Embracing a testing culture: fail fast, fail cheap

Your job as a business founder is to prove (or disprove) an idea as quickly as possible so that you can save your time, money and energy for the things that work – and move on quickly to the next thing if they don’t.

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Have you ever played Wordle?  It’s the word game that went viral resulting in the New York Times buying it from the programmer for a million dollars.  It’s a simple game where you have to guess a random five-letter word: you start by entering your first guess and Wordle tells you if any of the letters are right.  If you’ve got a correct letter but it’s in the wrong place it marks it yellow, if you’ve got a correct letter in the correct place then it marks it green, and you’ve got six guesses to work out what the word is.  And the thing about Wordle is that your first guess will be wrong – but you will learn something about what the right answer is from that guess.  Even if you don’t get a single letter right in that first attempt you will have still learnt what letters are not in the answer.  Your second guess will likely be incorrect too, but again, you will learn a bit more about what the right answer is by getting it wrong.  That’s how the game is designed to be played: it’s not designed to be won on the first attempt, it’s a game of failing until you work out the right answer.

And that’s the same with business.  Very few people come up with a business idea, go out and do it and then it just works.  That would be like getting Wordle right on your first guess, it would just be a pure fluke.  But most people approach business thinking they are going to get it 100% right first try.  However, what most people actually do with a business is go through a series of failures (some small, some huge) but each time learning something valuable, until they have enough information to make something successful.

If you meet anyone who has a successful business, ask them about the ideas they tried BEFORE that business and then sit back and listen to their long list of failures.  Go listen to How I Built This with Guy Raz which is a podcast from NPR which interviews successful business founders about the real story behind their success, and every episode you will be treated to a chronicle of failed ideas, dead-ends and missteps the entrepreneur went through before they had learnt enough to build the thing that worked.  

Huge brands like Airbnb and Starbucks didn’t just pop out of the ground fully formed, they were the result of a string of failed ideas and wrong-turns, each teaching the founders something new about where success actually lay.  Everyone thinks Beyond Meat has been an overnight success story, but they were trading for ten years before you heard of them.

 

Before you launch a business, every decision you take is just a guess.  It’s your best guess based on your life experience to date.  And if you have never run a business before, or if you’re launching into a sector that you don’t have a lot of experience in, then there’s a very high chance that those guesses will be completely wrong.  If you’re lucky, like Wordle, you might get one right letter but it’s probably going to be in the wrong place.  It’s not until you launch your business that you will find out just how good your guess was; it’s not until you get your products into the hands of a customer that you will start to learn what you got right and what you didn’t.

If we know that the business or new product that we launch won’t be right straight out of the box – that it’s likely our assumptions about what customers want is going to be wrong – then we should build our businesses with that in mind.

When I interviewed Chris Kong, one of the founders of tempeh manufacturer Better Nature, he said that the goal of any entrepreneur should be to try and kill their idea as soon as possible.  Because why spend three or five years of your life on something that is destined to be a dead-end?  And you will have probably heard that concept echoed in the business phrase ‘fail fast’: if you know that you don’t have all the answers then you want to prove or disprove a new idea as soon as possible before you stake everything on it.

The goal of any entrepreneur should be to try and kill your idea as soon as possible. Why spend three or five years of your life on something that is destined to be a dead-end?

But you should tag an extra bit on to that phrase ‘fail fast’ – and that is that you also want to fail cheap.  You should only ever put money into something that you have proven works to make it work better.  That’s why new companies struggle to find investors unless the founder has an incredible record of success with their previous businesses: investors are looking to invest in businesses that have already proven an idea with paying customers validating the concept.  They are expecting you to spend your own money and energy first to work it all out, to get the expected failures out of the way before they put their own money in to help you take that proven idea to the next level.

One of the first things that you will see happen when a company gets that investment is that they rebrand, because at that point they have worked out what their place is in the market and what their brand needs to be to speak to their customers – so now putting money into branding, once you have worked all that out and proven the business model, is a sound investment.

So let’s translate all this, what does that practically mean to us as business owners?  You might have heard of a concept called a minimum viable product, or an MVP.  This was a business methodology popularised by Eric Ries in his book The Lean Startup.  The aim of launching a minimum viable product is to avoid doing unnecessary work on something before knowing if it will work out or not.  Money isn’t your only resource as a business and sometimes it’s not the most important.  Your energy is a resource, your motivation is a resource, and you want to make sure they are not used up on dead-ends.  So the concept of a minimal viable product is to create the most basic version of your product or idea so that you can get it into the hands of potential customers quickly to see if it works or not.  If it doesn’t, then you have just learnt something really important to apply to the next version and you haven’t spent loads of time, money and energy on something that would have been a flop.  

 

Take a look at Vegan Business Tribe – we started VBT off as a free service because we wanted to prove the idea before we committed our time to it.  We wanted to prove that there was a market out there for vegan business advice and that we could convince people to sign-up for an account on a website before we took our time away from our other businesses to develop it.

We built a simple website and used a Facebook advert to generate some traffic to see if people would sign-up, we spent a few hundred pounds to try out the idea.  And as it turned out, our original idea of what Vegan Business Tribe was going to be was very different to what our members actually wanted.  We thought that people would pay to receive regular great business advice in an email every week, when in fact the advice and the content we were producing proved to be just our marketing, it’s what brought people to us.  What our members were actually looking for was a community, and that took longer to understand and to build.  But had we gone all-in with what we thought the business was going to be on day one, we’d have spent a lot of money, time and energy on something that didn’t work and we would have thought the concept wasn’t viable – when in reality we were just wrong in some of our assumptions.

 

So if you haven’t launched yet, don’t spend time on your website and brand – just get your product into the hands of people as quickly as possible spending as little as you can to do it.  Before you invest in that amazing packaging, wrap your products in brown paper and see if you can sell them at your local vegan market first.  Because if you cannot prove the concept at a market stall with customers standing there in front of you then you’ve not got an idea that works yet, and no amount of spending on branding and marketing will change that.  Instead of spending thousands on a new website to launch your new online membership, can you make it work in a Facebook group first?  And if so, what learnings can you take away from that to then dictate what your website needs to be able to do, instead of having to have it built twice: once before you launch and second a few months later when you realise your assumptions were wrong?

Instead of launching your store on the high street with all the expense of getting it fitted out and committing to a three-year lease, do a series of pop-up shops first to learn more about what kinds of customers you attract.  Before you go away and spend all that time writing your book or online course, test out if you can get people to turn up to a live online seminar first to see if there’s actually any interest in the topic – and if there isn’t then keep tweaking the topic, your message or how you promote that seminar until you learn how to get people interested in it first.

Thomas Edison and his team tested out more than three thousand different concepts before they found out how to make a viable light-bulb, learning a little something new from each burnt-out filament.  If we approach our businesses in the same way, knowing that failing is the route to succeeding, then we should minimalise the amount of resources that we put into each test, saving them for when we’ve worked it all out and have a proven idea that works.

Doing this requires keeping a degree of flexibility in your business.  No matter how far you are with your business right now, you have to stay open to what your business is going to become. The huge success that will allow your business to make a real impact in the world might be found in a tangent to what you are doing now.  Seth Tibbot, the founder of vegan food giant Tofurkey, spent years trying to sell tempeh with moderate success.  It wasn’t until he gave in to the consumer demand for tofu that he then discovered the right blueprint to create a business that now turns over somewhere in the region of 50 million US dollars a year (read his story in his excellent book here).  Starbucks started out just selling coffee beans for people to make coffee at home, and it took them a decade to realise that if they just added some boiling water to those beans and gave those customers a seat in their small amount of stores then they had an entirely more profitable business on their hands.  That’s why all businesses need to keep testing, and by doing that testing as efficiently and quickly as possible you will get used to embracing each failure as just being one step closer to working it all out. 

You have to stay open to what your business is going to become. The huge success that will allow your business to make a real impact in the world might be found in a tangent to what you are doing now.

Each time something doesn’t work out the way you thought it would that’s a really important learning, so embrace it.  Be glad that you found that out quickly and cheaply instead of dragging it out over several years and investing thousands of pounds into something that wasn’t going to work.  But then, work out exactly what you did learn from it, what piece of the jigsaw did that experience just fill to give you a better understanding of the business you are building?  How much closer did that failure get you to the idea that really works?  And this is important.  Don’t just try things out randomly and not track what the results are, you need to have a learning outcome so that you know what to change in your next test.  So if you are trying out advertising or a new promotion method then you need to know if those adverts got you any new customers – you need a coupon code unique to that promotion that you can track.  If you have a tech product, then make sure you are collecting all the metrics of how people interact with your minimal viable product: are they using the features you thought they would in the way you expected, how can you get them to leave feedback and tell you what’s wrong with it instead of just deleting the app?  If you are launching a new product, then take it to a local fair and get people to try your product while you are there and see what their reactions are.  You can’t assume that people will get excited by a new gluten-free vegan cupcake when you can pick one up in most supermarkets from the free-from aisle now, and you can’t assume that what you think makes your product different is something your consumer actually cares about.  Remember, it’s like a lab test, you are trying to prove or disprove a concept before you put more time and resources into it.

And you should never stop doing this, no matter how much you think you’ve worked it all out or how successful your business gets.  Trends change, new products enter the market, consumer behaviour evolves, new problems need to be solved.  And as your business gets bigger, that just gives you access to more resources to be able to test the next thing even quicker: to roll out a new feature, to test a new recipe or try a pop-up in a new location to learn about what kind of customers you would attract in that area instead and if they are different to the ones you attract now.  Fail fast, fail cheap, learn, change and test again.

So if you’re in the position where you’re getting everything ready, where you’re trying to make it all perfect before you launch, then recognise that’s just a delaying tactic.  Don’t wait until it’s perfect because, at the moment, you’re probably just making it perfect for yourself not your customer.  Skip a few steps, get it out now and use what you learn to make it better.

Let’s have a bullet point recap of what we’ve just covered in this article:

  1. It’s very unlikely that your first ideas will work out like you think they will.  Remember that any decisions you make before you get your product in the hands of a customer is just a guess.

  2. Almost every successful business you see is a result of a string of failures and missteps where the business owners were trying to work it all out.  Make it a habit to listen to honest founder stories, such as on NPR’s How I Built This, and it will make you view how most businesses are built in a whole new light!

  3. As Chris Kong from Better Nature Tempeh said: the goal of any entrepreneur should be to try and kill their idea as soon as possible.  Why spend three or five years of your life on something that is destined to be a dead-end?  Prove a concept before you put your time, energy and money into it.

  4. Embrace the idea of an MVP or a minimum viable product. Take a prototype of your product to a market and see if you can sell it there first before you build a website for it.  Do a pop-up shop to see what kind of customers you attract before signing a lease on a store.  See if you can get people to a free online seminar for a topic before you sink a couple of months into creating that online course.

  5. Doing this means you also have to keep an open mind about what your business might become.  The huge success that will allow your business to make a real impact in the world might be found in a tangent to what you are doing now.

  6. Each time something doesn’t work out the way you thought it would embrace it as a learning opportunity.  Be glad that you found that out quickly and cheaply instead of dragging it out over several years and investing thousands of pounds into something that wasn’t going to work! 

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