The Idea Test
Hypothesis testing is a way of testing new ideas against your strategy, objectives and context. Before running away with a brilliant new idea, it needs to be checked to see how good it really is and how well it fits with who you are and what you do.
There are three filters for your investment decision to pass through or fail:
1. First filter – test the Hypothesis against the context to see if it’s relevant and feasible.
2. Second filter – test the Objective against the benefits and detriments to see if it is desirable.
3. Third filter – test the Goal against the Plan to prove it is a worthwhile use of resources.
To begin with, you have to set the scene, to understand the context in which you operate. What’s your business environment, customers, suppliers, competitors? What’s your Vision and Mission, your raison d’être?
Then you can choose to change. Have a new idea, set a Base Hypothesis, “Why don’t we…?” “Wouldn’t it be good if…?”
Test the Hypothesis against the context to see if it’s relevant, appropriate and feasible. Will it be good for your business? Do you have the capacity and capability to do it? Are you comfortable that it fits with the sort of people you are?
Next, turn the Hypothesis into an Objective. Go from, “Why don’t we do X?” to, “We will do X because…” The ‘because’ is vital, even if it’s implicit. The purpose behind any course of action has a direct and significant effect on the way it is undertaken. The same applies for any project, the ends affect the means and ways. Multiple objectives twist individual priorities and break down any common purpose. That’s when conflicting objectives throw a spanner in the works. That’s why a few, clear objectives are crucial.
You have an objective, a result with a significant and agreed purpose. The next step is to establish the benefits. Use a Benefits Map to plot the cause – effect links. Most ‘Benefits’ you will see aren’t benefits at all. So what is a benefit?
A benefit is a result that a stakeholder perceives to be of value
A benefit needs a stakeholder, someone has to see its merit. “What’s in it for me?” is a subjective judgement. Get away from features and outcomes. It’s got to be perceived as being valuable; improving sales, reducing complaints, stopping costly processes, not improving network performance, reducing down-time and stopping legacy systems.
Test the Objective against the optimised package of benefits and detriments. Different stakeholders want different things. Work out who you are doing it for and what they perceive as being valuable. Who are the key ones who have a significant influence on the project? What business changes will they make for the project to be successful? “What’s in it for them?” How committed to success will they be and where do we want them to be? Are the benefits appropriate? “We’re doing this because it brings substantial benefit to the right people”.
Now you have a good feel for what you want, plan to realise the Ends (Objective, Benefits, Outcomes) through the best use of Ways and Means. This is where the Benefits Map comes in. Mapping makes the links and dependencies clearer than tables in a business case.
Test the benefits against the costs. Is the cost (money, time, stress, lost opportunities) outweighed by the benefits? Will your Big Idea add value?
When your idea has passed through the three filters you know that it is:
• Appropriate – it’s the right thing to do
• Feasible – the effort required is manageable and within your capabilities
• Worthwhile – benefits outweigh the costs and satisfy the people you want to keep happy, (including you)
You’ve got the makings of a good idea and the start of a successful business case. Then all you have to do is plan, implement, manage, etc.