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4 approaches to track your assumptions, when starting to work on a new business idea

October 23, 2019 by LaunchTomorrow 1 Comment

In The Origin and Evolution of New Businesses, Amar Bhide reported that 2/3 of the Inc 500 company founders he interviews pivoted away from their original concept:
More that one third of the Inc 500 founders we interviewed significantly altered their initial concepts, and another third reported moderate changes.
In other words, it’s best to assume that you will be wrong about something when launching a new product, and make sure you have the option to pivot. Usually this happens once you collect data or information that challenges your assumptions.
In practice, assumptions are beliefs that you have which must be true for your new business venture to work. Usually, when you are starting out you make hundreds of assumptions, simply to get going. To start making progress despite the uncertainty.

Identifying the riskiest assumptions is an excellent use of your time up front. Much better than building technology (which is where almost everyone wants to start). All that said, it doesn’t really matter how you keep track of this or think about it. Just that you actually do it.

Economic impact of risk factors

In How to Measure Anything, Douglass Hubbard analyzed variables that had potential economic impact on the success of an IT project in established companies. By economic impact, these are random occurrences which could happen with significant negative variability. They would be realized as an unexpected cost. These risk factors included things like: initial development costs, adoption rate, productivity improvement, revenue growth and so on.

Filed Under: metrics

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Trackbacks

  1. Why new tech products usually stumble, and how to prevent it at your company says:
    November 21, 2019 at 11:58 am

    […] budgets need to be large to show a big company takes a new initiative seriously, be aware that you aren't likely to be 100% right straight out of the gate. Amar Bhide reported that 2/3 of the Inc 500 company founders he interviews […]

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