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Stop wasting money on failed projects

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Innovating should be a priority for all businesses, yet too often, businesses approach innovation with a traditional mind-set: they write a business plan, secure investment capital, and then spend months or years developing the idea without knowing if it will work, says Jurie Schoeman, client engagement and strategy executive at BSG.

This approach hardly worked in the past, but in today’s fast-paced business environment, its shortcomings are laid bare more quickly and brutally than ever before, with market share being snapped up by more agile competitors. Businesses have come to realise that, if they want to be successful, they need a new approach.

The Build-Measure-Learn method applies the principles of start-ups that don’t have resources to waste on bad ideas. Through experimentation, customer feedback and iterative design, Build-Measure-Learn ensures businesses don’t waste time, money and scarce skills on initiatives that deliver little or no benefit to the organisation or the customer.

To make certain they’re investing in ideas that deliver purposeful and positive change, businesses should focus on agile development and adopt lean principles so that they can answer these key questions about identified opportunities:

Is it a problem worth solving?
The only successful solutions are those that address a problem worth solving. Too often, businesses develop a solution and then try to find a problem it could solve, which usually leads to failure.
By adopting the Build-Measure-Learn approach, businesses first define the problem and conduct “problem interviews” to test the hypothesis with real customers to establish if they believe it is a problem worth solving. During these interviews, they may find that people have found ways to work around this problem and that they’re comfortable to keep using these methods.

Can we solve the problem?
Step two of the Build-Measure-Learn process involves the iterative development of a minimum viable product (MVP), which is the smallest solution, with ruthlessly limited features, that can be used to test the solution with real customers.
For example, businesses could create an app for a single platform – like Android or iOS – which shows that the problem can be solved with one or two features, rather than the traditional approach of developing a full-blown solution for all platforms before ever testing it with customers.
During the “measure” step, a few people who are comfortable with trying new ideas (known as “early adopters”) provide feedback on the solution’s usability, whether they think it solves the problem, and the value it adds to their lives. This feedback is used to “learn” by deciding whether the solution needs to be adjusted (pivot) or persisted with through the next iteration of the MVP (“persevere”).
This is not a product launch. Rather, it’s about testing a developing solution with real customers, and establishing whether it should be further developed by building the next smallest, quickest and cheapest iteration. It’s important to note that these principles apply to all areas of business, not only development.

Will customers buy it?
Once businesses have identified a problem that’s worth solving, and have a working proof of concept for a solution that can solve the problem, they need to establish if people will pay for it.
This is where vanity and real metrics come into play. An example of a vanity metric is the number of times an app has been downloaded. This figure does not consider how many people actively use the app, however. Real metrics, on the other hand, provide valuable insights into how often people access and use the app, as well as which features they use most.
This can be tested by establishing if people will pay for the app by encouraging them to take real actions – like following a link and downloading the app – and then measuring if they actually paid for it.
If real customers have answered yes to all these questions, the organisation can then proceed to define a business case to build and scale the solution, knowing that it is likely to be a more worthwhile investment than the historical approach of doing the business case first, developing an entire, expensive solution over a significant period of time, and then launching and hoping.

Fail fast, succeed faster

The “learn” aspect of the Build-Measure-Learn process is about embracing failure, accepting constructive feedback and learning from mistakes. The only way we learn how to ride a bicycle is by falling off and trying again. This can be applied in business, yet many businesses punish failure, and so projects still follow typical cycles that stretch over many years, are delivered late and over budget, and offer few benefits to the end-user.
There are many ideas in the world. The goal of the Build-Measure-Learn process is to quickly prove if an idea is a good or bad one, whether that’s an app or a new product or process. The more time and money businesses spend on bad ideas, the more they waste scarce resources that could have been spent on good ideas. This is particularly difficult for large, established organisations because they’re used to putting everything into an idea without getting any feedback along the way.

In contrast, entrepreneurs and start-ups don’t have the luxury of time or money to operate this way. They need to prove ideas as they go along in order to secure more funding, which means they produce better, well thought-out solutions – and are disrupting the markets of enterprises.