Many companies today have been urged to “try new ideas and fail fast” in order to inject entrepreneurial thinking and flexibility into our traditionally conservative culture.
The belief has been that, at a time of declining revenues, there is no such thing as a bad idea, and the only thing really holding us back is a fear of punishment for getting it wrong.
But the mantra is at risk of being abused in those instances where the need for urgent action to address declining revenues is being misinterpreted as “try anything, quickly! Seriously, just throw something – anything at all!”
When we give ourselves permission to fail, it should NOT mean that failure is our ambition.
And as we seek to fix our current predicament, we should not confuse the idea that a stupid action is better than no action at all.
In business development, there ARE such things as bad ideas. And in a society facing unprecedented changes there IS a need to recognize that being bold enough to try something new and fail fast is different than setting yourself up for failure.
However, following these simple step may help you maximize their chance of success:
- Understand the value. It should have a genuine dollar benefit attached, not just a feel-good factor.
There are only two ways something can add value: It can either increase your buyers’ willingness to pay, thereby increasing what you can charge for your product; or it can decrease how much it costs to produce your product, making it more affordable to do what you do.
If your cover price is fixed, the ability for a new idea to increase your customer’s willingness to pay is limited. So you need to get creative about how the value is added. This might include looking for an advertising sponsor for a new initiative, or building a new audience altogether that can be monetized.
- Consider who you are trying to impress. Does your idea meet a customer need that is not currently being addressed? Or are you frantically brainstorming to impress your boss and prove yourself to be an ideal person? As a general rule, business ideas have longevity – and success – when your customers can’t wait to pay to get their hands on them.
- Determine if it’s a good use of your resources. The cost of a business idea can often be measured by asking a question: “What would we have to stop doing to direct existing resources into this new idea?” The resource question can also be put in a more compelling way: If the only way you could get this project up was to close/shut down another, what would that be? What is your worst performer? Is the potential value of this new idea stronger than what the worst performer is doing? Understanding if you’re prepared to do that is a good test to understand how passionate you are REALLY about the idea.
- Devise a business plan. I’m not talking about a 37-page PowerPoint, complete with global analysis and 15-pages of spreadsheets but just a simple profit/loss statement.
What are your hard costs? What are your variable costs? What profit do you want to make/sacrifice? You then can work out how much revenue is needed and, therefore, what and how you are going to charge for it.
- Ask yourself: Is it sustainable? Following from the resource question, how long can your team produce this? Most new ideas fail not with a bang, but with a fizzle and a whimper, as everyone just loses enthusiasm, due to poor resourcing and a ridiculous workload that burns everyone out before the idea really takes off.
- Consider if the idea can be tested small/flexibly first. Look at ways you can support your existing resources and their workload for a trial period that can be undone quickly if needed. Can you move work around to other teams? Use a small freelance budget? Bring in graduates and pay them in pizza and beer?
Putting a time frame on trials – say three months – also makes what is proposed seem more manageable, because there is the discipline of an assessment at the end and light at the end of the tunnel for the extreme workloads of launch.
Small trials also should be done with mindfulness of scale. If this works, how will you be able to scale the project up quickly and affordably?
Zachary T. Brown