Years ago Bill Sahlman, professor of entrepreneurship at the Harvard Business School, told me that “Startups are a succession of small experiments.” I’ve never forgotten those words of wisdom and have passed them on to many mentees. Of course, the mentees at MIT, all being engineers or scientists, do not need to have the scientific method explained to them, but it’s still good to see how it is applied to business. I was pleased to see Reed Sturtevant of Project 11 make this same point, very eloquently at a meeting of MIT Sandbox mentors and student entrepreneurs yesterday. Here’s my version:
- Make your hypothesis – per Professor Sahlman – make this something small that can be tested quickly.
- Design the experiment that will test your hypothesis. You don’t need to write a lot of code to do this. You can mock things up on paper and do an A/B test of a design element, for example. Or give prospects a choice of a purchase model: subscription vs. a la carte.
- Gather your data. Needs to be quantitative. Where qualitative judgements are involved, like in a design, get your test subjects to use a Likert scale or another method of turning qualitative into data.
- Analyze your data.
- Present your data and analysis to the decision makers on your team.
- Come to a conclusion: did you prove or disprove your hypothesis? Do you need to runs more or different experiments? What are the next steps?
Obviously you need a product roadmap and your experiments need to fit into that road map and into your big hypothesis: “Customers will love our product because it helps them do X far better than their current solutions, which will enable us to build a successful, profitable company.”