Opinions are not Data

People have a lot of opinions when you start or expand a school.  Ken Robinson, in his very popular TED Talk, says that people are bored when you discuss education, but are completely engaged when you ask them about their own education.  The strong feelings people have about how they were educated color the opinions and advice they have for a newly expanding school.

In the corporate world, senior leaders are often extremely passionate about an idea they have or feel strongly that a particular direction will never work.  Many times, the HiPPo, or “highest paid person” in the room states an opinion or throws out an idea, and everyone on the team picks it up and runs with it without considering a few very important questions:  “How do we know they are right?  Are they right for THIS situation?  Are they right in THIS time?”

I’ll share 3 examples of what we heard at the school and talk about how we withheld judgement until we had data in hand.

• “The community really needs a new girl’s school.” – Our community has a number of single-gender parochial schools and at our very first meeting to discuss expansion, several people shared the word on the street.  In this case, the street had it wrong. Rather than committing to a path before the data was in, we opened up registration to find that the boys’ class was filling even faster than the girls’.
• “The community will only support mainstream schools.” – We felt strongly about offering the first strict Montessori elementary program in our very conservative community. We had watched other new schools begin with innovative ideals but ultimately shift to “more of the same” before they enrolled students.  We suspected that these decisions were based on fear and hearsay rather than data, so we arranged an informational dinner for interested parents to see what type of response we got when we let our freak flag fly.  We hoped for 30 attendees, but ended up hosting 100 engaged parents who only stopped asking questions when the restaurant owner turned off the lights at 10:30pm.  And the applications started pouring in.
• ”No one will drive that far for a school.” – Over 2 years, we grew from 16 pre-schoolers in a basement to 90 students from pre-school to 3rd grade. We planned to continue through high school, so it was important to find a space where the school could grow. When we found the perfect space at the right price, it was almost 20 minutes away from the community. There were many closer educational options, but we hoped we were strongly differentiated from the competition so that people would still choose our school in spite of the distance.  Before we signed the lease, we ran a test to find out. We told our existing and incoming parent body about the new location, emphasizing the gorgeousness of the building, classrooms and playground to see if we would lose families because of the distance.  We did not AND many families with kids in both pre-school and elementary signed up for late stay for their little ones to give them a single pick-up time, providing an unexpected revenue stream that paid for cool programs like music, yoga and martial arts during the school year.

Whether you’re part of a start-up or a multi-national corporation, you will be tempted to accept opinions from the powerful or confident, but pump the brakes and create an experiment to test the assumptions instead. There’s no downside to validating an opinion with data and you may avoid a business-breaking mistake.

Assumptions: Who wants some fudge?

A friend of mine has been making small-batch, killer fudge out of her kitchen and selling out batch after batch. Her packaging is very urban hipster and she gets a good profit margin on every batch.  Today she uses the (very) small business to fill in the gaps in her family’s monthly budget. She was approached by a friend representing a potential distributor who wants to include her fudge in his line of foodie-targeted products. After saying “no” repeatedly because scaling the business would create disruption in her already busy life, she decided to consider the question and formed a small team to help her think it through.

One of the first questions to answer is: “Who is the customer for this product?” The team member who brought the distribution opportunity thinks that the audience is definitely hard-core foodies.  This is the best fudge he’s ever eaten, it’s got a great artisanal story, and the packaging is on point.  He’s got lots of ideas for foodie distribution channels and pricing is extremely elastic for that market.  Sounds great!  But until we have data to support the claim, it is only an assumption.  Fortunately, my friend has a record of everyone who has bought her fudge over the past 9 months.  We looked to her records to validate the assumption and…most of the buyers are not what you’d consider foodies.

This doesn’t mean that the assumption is wrong; foodies might be a very attractive market for Artisan Fudge, but they aren’t her current market.  So we need to gather some data to validate or invalidate the foodie assumption. We don’t have any money and very little extra time, so we need to approach this in a low-fidelity way.  Here are our next steps:

1. Interviews with past customers – We’re going to go talk to people who have bought Artisan Fudge in the past and understand their motivation.  One doesn’t normally think of fudge as solving a problem (unless you’re an emotional eater, but that’s a totally different blog post)
   , but something drove her customers to spend their hard-earned money on a premium-priced dessert.
2. Interviews with foodies – My friend knows a guy who has a very successful smoked meat business.  He sells turducken for $450 at an upscale farmer’s market outside of Washington, DC.  We’re pretty sure that hard core foodies are the only ones who would lay down that type of green for their Thanksgiving protein.  We’ll ask him if we can speak to a few of his customers about desserts.
3. Set up an experiment to test the foodie market – What if my friend could share that farmer’s market table for one Sunday only and see how the product sells?

Within a few weeks, we’ll have data on the Artisan Fudge customer today and the potential of the foodie market.  That will allow us to make an initial set of decisions about whether and how she should expand her distribution.  After that, we can work on the rest of our long list of assumptions, validating the most critical and unknown among them.

Remember, if your team is disagreeing about some aspect of your business plan, you are probably talking about an invalidated assumption.  Stop arguing and start working on how to validate it!