Are you able to validate digital innovation?

These days when entrepreneurship is in fashion and disruption is the new goal of every entrepreneur, I write to ask if you have what it takes to walk down the path of validation.

One of the most challenging phases of digital innovation is the validation phase, where the famous Product-Solution-Fit and then the Product-Market-Fit must be achieved. This is the moment when you take the long-awaited solution to be analyzed by the users and the market.

Resilience and detachment

A famous quote, attributed to Peter Drucker, is that “culture eats strategy for breakfast”. I actually think it is a feast, and one of the diners is the market. By this, I mean that your strategy, on paper, is worthless; it is just a set of hypotheses. Moreover, the more innovative the business, obviously, the more uncertain the chances.

Of course, it makes sense to sketch out strategies, come up with ideas and create business models. However, you need to be fully aware that these constructions are temporary, meant to be modified, improved, and rebuilt. The term to pivot is not just a trendy term; it is a tool to be used. The Lean Startup, by Eric Ries, was not written to decorate bookshelves, but to remind us to test hypotheses.

Then comes the need for detachment: throughout your path in building a digital innovation, it is not possible to keep attached to an initial idea or to a specific business model even after research, tests, and the market show signs that it does not work. Believe me, the journey between idea and Product-Market-Fit is not an easy or short one. It is full of doubts, full of difficult decisions, and even some confusing signs. These fits are not binary; they are not simple questions answered with “yes” or “no”. They are a learning process that requires a lot of interaction with people.

It is necessary to be resilient in order to get through this phase of uncertainty. Knowing that it might not work right away and be prepared to spend months in validation cycles. It is always helpful to remember: the more innovative, the more uncertain. So if you are looking for disruption, be prepared for long periods of experimentation and validation.

Financial Control

An important matter for surviving these long periods is financial control. This means knowing what your cash burn rate is (the speed with which you will invest), and thus optimize the use of money. It doesn’t matter if it comes from bootstrapping, from investors, or from the company that is trying to create a new innovative business. The validation phase is a marathon, not a sprint!

The worst scenario, one that I’ve witnessed several times, is when the entrepreneur doesn’t let go of his initial ideas and doesn’t see the marathon. In these cases, what happens is not wanting to do research, not wanting to carry out experiments, wanting to build “the complete product” right away. However, in this complete product mentality, the entrepreneur is financially organized to run a sprint, not a marathon.

The entrepreneur spends all the time and money he has building a dream and there is nothing left for the validation cycles. It’s like betting all your chips on a single move – the risk of this strategy is very high. For this reason, I believe that the exercise of making financial projections for the validation stage, although full of doubts, is one of the best ways to develop this detachment mentality and convince yourself that it is important to start testing and learning right away.

Ears to hear, eyes to see

I mentioned earlier that the validation phase is a path of uncertainty. It turns out that human beings do not live well with uncertainty. We are programmed to find patterns, and over evolution, we develop cognitive biases. When undertaking, confirmation and anchoring biases come into play, which can prevent us from seeing clearly.

I recently heard from an entrepreneur: my product is wonderful, it’s great, I feel it in my heart. I know that, for years, we’ve been taught that the entrepreneur needs to be very self-confident, needs to believe when no one else does. Well, let me say it is useless to subvert self-confidence into an illusion.

In the validation phase, you need to be careful, have ears to hear and eyes to see to absorb the numbers, listen to feedback, filter out biases, and separate vanity metrics from real indicators. You can’t focus on the number of likes on social media and ignore conversion funnels full of holes.

Integration and knowledge

Focusing on vanity metrics can be the result of a confirmation bias, but it also happens when integration is lacking. In spite of a startup or spin-off being a small organization, there is still the risk of communication not flowing and an integrated strategy not being built.

There is a lot of information being collected in the validation phase. The product is like an airplane full of sensors. There are usage metrics, attribution metrics, funnels, and retention metrics. There are user tests, feedback, interviews. There are perceptions and opinions.

All this information needs to circulate, needs to be known, digested, discussed by the team as a whole. If there is a sales effort, if someone is working in an online presence, if there are people in the operation, if there are people supporting them: everyone needs to be aware that the current phase is one of validation.

It should be clear to the team what we are now testing and what we want to learn from it. It is necessary for the team to be aware that no local efficiency metrics matter at this stage.

In fact, speaking of awareness and information sharing, there is no way to cross this phase without relying on knowledge. A classic fallacy of entrepreneurship is the importance of intuition. Entrepreneurship is not intuition, it is strategy, and a well-informed strategy is better.

The larger the repertoire, the greater the preparation

Thus, to carry out the validation phase, it is important to learn about how to measure, how to evaluate, how to obtain data and feedback, how to interpret them, and what to do with them. This does not mean that you will find ready-made recipes: the validation of a product is in the universe of complex problems, so it is empirical in nature. Nevertheless, even if there is no map ready for your path, there are familiar tools that can help you see your way, and past experiences can help you learn how to read terrain patterns.

The suggestion is to learn about product discovery, product management, product marketing, and all the techniques and tools that these subjects bring. Alternatively, count on the support of specialists, people who already have experience and some tools at their disposal.

Furthermore, learn about innovation and strategy. You can join the startup community in your region, attend lectures by entrepreneurs or leading theorists, read articles and books by those who study innovation and strategy. You won’t get ready-made solutions: you can’t simply copy the experience of others, because in the domain of complexity, a causal relationship is not so simple to be replicated. However, with this study, you can expand your repertoire of strategic options and be more prepared to respond to situations that will arise during validation.

From idea to business

I conclude knowing that this article is not complete, that it does not exhaust the list of concerns and skills needed for the validation phase. Even so, I hope that you, an entrepreneur who has come this far in reading, is resilient enough to cross the validation path, able to enter this phase with the detachment necessary to modify your product and have the financial organization to use the investment strategically in research, experiments, and deliveries.

I also hope that you go through this phase really aware and able to read the signs without getting lost in confirmatory biases. That you can engage the entire team that is already with you in the way of thinking necessary for this phase. And that you rely on existing knowledge and tools to read the terrain and draw your own map for product-market-fit. I even dare to say: either this is all done, or it will be just a waste of time and money with a dose of frustration.

Nonetheless, it is worth remembering that all the effort might be worth it. A well-done validation phase is what takes you from an idea to a business. If you can actually validate a solution and achieve fit, you will be creating the story of a successful, innovative, and perhaps even disruptive business.