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Are you in charge of making product decisions in your team? Are you confident enough that you made the right decisions, and are doing the right job?

In today’s article, Riskiest Product Assumptions, we will discuss what this is about including when to identify that you’ve made the right decisions, what defines making the right decisions, and what are the riskiest assumptions.

This article will also cover the following:

What are the riskiest product assumptions?

Have you heard about Riskiest Product Assumptions or also known as the Riskiest Assumption Testing (RAT)? Because of its effectiveness, this is becoming a popular way of testing ideas and validating hypotheses before going to market with a new product or service.

RAT validates and tests the riskiest assumptions of an idea to get a full understanding of what works and what don’t. This way, the interest can be properly gauged, and any crucial changes can be made before the product launch.

RAT also provides a closer look at the market, the idea, and the target customer base, even before the team builds and ships a minimum viable product (MVP).   

The whole concept of RAT is based on the fact that most often, we can believe something without any supporting evidence.

This is called ‘congruence bias’, which is a type of confirmation bias, describing the person’s ability to jump to conclusions and think the person has answered the idea in question. But in reality, this is simply over-relying on the acquired information that has already been presented.

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For startups, the RAT approach is especially valuable since it is always a big challenge to release new product startups. 

Testing the riskiest assumptions means avoiding unnecessary financial costs, including the time required for building a minimum viable product. This strategy reduces possible risks and allows for testing the most controversial assumptions. 

RAT may require additional effort with more planning and strategizing upfront. But this strategy can save us significant amounts of time and money while we move into the building and shipping phases of the design.

What is the difference between MVP and RAT?

As we discussed RAT is what is needed to start with product development, while an MVP is a full-fledged product with several minimal required features. 

While we have already discussed this in the previous section, it is worth noting that the RAT prevents any pains for the UX team in case the product fails.

The same is true with the minimum viable product, which is also a way to test your product and collect feedback, however, more expensive and time-consuming than the riskiest assumption test

We need to understand the “minimum” in MVP, which does not always line up with reality. The tendency with most companies is to add more features to the product than what is needed, just to avoid falling. Nonetheless, when the product fails, this ended up in wasted money.

Everything is more straightforward when it comes to riskiest assumption test. In this method, you test hypotheses related to the product to see how viable the product is. This method does not require investing funds in front-end and back-end development, as well as in the creation of UI and UX. 

Based on these differences, the RAT plays a very important role as it serves as your guide towards any uncertainties when it comes to creating a new product. The risky assumption test is focused on learning.

However, testing the riskiest assumptions is always different as each product development has its particularities, so identification of assumptions is your primary task. 

Why conduct riskiest assumption test

Did you know that 42% of 100 startups failed and did not reach their goal due to a lack of product-market fit? This is based on the survey from CB Insights, which explains that those startups that failed were released to the public without conducting proper research of their market. 

The data shows the need to identify the feasibility of the idea first. This will be followed by the development of a functional product. It is important that you single out the risky assumptions of your idea and test them after.

This is where we need to conduct the riskiest assumption test approach before building an MVP.

We all know how businesses and startups and companies launch a new software product. They usually start with a minimum viable product (MVP).

While this is generally the case, however, we recommend applying the RAT research approach as the key to the very first step.

Compared to starting off with an MVP, the riskiest product assumption tests do not require a lot of effort as you don’t need to create more than what is needed when it comes to testing the most controversial assumption. This approach does not even require writing programming code or building resources for UI/UX design companies. 

Conduct a small test once you have identified what is the riskiest product assumption. Here, you need to test the significant hypothesis of your product feedback.

You will find that in every result, the route to product development becomes more precise and predictable. Step by step, you and your team develop or create confidence in the viability of the product ideas. These lean startup assumptions method may be tested and validate without high costs.

The riskiest product assumptions methodology allows fast learning to get the most valuable empirical experience since testing the riskiest assumptions helps cut off unnecessary components.

So, if the hypothesis is proven successful, you can then proceed and move on to process and check the next one.

In case your hypotheses test fails, you saved resources for the development of a useless product or service.

How to address if the product is viable

We’ve learned that the goal of the riskiest product idea test is to “test” the riskiest assumptions about the product, customer, and even business model solution before even starting to build it.

We have also learned the common mistake of most startups, which often use the minimum viable product (MVP) model first, which begins early by building the product first.

The data provided by CB Insights showed that startup using the MVP model fail in achieving their goal because of the lack of product-market fit.

This is where we learned the importance of RAT. RAT enables the UX team to test whether or not the product or business models are viable, before the launch, to avoid this common pitfall.

From the starting stages of product developments, RAT is recommended to maximize discovery using the learn-measure-build feedback loop.

You can see the common RAT model to include the following steps:

  1. Learn and gather users data through experimentation
  2. Measure the users data collected
  3. Build the product
  4. Learn and gather users data through experimentation
  5. Measure the users data collected
  6. Iterate

For example, the product you want to build is a mobile photo editing mobile app targeting millennials. In the learning process, it is normal to start the project by conducting customer interviews and gathering user data on different use cases or edge cases.

The following questions to answer may include:

  • Is it a known problem for your target customers?
  • Is the market big enough?
  • Is this product something that they could be ready to invest in? If yes, then how much?
  • How does your product become a solution to your target market’s problem?

Through the riskiest product assumption method, you get to test your idea, which in turn determines whether the product meets your target customers’ needs or if it’s better suited for another segment of the market. You may learn that maybe your product can be used to solve a different problem altogether, or maybe there is no fit at all.

The RAT method is all about building the right solution product big enough for your future customers so that your customers want and are willing to pay for it.

Any potential or existing hiccups are addressed before they can happen

Along with customer interviews, testing your riskiest assumptions through an experiment will help you avoid hiccups before they even happen.

Assumptions typically look like this:

Experiments are made to validate existing assumptions and at the same time to make sure that the product provides value to customers, prior to building it out.

Based on the Lean Startup Machine, an effective experiment is composed of these 4 elements:

  1. Hypothesis
  2. Risk assumptions
  3. Methods
  4. Minimum criterion for success

Let us take the image editing mobile app again as an example. In this case, the hypothesis could be something like this:

“The target market, the millennials have trouble editing their images for social media because of the lack of an easy-to-use mobile app.”

Our risk assumption test to test would be the following:

  • Millennials are frustrated with the available mobile apps in the market that they would be willing to pay for a valid mobile app with a better solution.
  • Millennials would be willing to pay $10/month for a mobile app with an average lifetime value of [X dollars] in sales.

Setting up a simple landing page to gather signups to gauge early interest and conducting online surveys would be things that you would want to consider for this experiment.

Also, take note of the minimum criterion for success when it comes to assigning a pass or fail to rate your simple landing page experiment:

“For this [product] to succeed, it’s necessary that we receive 500 early sign-ups out of [X number of users] in the next 4 weeks.”

If the experiment passes, then your product or service development team starts building it. If the experiment fails, then you need to start from scratch. We have discussed the riskiest product assumptions method requires more planning, strategizing and overall effort upfront. But the good thing about this method is it can really save you an enormous amount of time and money.

Always launch with the best features

Once you’ve validated your idea with a successful experiment, it’s time to start building.

Unlike the MVP model of build-measure-learn, your riskiest assumption test method should launch with its best features and not the easiest ones.

We know that the emphasis on the riskiest assumption test is to learn, measure then build fast, instead of build, measure, then learn fast.

Building fast, without properly testing all your riskiest assumptions, could lead to failure rather than success.

While speed is a factor in a startup’s success, the ability to launch with the right and best features based on customer needs and market demand is another important factor.

Final thoughts

In a summary, the MVP business model includes three necessary steps: build, measure, and learn.

On the other hand, for the riskiest product assumptions, we get to learn and measure first. We make the product if the assumption is proven.

Moving away from the MVP business model and towards your riskiest assumption test allows you to learn and validate your product, before committing to a business or product that may not be worthwhile.

Instead of building a product without testing the assumptions, approach your build from a position of knowledge and use the riskiest assumption test to build after you learn, experiment, and gather users data.

We have also learned that we build a mobile app with the top features, not the easiest ones. 

Without proper testing of your assumptions, the chances of failing the product are higher.

While the MVP lets potential users feel the product and use it, without the right features, the startup company failed to doom.

With these comparisons, the RAT method is considered and preferred over the MVP model in the long run. 

Please take note that the MVP is not a bad option, not it is not worse than the riskiest assumption test. You may have the MVP as the second step after the RAT.

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Mary Ann Dalangin

About the author

A content marketing strategist and a UX writer with years of experience in the digital marketing industry.

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