EP 89 Testing Business Ideas: How to Validate Before You Build

Episode Summary

In this episode of The Business Book Club, we unpack Testing Business Ideas by David J. Bland and Alexander Osterwalder — a step-by-step field guide to turning uncertain ideas into validated business models. This book isn’t about dreaming up the perfect product—it's about systematically reducing risk through structured experimentation before you waste time, money, or your team’s energy chasing a "hallucination."

We explore the essential framework of testing hypotheses across three types of risk — desirability, feasibility, and viability — and walk through dozens of smart, creative ways to validate your assumptions, from Pinocchio prototypes to mock sales, pop-up stores, and Wizard of Oz experiments.

Whether you're building a startup or launching something new inside an existing business, this playbook gives you the mindset and methods to make better decisions, faster.

Key Concepts Covered 🧠 The Three Core Business Risks

1. Desirability – Do people actually want this?

2. Feasibility – Can we build or deliver it with the resources and tech we have?

3. Viability – Can we make it profitable and scalable?

🎯 Always test in that order — solving a problem no one cares about wastes everything else.

🧪 Hypothesis-Driven Testing

• Turn vague assumptions into specific, testable hypotheses (e.g., “Millennial parents will pay $15/month for science kits”)

• Use the Assumption Map to prioritize: Test the most critical + least validated assumptions first.

🔍 Discovery vs. Validation

• Discovery Tests: Cheap and fast (e.g., Google Trends, competitor observation, Pinocchio prototypes)

• Validation Tests: Require stronger evidence (e.g., mock sales, A/B landing pages, in-person pop-up stores)

🛠️ Experiment Types

• Pinocchio: Fake version of a product you use personally

• Boomerang: Observe customers using a competitor’s product

• Landing Pages: Simple CTAs to test interest (aim for 10–15% conversion)

• Mock Sales: Real pricing page with “buy now” buttons—no payment collected

• Wizard of Oz: Looks automated, but humans are doing the work

• Concierge: Manual delivery with the customer aware it’s not automated

• Tech Spike: Time-boxed code sprint to test technical feasibility

Actionable Takeaways

✅ Follow the Testing Sequence: Start with desirability, then feasibility, and only then tackle viability.
✅ Prioritize the Riskiest Assumptions: Use the assumptions map to identify what could kill your idea.
✅ Use Low-Fidelity Experiments Early: Validate direction with lightweight discovery tests like search trends or Pinocchio.
✅ Raise Your Bar for Evidence: Weak signals like email signups are not enough—use mock sales or in-person tests for stronger validation.
✅ Design for Learning: Every test should lead to a clear decision—pivot, persevere, or kill.
✅ Build a Cross-Functional, Autonomous Team: Dedicated, customer-obsessed teams are faster and more effective.
✅ Avoid Confirmation Bias: Seek evidence that disproves your idea as rigorously as evidence that supports it.

Top Quotes

📌 “A hallucination is an idea that looks amazing on a slide deck but hasn’t faced reality yet.”
📌 “You’re not testing to confirm your idea—you’re testing to decide what to do next.”
📌 “Desirability always comes first. If no one wants it, nothing else matters.”
📌 “Don’t ask what people would do. Ask what they did last week.”
📌 “Learning is the input. Deciding is the output.”

Resources Mentioned

📚 Testing Business Ideas by David J. Bland & Alexander Osterwalder – [Get the book here]

Final Thought

Testing isn't a phase — it's a discipline. The best ideas don’t win by default. They win because someone tested, learned, adapted, and built real evidence every step of the way.

Whether you're in a scrappy startup or leading a team at scale, ask yourself:

What assumption are we acting on today that hasn’t been tested?

If you can’t answer that confidently, start there.

 

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