MBA1193 Guest Teacher: Steve Glaveski- How to do Rapid Experimentation

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Hey guys, Steve Gloveski here. Thanks for joining me. The late Stephen Hawking famously said intelligence is the ability, ability to adapt to change. Evolutionary biology teaches us that people who adapt to changing circumstances succeed in passing on their genes. And it's no different for entrepreneurs and companies that are navigating the fast changing landscape they find themselves in today. As a startup founder, solopreneur or small business owner, your resources are likely to be scarce. So being diligent about how you spend your time and money is paramount. I just know this will work or I think this is a good idea. And statements to that effect are famous last words for many a failed entrepreneur. Former World Series of Poker champion Annie Duke knows a thing or two about making good decisions. And in her best selling book, Thinking in Bets, she says that your intuition is generally not being challenged by people who think that another answer might be right because it's generally just running on its own, so so it's not held accountable. Complementing what you think with customer driven data and real world opinions is an absolute must in a world where technologies, business models and customer habits are changing fast. The assumptions underpinning our proposed ideas, business models, marketing strategies, and so on are likely to be flawed. Now, if you're listening to this show, you're probably not the type of person that likes to jump to conclusions, waste time and money, and gloat that you're crazy busy. You're serious about making the most of your time and creating impact with a product. That makes money not only today, but well into the future. And to do that, you'll need to become adept at experimentation. If it's a business idea you're experimenting with, you might like to use a tool like Ash Moria's Lean Canvas. Or simply ask yourself questions such as, what's the problem you're solving? How does your solution solve this problem? Who will use your product? Which channels will you use to get the product into the customer's hands? How will you promote your offer? What will it cost to do all of this? How will you make more money than you spend? Answering such questions will give you a better feel for what your make or break assumptions are. For example, take Uber's business model and backtrack to 2009. Uber had a number of assumptions that underpinned its success. For example, people will use smartphones and have access to the Internet. They'll be happy to pay through their phones, or they prefer not to use taxis, and so on. But there is one leap of faith assumption underpinning Uber's success above all else. Trust. Trust that the person picking me up isn't a serial killer, or that the person I'm picking up isn't going to pull a 1960s Robert De Niro Mafioso inspired move from the backseat. Without trust, Uber's entire business model falls down faster than Apollo Creed in Rocky 4. When it comes to determining your make or break assumptions, it's it's easy to overdo it. Don't limit your assumptions to those that have the greatest impact. Avoid paralysis by analysis. Focus on the riskiest assumptions only, and focus on what you don't know. Instead of falling into the trap of confirming what you already do know, you'll then want to prioritize your assumptions, so test the most important ones first. How first, determine A how impactful the assumption will be out of 10 if it turns out to be true or false, with 10 being high impact. Next, determine B how certain you are that the assumption is true out of 10, with 10 being absolutely positive. Finally, determine C. Is this something that matters today that you can test today, or is it a consideration for the future? Write this out of five, with five being future oriented and one being today. Once you've determined A, B and C, simply divide A by B and divide the result by C to get to D. The higher D is, the higher the priority. This forces you to not only focus on the most impactful assumptions, but also on those that you can actually test today. For example, if I rated an assumption 8 for impact 4 for certainty and 1 for time. The result would be simply 8 divided by 4 equals 2. I then take that 2 and divide it by time, which was 1 and end up with 2. I know what you're thinking. I'd love to see a visual Steve and I've got you. Just head over to www.employeetooentrepreneur.IO assumptions for a visual representation of this. Once you've prioritized your assumptions, you'll want to then determine how you'll test your assumptions with some form of prototype. Prototypes help you separate fact from fiction as quickly, cheaply and effectively as possible. You want to avoid your own New Coke moment and not invest bags of money and time on ideas grounded in untested assumptions. You've heard of roi, right? Well, you want to again prioritize your choice of prototype based on something I call loi. What's the L stand for? Learning. And the equation is simple. How likely am I to get the learning I need by using this Prototype out of 10 divided by what's the cost in terms of time and money out of 10? For example, I'd rate a simple Facebook ad used to test an idea very low, but a functional prototype developed using PHP with offshore developers much higher. Again, you'll want to prioritize by the higher resulting number, as this is where you're more likely to get the value you're after. Strategy in the business game shares so much with sports and military strategy. What's key is shortening your feedback loop by increasing the rate at which you test, learn, and adapt to changing circumstances on the battlefield. Effective prototyping helps you do that. So what might some prototypes be? 1. Targeted ads on Facebook, Google, LinkedIn, or any similar platform can help you to quickly attract target customers and determine based on click rate how compelling Your offer is. 2. Landing Pages when someone clicks on your ad, they hit your landing page. Or you can use Facebook's built in lead collection tool. Again, you want to determine what percentage of people clicking through to your site are signing up to your early offer. 33 Concierge Prototypes Think Zappos, the online shoe company acquired by Amazon in 2017 for US$850 million. When they started out, they had an online store with a range of shoes available. But when a customer bought something, they literally went down to the local shoe store, bought the shoes, packaged them up, and sent them off themselves. They didn't own any inventory or have a legitimate supply chain. They were purely testing genuine customer appetite in one of the cheapest, best and quickest ways possible.

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An explainer video When Dropbox was getting started, they developed a smoke and mirrors video demonstrating what Dropbox would do and posted this on popular online communities where their target audience was hanging out. Literally overnight, Dropbox earned itself 60,000 signups and the rest is history. Search for Dropbox explainer video on YouTube and watch the four minute video and five LinkedIn and email outreach Today you can use countless growth hacking tools to automate your identification of and outreach to target customers. You can leverage tools that automate messaging, say target executives on LinkedIn in order to introduce them to your offer. Engage interest based on the number of people who accept and respond to your inquiry. Just don't start your message with we are a web development and SEO company. Always make it about them. You can check out tools like Mixmax for email or Linked Helper for LinkedIn to help you with this. Other prototypes you might want to look up include mobile app prototypes, wireframes, crowdfunding platforms, 3D printed prototypes, paper prototypes, and email marketing prototypes. You'll want to get your prototypes in front of people using myriad marketing channels, whether they be content marketing, social media, email, online forums, direct outreach, or any number of marketing and growth hacking strategies. Gabrielle Weinberg's book Traction provides 18 marketing channels that you should consider when it comes to not only getting your product in the customer's hands, but in this case, getting your prototype in the customer's hands so you can learn fast. Finally, as famed management thinker Peter Drucker said, if you can measure it, you can manage it. How do you define whether a test was successful or not? How do you interpret the results of customer interactions with your prototype? To do this, you can use industry benchmarks or or in some case, you might be able to quantify the number yourself based on what your financial objectives are. For example, if I'm testing a marketing channel and it's costing me $100 to acquire a customer, but each customer is only worth $50 to me, then I might want to reconsider. If I'm targeting 50% margins, then success would mean a cost of customer acquisition of $25. If I'm selling a product worth$37.50. The nature of rapid experimentation is best encapsulated in a story from the Korean War where the United states had inferior F86 fighter planes while the North Korean fighters had Soviet issue MIGs. On paper, the MIGs were superior to the F86s and should have wiped the skies clean of them, but they didn't. Top Gun Naval Fighter Weapon School training Aside, there were two key reasons for this. First, the MiG pilots had limited vision. The F86s featured a relatively clear bubble canopy, unlike the MiGs with their peens and struts. Second, the MiG's throttle was only semi hydraulic and required lots of physical exertion to control. Pilots had to do weights in order to control the throttle, whereas the F86 throttle was fully hydraulic and therefore allowed pilots to transition faster between maneuvers. The outcome was that the American pilots had a much shorter feedback loop and as a result, they were able to decide and act on that information in the sky faster thanks to their fully hydraulic throttle and their 360 degree vision. When it comes to testing new business ideas or testing new ideas for your existing business, be the F86 well, that's it for my guest lesson. I hope you enjoyed it. I've packed insights like these and many, many more into my brand new book, Employee to Entrepreneur, how to Earn your Freedom and do Work that Matters, which hit bookstores globally on January 9th. To download your absolutely free book Bonus bundle, which includes a treasure trove of techniques and tools to help you ramp up your productivity, build your sales pipeline and radically increase your chances of success, visit www.employeetoentrepreneur.IO. it's been super fun hanging out with you all on the $100 MBA show. Back to you Omar.

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What a great, great lesson by Steve Glovesky. Thank you so much for that awesome, awesome lesson by Steve Glovesky. He is right on the money when he says you have to experiment and you have to do this quickly. But I love the fact that he emphasizes you have to actually measure what's happening during your experiments. You have to take note. And I love that quote, of course, by Peter Drucker that says what gets measured, gets managed. Right? It gets actually improved, gets better. Right? You want to make sure that your businesses get better and that you get a better result when you try to experiment. Hey, you're trying something new out. So you want to see if this new way of doing things is going to improve it, improve your product, improve your service, improve your procedures, improve your landing pages, whatever it is. But if you don't measure, if you don't have a way to keep track of what has happened and the change that has occurred, then you're really, really just wasting time. I mean, just jotting down some notes every time you do an experiment is going to make a huge difference. Let me give you a quick example. I run a lot of webinars at Webinar Ninja because that's what we do. We do workshops and we give demos. And for the longest time I was doing a workshop on how to create your own webinar. And then I would make an offer for our product. At the end I would tweak and change and experiment with this actual webinar. But then I realized maybe I need to change the whole webinar topic and just make it purely a demo. People want to see this software in action, what it could do. When I switched to that, the engagement on the webinar just blew up. It became amazing. I note down how many chat messages was I getting in that webinar versus the old webinars? The attendance rate, the conversion rate from attendees to buyers. Through the experiment, I realized, hey, maybe when it comes to the content, how to actually build a webinar and the actual workshop, I can create a course for that. And that's what we call our webinar blueprint. We have a course, a seven day course that you can check out@webinarninja.com course. So people can consume that on their own time. But the live webinars, I can just focus on the actual software. That's what people actually want. But I would never know that if I didn't experiment, if I didn't try different things and take note of the differences, take note of what has changed, what has improved, what didn't improve. So I can make an educated decision. Thanks again. Steve for that amazing, amazing lesson. And don't forget to pick up Steve Glovesky's book Employee to Entrepreneur. Thank you so much for listening to the $100 NBA show. Don't forget to hit subscribe on whatever you like to use to listen to podcasts. Whether it's Stitcher Radio, Spotify, Apple Podcasts, Google Play, Overcast. We're on them all. By hitting subscribe, you get our episodes automatically downloaded to your device so you never miss a beat. It's ready for you when you're ready to listen. Before I go, I want to leave you with this. Nothing changes when you do the same thing. This is a hard lesson I've learned over and over and over. In business. If you don't experiment, if you don't try different things, you're not going to get different results. If you're looking for massive growth, that's just not going to happen by accident. You have to do different things. You're not just not going to stumble upon it. You have to try and experiment and see what works. All right, I'll check you in tomorrow's episode. I'll see you then. Take care.

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