The idea
The development of a successful new product, service, or business is often the result of lots of learning from lots of failures. The key is to fail fast and fail cheap.
The classic mindset is to try to get a business plan or product 95% right before taking action. This is great in theory, but it rarely works. Why? Because as soon as you ship the product you immediately recognize its fatal flaws. By then, it's often too late to change the packaging, the marketing, or the product itself.
The alternative is to get your idea about 50% right, then let customers tell you what your mistakes are. Listen, learn, get it 50% right, and put your idea through the process again. Keep at it until your customers say, "Wow!" Instead of debating options internally, you'll be making your idea real, taking it to customers, and learning as it fails.
Numbers
The math of fail fast and fail cheap is simple. If it takes six months and $100,000 to take a product from idea to customer reaction, then at best you'll get two cycles in a year. However, if you can do a complete cycle of learning in a week for $1,000, you can get 52 cycles in a year at about half the cost.
Example
You can make an idea real by producing a "looks like" or "works like" prototype and showing it to customers. A "looks like" prototype can be as simple as a fact sheet or a sales letter e-mailed to friends or potential buyers. "Works like" prototypes are demonstrations. They don't have to be pretty. They just need to show the overt benefit you are promising.
The power of a "works like" prototype can be immense. I observed this recently in the boardroom of an industrial products company. A young engineer demonstrated how his prototype could cut the noise level of the company's equipment by 70%. The prototype was made from duct tape and other materials from a hardware store. But it was effective enough to win funding for its development. Thanks to that idea, the company is projecting 20% sales growth this year.
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