Value Proposition Testing: How to Test the Desirability of an Innovative Business Idea

To launch any business, one needs to tackle the risks of developing new businesses upfront before even a pixel is designed or code is written. What are those risks?

  1. Value Risk – Would people buy it? (Desirability )
  2. Business Risk – can we financially and operationally grow the business? Are the legal threats? Can we market it? (viability)
  3. Tech risk – Do we have the right technology to build it? (feasibility)
  4. Design Risk – Can we design an interface that people use the technology? (Desirability, feasibility)

desirability, viability and feasibility testings

Some would argue that the sweet spot of innovation is in the middle where the desirability, feasibility, and viability of a business idea meet together. Viability and feasibility testings would guarantee that the business idea can be scaled operationally, financially, and technologically while no legal threat would threaten it in the future. If we want to use technical language: desirability (does anyone want it?), feasibility (can I deliver it?) and viability (can I afford it)

I would agree that these criteria all need to be met and are equally crucial when building a successful business. But I do not believe that validating these aspects should be a process that runs in parallel. That does not mean they are not equally important, it just means that we should take a closer look at which one to focus on first. 


Desirability tests whether your innovation is solving the right customer problem

Now that I have put it out there I would like to address the elephant in the room: Why would I even start thinking about building or financing something that is not relevant to customers?

So before even getting into “Can we build it and can we afford it?”, I would suggest you make sure anyone wants to actually buy it before doing anything else. 

Again: No bullshit – if no one wants it we can skip the feasible and viable and go straight to the next idea, saving us time, money and tears. 

To sum it up: No desirability – No business

So let’s discuss how to validate the desirability of a business idea. Many possible solutions – we like to start with using the Business Model Canvas or Lean Canvas. 

In order to learn more about the desirability of your idea, focus on the right side of the model first – go validate the idea in the market and come back to it to fill in the left side. Before you have not validated your idea, do not touch the left side and remember: Without desirability (right) there is no feasibility (left).

Desirability side of a business model

The right side of the canvas gives us the opportunity to think about our idea further. We believe that if you can’t fill in the right side of the canvas you a) do not know enough about the idea yet or b) the idea is not really worth it (yet?) – in both cases you would need to do more research to validate your assumptions and generate facts.

Filling up the desirable side of the business model forces you to think about your idea in more detail. Later on, it will be much easier for you to build an experiment out of your idea in order to validate it, as you have already thought about the most crucial points: 

  • Starting with the most important (in my opinion) Value Proposition: What value do we deliver to our customers? Which problem do we solve or which needs are we satisfying?
  • Customer Segments: For whom are we creating value, who are our most important customers?
  • Channels: Through which channels do our customers want to be reached? How are we integrating them with customer routines?
  • Customer Relationship: What type of relationship do our customer segments expect us to establish and maintain with them?
  • Revenue Streams: For what value are our customers willing to pay?

 

I think it became pretty clear by now that all of these blocks, that we should focus on in the beginning, are customer-focused. And that is exactly why it is so important to think of these first and foremost because it is what desirability is about after all: Making sure the customer wants it before you purchase it.

 

At Bonanza Design we offer one of the most effective and lean processes to evaluate business ideas at scale. We’d be delighted to consult you on your projects.

 

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