Startup Library

Iterative Problem Solving: Hypothesis Testing and Experimentation

The core idea of the Lean Startup movement is to validate your business ideas with customer experiments/tests before scaling them. Strategyzer (founded by Alexander Osterwalder who came up with the Business Model Canvas) came up with a simple tool to better design those experiments/tests, because they weren’t good at it in the early days of Strategyzer. Watch the video in this post to learn about the Test Card.

As startup founders, we need talk to customers a lot and continuously conduct experiments before we launch something new. In the early days, even when you talk to tons of customers, you may not learn as much as you should because you can easily find yourself all over the place, not focused and pulled in many directions. That’s why you need the Test Card to help you and your team stay focused on keeping the MAIN thingm the MAIN thing and always working to validate the riskiest assumption your making on your business today.

Basically the Test Card forces you to make the following things explicit:

  1. What needs to be true for your idea(s) to work (aka hypothesis, assumption, or simply guess)?
  2. How are you going to test if that hypothesis is true or false?
  3. What are you going to measure to (in)validate your hypothesis?
  4. How does success look like? What’s the threshold?

Once you get out and execute your test, you leverage the Learning Card to capture the insights and learnings.

The Learning Card forces you explicitly articulate:

  1. Which hypotheses you went out to test
  2. What you observed, discovered, or learned in the field
  3. What you deduct from from those observations (i.e. the insights you gained from the experiment)
  4. How you’ll act upon this learning (e.g. to improve your business model and value proposition ideas)

Of course you’ll need to design and execute many, many Test Cards to validate an idea.

Watch the video below from Strategyzer’s online course on Value Proposition Design in which they explain the Test Card and Learning Card.