient, they barely touch the surface of the data needed to verify our hypothesis. We need to speak directly to potential purchasers to verify if our product, its proposed features and the price point are indeed what we had originally hypothesized. We may learn the market likes our idea, but only if it includes certain features or functions. At this point, our hypothesis becomes agile and changes to include the additional information.
So how many customer interviews do we need to conduct before we can verify our hypothesis that we have a great business idea? It may take 25 or 50, but we continue to conduct interviews until the point when we can predict the answers to an interview before we conduct it. While this process does not guarantee our idea will be successful, we have reduced the odds of failing by inexpensively validating the
Scott Benjamin, MBA, Ph.D., is a 20-year veteran of serial entrepreneurship. Prior to receiving his Ph.D. in entrepreneurship and strategic management, Benjamin was the founder and CEO of Health and Radiological Services, a medical education and consulting practice, and Signature Properties, a real estate development firm. He has also owned several restaurants and is an active angel investor. He is assistant professor of strategic management and entrepreneurship in the Nathan M. Bisk College of Business and the director for the Center for Entrepreneurship and New Business.