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How to Prototype a New Business

“What assumptions have to be true for this business to work?

–Joe Gerber, IDEO CoLab Managing Director

In our Creative Confidence series chat with IDEO CoLab Co-Managing Director Joe Gerber, we explored the world of business prototyping. In his early days as a Business Designer at IDEO, Joe noticed that experimenting and prototyping were an essential part of IDEO’s process and became curious about prototyping something complicated and abstract like a business. Applying the design approach and philosophy to new business ventures with techniques like prototyping creates a clearer path forward. 

Here are a few highlights from Joe and Suz’s discussion on prototyping new businesses. To go deeper, our course From Ideas to Action offers an introduction to creating lightweight experiments or prototypes.

Prototype Your Business

When prototyping a business, start by asking the right questions. Determine what assumptions have to be true for this business to work and design experiments to test your assumptions.

For example, PillPack—a full-service online pharmacy that delivers your daily prescriptions in easy-to-use packages—wanted to test pricing and value propositions. They branded a kiosk in a mall where the CEO talked with potential customers. While online prototypes can be great, this instance of live prototyping allowed the team to learn directly from prospective customers, have conversations, ask follow-up questions, and get real-time feedback about the business. We call this a “lemonade stand” prototype.

“Lemonade stand” prototypes are a great way to get direct customer feedback about your business and answer questions around your value proposition assumptions.

PillPack's "lemonade stand" prototype

Question Desirability, Viability, and Feasibility  

One tricky and exciting thing about building a business is that to succeed, all the pieces have to work in harmony—the value proposition, pricing, financial model, etc—so often you’re testing how these different pieces work together. Joe and CoLab use the three IDEO circles: desirability, feasibility, and viability to guide what questions they’re going to test.

Desirability

What’s the unique value proposition? Do people want this product or service? Does it make sense for them?

Viability

Can we build a sustainable business? What has to be true for this business to work? What are the costs? How will you pay for it?

Feasibility

Does this work? Is it functionally possible in the foreseeable future?

Prioritize Your Assumptions

Create a long list of questions with desirability, viability, and feasibility in mind. Try to prioritize assumptions. Which questions are dependent on an answer from the other questions? Have conversations to determine what needs to be true for your business to be a desirable, viable, and feasible endeavor.

Business Prototyping Resources

Here are some tools that Joe, CoLab, and other IDEOers use for prototyping new ventures:

Nerding Out

CoLab prototyped an internet-connected solar panel that generates renewable energy credits that can be sold on carbon markets. They’re now working with CoLab member Nasdaq to move forward a pilot with a major solar field.

CoLab's internet-connected solar panel

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Learn the mindsets and methods behind moving your business from ideation to prototyping and iterating in our From Ideas to Action online course. 

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