Use this simple method to identify your riskiest assumptions

Imagine being the boss of the internet only car dealer Carzoo.

Your entire business model relies upon people being happy to buy what is typically their second most expensive purchase, without seeing it or test driving it first.

It’s really interesting to consider some of the assumptions that need to be true in order for this business to succeed ;

  • People will happily buy a car without seeing it ‘for real’ and test driving it
  • A money back guarantee will be enough to make people feel comfortable to spend thousands online
  • People will prefer shopping for cars in this way because car salespeople have such a bad reputation
  • People will be happy to buy cars online despite there being no physical dealership to go to if things go wrong

I wonder what research Carzoo did to explore these assumptions in order to get to the point that they were happy to launch the service?

As with every product and service, there are always a bunch of assumptions that need to be true in order to succeed.

On a recent project, we ran a really useful exercise designed to flush out our riskiest assumptions.

Critically, it also helped to identify how much confidence the team had in each of them being true.

It worked like this.

  • Ask everyone to list all of the assumptions that they feel underpin the success of your product or service (If people are struggling ask them to pretend they are funding it with their own money and watch the assumptions flow!)
  • Take each assumptions in turn and plot it on the following matrix by asking yourselves two simple questions:
  1. How important is it that this assumption is true for us to succeed?
  2. How much confidence do we have that this assumption is true?

A matrix that allows people to plot their assumptions based on how important the assumption is and how much confidence they have in that assumption being true.
Assumptions importance/ confidence matrix

The more assumptions that you have in the top left of the matrix, the more might be feeling that your business model might be build upon a house of cards!!

We used our top left ‘most important / low confidence’ assumptions as the key areas of focus for our user research in order to learn more about them.

We also chose other assumptions to explore from the top right of the matrix to check whether our confidence in them remained.

After the research we reflected on all of the assumptions and re-plotted some of them based on our new knowledge.

It’s important to note that it’s hard to validate assumptions completely as being ‘true’ or ‘false’, in reality you use research to look for signals that will give you more or less confidence in them.

A useful way of thinking about them is as ‘rolling assumptions’ in that you continually explore the most critical ones until others become more important.

The ‘assumptions board’ that this exercise gives you is a useful tool to update throughout the product lifecycle as it gives you a useful reminder of your riskiest assumptions and helps you with where to focus your future research.

Stop working on the wrong problem

I think ‘Build the right thing then build the thing right‘ misses a trick.

It makes you think too much about the thing that you are making and not enough about the fundamental problem you are trying to solve.

Peter Drucker, the ‘founder of modern management’, once said;

There is nothing worse than doing the wrong things right

Peter Drucker

It is sobering to acknowledge how many times we’ve all done ‘the wrong things right’.

I think we should focus instead on;

‘Solving the right problem with the right solution and delivering it in the right way (then continuously improving it)’

The continuous improvement bit is vitally important because things like products and services are never ‘finished’ they can (and should) always be improved.

Choosing the right problem to solve isn’t easy and can feel more like an art than a science.

I’ve used a few different approaches in the past and have tied myself in knots trying to devise complex methods to score problems to determine which are the most important ones to fix.

There is a much simpler method.

In a recent service discovery project I worked on, @_juliesun ran an excellent workshop using this simple ‘action prioritisation matrix’ to help us to prioritise where we should focus our efforts.

Action prioritisation matrix that we used to prioritise service problems by mapping them against the value of solving them vs the effort to do the work
Use this simple matrix to help you prioritise where to focus your efforts

You can use it to plot know problems as well as potential solutions to problems.

In this project having already identified the critical problems within the service, we used it to prioritise potential solutions to explore within our alphas.

It’s all well and good planning and prioritising things of course but vitally important to remember that the only way to learn what really works is by making things real and seeing what happens.

The faster you can test solutions to problems, the faster you can measure the impact they have on the outcomes you’re looking for.

This gives you the best indication of whether you are in fact working on the right problems and allows you to refocus your work accordingly.

So before you fall in love with what you’re going to make and how you’ve going to make it make sure you’re working on the right problem.