A failure to plan is a plan to fail.
Planning remains a key element in organisational success but it is a lot harder than it was before Covid-19 began creating uncertainty everywhere. Past performance is no longer a reasonable guide to future performance. Old assumptions of cause and effect may no longer hold. In such circumstances it can be hard to have confidence in your own ideas and to convince others to support them.
We have already shared some thinking about how to plan in uncertain times (see related post links below) but want to focus, in this post, on how testing can help you build confidence for yourselves and your stakeholders in your plans before sign off.
Elements of your plan you might want to test
- Assumptions around customer behaviour
- Appetite among new customers for your offer
- Attractiveness of your new offer
- Feasibility of delivering an existing programme in a different way
- Financial viability and risk of your revised catering offer
Don’t think of testing as a waste of time, as a distraction from getting the job done – it is an investment in getting it right and not having to write another plan in six months’ time! Testing may tell you that some elements of your plan need further work but that is a discovery much better made in private before your put your plan into action.
Some tools and techniques for testing business plans
There are a great many ways that you can test elements of your plans. Which tools are best for you will depend upon the questions you are trying to answer and the resources you have available. Here are a few examples to get you started and there are links to many more at the bottom of this post.
Talk to people
This is the simplest way to test almost anything. Talk your assumptions through a critical friend or two who have not been involved in the planning process. You will learn both from the experience of articulating your ideas and from their feedback. Pull together an online focus group. Form an advisory group. Ask your existing supporters what they think of your plans.
Journey mapping
We have written before about the power of journey mapping to visualise people’s experience. We focused largely on the tool’s use as way of understanding your current offer and designing a new one but journey mapping is also a great way of testing the offer you have designed. Invite some potential customers to walk through the map with you – virtually, or socially distanced of course. Does it make sense to them? What do they find appealing? Where are they confused or unconvinced?
Prototyping
We have touched on prototyping before. A prototype is simply a mock-up or a model that you create to test your thinking.
A great example of using a prototype to test a business idea was the start-up of Innocent Drinks. In 1998, after spending six months working on smoothie recipes and £500 on fruit, the founders sold their drinks from a stall at a music festival in London. People were asked to put their empty bottles in a “yes” or “no” bin depending on whether they thought the founders should quit their jobs to make smoothies. At the end of the festival the “yes” bin was full, with only three cups in the “no” bin. They had their answer,
Build a minimum viable product (MVP)
An MVP is ‘the simplest form of your idea that you can actually sell as a product.’ Eric Ries
Suppose you wanted to offer online creative writing classes. You could create the first class and either try and sell it or offer say 10 free places in exchange for participation in a focus group afterwards.
Quick customer feedback through social media
Social media is a great way to test ideas quickly and very cheaply. You could create a video on Facebook outlining your idea and ask your followers to vote in a poll and offer comments. Setting up a crowdfunding page is a good way of testing how interested people might be in your new idea.
Sensitivity analysis
Sensitivity analysis, sometimes called ‘What if’ analysis is a common technique for exploring the financial impact of a change in key assumptions such as how many tickets sell.
Keep the model simple working with one or two variables only as this museum example shows.
When you have completed the analysis, take a look at the outputs and think about what they are telling you about the level of risk in your financial projections. Can you live with this level of risk or do you need to take action to reduce it through increased contingencies, reduced targets, a redesign of the offer or its delivery or improved forecasting so you can see an emerging problem far enough ahead?
Tips for designing your experiments
- You cannot and should not try to test everything so think about where you want to focus your efforts.
- Which elements do you have least confidence around, perhaps because they are ‘new’ in terms of the offer, the customer or the delivery mechanism?
- Which elements of your plan are most important to your success in terms of mission and money?
- Where might your stakeholders (board, funders etc) need most convincing?
- Be clear about what you need to test. For example, if you are opening a new catering outlet in your venue are you most concerned about customers’ willingness to eat out at all, the pricing, the offer (menu) or how you will manage your internal processes? Testing all of these would be much more costly in time and money than choosing the one area of uncertainty that is most important.
- Be explicit about what you are testing and what evidence you are looking for.
- Get creative about designing your tests and try and use a range of approaches.
- Make your tests as quick and cheap as possible. You are not conducting academic research or working on a report for Government – this is just about reducing the risk and uncertainty in your plans.
- Take time to think about what your experiments have shown you. Be prepared to change your plans in the light of your new evidence. Watch for bias in your decision making
If you are looking for some ideas about how you might test key elements of your evolving plans, here is some inspiration.
- Testing Business Ideas. A new book out from one of the creators of the Business Model Canvas. You can download a very useful 88 page extract for free
- Design thinking: getting started with prototyping
- Prototyping: eight common methods
- Tips for prototyping service design experiences
- Sensitivity analysis using excel
We hope that you find some of these tools useful. Testing cannot eliminate all the risk in any plan but it can help you to understand and reduce it.
Do let us know how you get on.
Dawn and Susan
Related Posts:
A deeper dive into scenario planning