Thursday, July 27, 2017

No Validation? No Project!

Project Business Case Validation
For large or high risk projects (what is large depends on your organization) it should be mandatory to do business case validation before you dive head on in executing the project. In the Project Portfolio Funnel of the Agile Project Portfolio Management Framework you will see a phase that is called "Validation" after selection of a project has taken place. In this phase you typically have a business case validation and/or a technical validation in the form of a proof of concept. This article will be about the project's business case validation.

Project portfolio management is about doing the right projects. And as Peter Drucker has said many times:

Nothing is less productive than to make more efficient what should not be done at all.


Jon Lay and Zsolt Kocsmárszky from Hanno have defined a process for lean product validation at https://leanvalidation.hanno.co/. I used their process as a base for business case validation for projects.

We will distinct between four different kind of validations. Depending on the project that you want to validate the business case for you do only one, two, three or all four of them. When your project is about launching a new product or service I would advise to do all four validations before executing the project. The results of these validations form your business case validation. Or the opposite of course, they can show you that you should not do this project as well.

1. Validate the problem: Is this a problem worth solving? If users don’t think this is a Major problem, your solution won’t be appealing.

2. Validate the market: Some users might agree that this is a problem worth solving. But are there enough of them to make up a market for your product or service?

3. Validate the product/service/solution: The problem might exist, but does your product/service/solution actually solve it?

4. Validate the willingness to pay: there might be market demand and a great product or service. But will people actually be willing to reach into their wallets and pay for it?

As you can see these validations focus on the introduction of a new product or service for your clients. But you can easily reframe them for all of your projects. Your market can be your employees instead of customers. For example when you think about implementing a new CRM, but only a very small but vocal number of users see the benefit of it, and are actually quite happy with what they currently have your market is too small. Or how about the willingness to pay for the accounting department for a new solution that triples the yearly operational costs?

You can decide per project which validations make sense, and what row order makes sense. For example in some cases it can be much harder to build a prototype (to validate the product or service) than it would be to build a landing page (to validate market demand).

But by working through these validations, you’re sure to receive heaps of feedback from potential users and stakeholders. With this deeper understanding, you might realize that it makes no sense to do this project, or you might realize there’s a bigger opportunity to tackle. In this case, you should feel free to pivot your project idea!

Validate the problem

No matter how confident you are in the project idea, you first need to figure out whether the problem is a real one that needs solving. To do this, your best option is to talk to potential users and stakeholders directly. The focus here is on getting qualitative validation of the project idea.

First, you start with a small number of properly sampled, representative users and verify that the problem exists for them. Then, you optimize and verify this later on with more users and at greater scale. Have a look at our artcile about jobs to be done on how to frame and discuss the problem with users.

The learning you take from these interviews will give you the confidence you need to move the idea forward. Or it’ll show you that you need to pivot the idea as you learn more about the real underlying Problems.

Validate the market

Once you’ve spoken with users and validated that the problem exists, you need to make sure the market is large enough to justify taking the idea further. Where will your users come from, and how much potential revenue or savings lies in the market opportunity? In other words, what is the potential value of the project.

By gathering as much information as you can about the potential market, you’ll be able to make an educated guess as to the size of your target audience and the number of customers you can acquire. It will also help you to figure out a possible pricing structure for the product or service, which will be valuable as you start to make other financial projections.

Here are a couple of tools you might use to validate the market for your product or service:

- Google Trends allows you to compare the relative volume of search terms. It shows you how demand for each term has changed over the last 12 months.

- Google AdWords’ Keyword Planner reveals the average monthly searches for a given keyword. It also gives you an estimate for competitors and suggested bids. Using this data, you can estimate how much traffic you can drive to your website using Google AdWords paid ads or by reaching the top of search engine results.

- Deep competitor research enables you to understand how your future competitors are trying to solve the same problem. If you’re focusing on a small market, finding just one competitor might be enough. But if you’re focusing on a bigger market, search for more, at least three. Besides searching for direct competitors, look up those that offer similar products and solutions. Then, find out as much as possible about them. Crawl their profiles, read their blogs, look for media coverage. Learn about the size of their team, pricing structure, finances and product features.

If you can’t find any competitors, then most likely you’ve either missed something in your research or you’re working on a problem that doesn’t really exist. There’s an exception, however. If you’re starting up a very small niche business, there’s a chance you don’t have any competition… yet.

Another area to look at when conducting competitor analysis is companies that might attempt to move quickly into a new product or service area when competition arises in their market. While this isn’t of immediate concern, it pays to roughly identify fast followers who might step up to offer a similar product to yours to win the market. This will help you to prepare and come up with a plan to handle the situation should it arise.

Validate the product or service

There’s only one way to make sure your product or service solves the problem you’re focusing on: to get your hands dirty and build a prototype. It doesn’t matter if you don’t have much technical experience, you don’t need an engineer to build a great prototype. Instead of choosing expensive and time-consuming prototyping techniques, keep things lean.

Once you’ve built the prototype, you’ll begin to run tests with users to gather feedback and learn from them as much as possible. Finding people around you to be test subjects is a great starting point. Ideally, look for users in your target audience. However, in the very earliest stages of testing, you can get useful feedback just by grabbing people around you and running simple tests.

Once you learn more from these quick tests and potentially iterate on your product or service, taking into account the feedback you gather, you can move on to more structured tests with your target audience.

The goal of product/service validation, whether remote or in person, is to make sure that your product or service is solving the right problem in the most effective way. It’s highly unlikely that you’ll manage to do this perfectly the first time around — but that’s perfectly fine! Iterations, tweaks and pivots are a natural part of the product validation process and are one of the reasons why prototyping is such a valuable technique.

Validate the willingness to pay

There are many ways to validate willingness to pay, but one of the big challenges is that we can’t necessarily trust people’s words. We all know those people who say “Of course, I’d totally buy that!” but who then drop out when the time comes to commit. As far as possible, we want to get people to put money behind their words.

A single-page website is already adequate for validation, especially as a first step. But if you want to gradually iterate and add more pages and content to increase fidelity and learn more, that’s an option, too.If you have the technical resources you could design and code this yourself, but most companies are better off using a template website builder. You’ll want to include following elements in your simple website:

- Explain what your product or service does, clearly and concisely.

- Highlight the product or service’s unique selling points.

- Address any key concerns that users had during testing. If they were worried about security, performance or comfort, explain your solution.

- Add a direct call to action to bring users to the checkout and payment part of the website. This should be clear and unequivocal — something like “Buy now for $99!” or "Sign up for early access!".

- Make sure the payment page has an email collection form, so that you can gather the addresses of prospective customers.

- Instead of confirming the user’s order, you should show them a “Sorry” page that explains why you’re conducting the experiment. This way, they won’t have false expectations about receiving the product.

- Run analytics on the website to track how people are interacting with it. Google Analytics is simple and free.

Once the validation website is up and running, you’ll need to drive traffic to it. Be a little cautious about doing this within your network of long time clients and colleauges. You don’t want to fall into the trap of collecting false positives, people who sign up just because they know you personally. The best technique for bringing unbiased traffic to a validation website is to spend some money on Facebook Ads or on a simple Google AdWords campaign.

Facebook and Google AdWords have robust targeting possibilities that let you showcase your solution to the right audience, which you would have identified in the “Validate the problem” phase. You can also further optimize your ad by factoring in data from your initial ads, such as number of clicks, likes and shares received and the location of people engaging with it. Getting started with an ad campaign on Facebook or Google AdWords is pretty straightforward.

What’s next?

Even if you validate your project's business case, your project isn’t guaranteed to succeed. The process of validation is just the start. But if you’ve worked through the relevant validations, you’ll be in a far better position to judge if you should stop, continue or change your project.

The goal of the validation phase is to delay the expensive and time-consuming work of projects as late as possible in the process. It’s the best way to keep yourself focused, to minimize costs and to maximize your chance of a successful project.
Posted on Thursday, July 27, 2017 by Henrico Dolfing

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