Taking an idea and creating new revenue from it doesn’t come with a road map. However, there are best practices that can improve your odds for success. We’ve already discussed two of these here on the blog: value exchange and understanding users.
Let’s explore another critical element in developing your unique concept into revenue with custom software: Validating an Idea.
Where do I start when looking to validate my business idea and see if it’s a good fit for custom software?
Many people would tell you the answer is to start with Product Development — a practice where your focus is primarily on the product. The designer and/or product owner often act as auteurs who draw on inspiration and experience to define what the product does and how it should work.
Product development is not only an old practice, but it is also comfortable for many. While it can work well in a lot of cases, it does have shortcomings. It fails to ensure there is a customer. It focuses primarily on execution, with learning and discovery taking a back seat. This leads to long feedback loops and expensive mistakes.
So, if I don’t start with product development, where should I start?
The entire purpose of your new idea comes down to the people that are using your new idea, product or service like we talked about when discussing how to understand users. Wouldn’t it make sense to start with the customer then?
Customer Development is the First Step Towards a Custom Software Solution
Customer Development has four steps, grouped in pairs. The first two form a search phase — for a business model. During the customer discovery step, you look for customers and seek to understand their problems. In the second, you propose a solution to see if the customers buy it. If they do, you have a product that fits the market. If you don’t, you make changes (i.e. pivot) to reflect what you have learned and try again. Once you have product-market fit, you move on to the execution phase where you create customers (e.g. through advertising) and scale your company.
All of this requires a discipline of continually stating and testing assumptions. While you’ll do research, of course, much of this is simply hypothesizing about potential problems and the solution that you feel could meet the customer’s needs. This leads to the Build-Measure-Learn cycle.
Using the Build-Measure-Learn Cycle for Custom Software
This cycle, inspired by the scientific method, is extremely useful in fleshing out your idea, understanding your customers, and determining if custom software could be a good fit.
Build: Form a hypothesis based on one of your assumptions. For example, if you believe your product or service is difficult to appreciate without experience, you might hypothesize “if I offer a free trial, I will end up with more paying customers than I would if I require them to pay up front.” Once you have a hypothesis, build something to test it. In the earliest stages of exploration, these tests can be done with off the shelf software or even simple conversations. Later, you may require custom software to make forward progress.
Measure: A well-constructed hypothesis and experiment will produce unambiguous answers to your questions. After the experiment is run, you measure the results and compare them to your assumptions.
Learn: Reflect on what you’ve learned to date. Decide what you need to learn to move forward. What do you need to know about your customers? What are their problems? What do you need to explore further to see if your idea is going to meet their needs?
Repeat: The Build-Measure-Learn cycle is one you’ll run over and over again. The chances for success increase the faster you can make this cycle go.
More Work Up Front Leads to More Effective Solutions
Taking an idea from just a concept to actual revenue starts with Customer Development and testing the assumptions you have about those potential customers. When you do the leg work up front to understand your users, you’re not only validating your own idea but in turn, creating a better product. If you’d like to learn more about how you can turn your idea into revenue with custom software, then register for our free webinar.