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• 1 2023-10-18T15:56:55+00:00 Chapter 25: Testing Your Ideas 4 30 plain 2023-10-27T16:38:24+00:00 As we start this chapter, just a reminder: you haven’t yet done a show. (In case you weren't aware.) This is a process of research and development. Each chapter has helped you to bring your project into focus so that you move from the magical thinking of inspiration to the practical thinking of getting it done. In the last chapter, I’ll outline a workflow for the process.
  
  This chapter will examine how to take all the hypotheses you developed in the previous chapters and put them to the test without spending a bunch a money up front. You want to have as much of your initial investment available for when you launch your first productions.
  
  Theater people, however, have a tendency to jump directly from the inspiration stage to the production stage without doing much planning at all. Instead, they apply the Institutional Production Template to their ideas (i.e., they rent a performance space and use a bunch of their seed money to create a full production modeled on the shows they were in at college), do some perfunctory marketing, and open. And most of the time, the next step is disappointment and despair, because their “business” is built more upon their own desires with only airy assumptions about who their audience will be and what they want. As Steve Blank says, when you do this, you’re running a “faith-based” business.
  
  Testing allows you to quickly gather data about your hypotheses to find out whether they are valid, need to be tweaked, or need to be killed. It is entirely possible that you will go through the planning process only to find that your business as imagined isn’t sustainable. Maybe what you offer doesn’t appeal to enough people, maybe your expenses will be too great to be covered by the anticipated revenue. At that point, you have to either pivot—make some changes to the business model to make it viable—or kill it and walk away. And if it is the latter, well, at least you haven’t blown a bunch of cash in the process.
  
  There are books (there are always books) that can help you dig more deeply. The same people who brought you Business Model Generation and Value Proposition Design have another called Testing Business Ideas that I highly recommend. Most of this chapter is built on the ideas contained therein. The best thing about books in the Strategyzer series is that they boil down business ideas into a combination of colorful drawings, flowcharts, and a few words that makes abstract ideas concrete and understandable. Testing Business Ideas is largely built following Steve Blank’s ideas in The Startup Manual, and they credit him repeatedly. His books go into greater detail, and would be a logical follow-up to Testing Business Ideas.
  
  According Bland and Osterwalder, “Testing is the activity of reducing the risk of pursuing ideas that look good in theory, but won’t work in reality….Test extensively to avoid wasting time, energy, and resources on ideas that won’t work.” In other words, it is a way to lower the risk that your inspiration won’t turn into desperation.

  Three Kinds of Risk

  There are three kinds of risks you face: the Desirability Risk (customers aren’t interested in your idea), the Feasibility Risk (you don’t have the ability to deliver your idea), and the Viability Risk (you can’t earn enough money from your idea). They are all interlinked. My doomed production of Ibsen’s The Master Builder collapsed due to all three: there weren’t enough people interested in seeing a production of an obscure 19th-century Norwegian play performed by unknown artists (Desirability), we didn’t have the acting and directing chops to live up to the difficult script, nor did we have the money to advertise (Feasibility), and so not enough tickets were sold to cover production costs (Viability). Game over.
  
  So how do you design and execute an experiment?

  Designing and Executing an Experiment

  First, you and your fellow company members should identify hypotheses within each area of risk, and prioritize them (oh, gosh, I guess the best way to do this is using Post-It Notes--I hate Post-It Notes). These hypotheses need to be specific enough to be testable. And it begins with the phrase “We believe that…” (or “We DON’T believe that…). “Will we make enough money to be profitable?” isn’t a hypothesis, it is a question for the Magic 8 Ball. Even converted into the proper format—“We believe that we will make enough money to be profitable”— is far too broad and general. You need to devise a series of hypotheses that will slowly add to your knowledge base and create confidence that you are on the right track.
  
  There are two major categories of tests:
  • Discovery Tests are to determine whether your general direction is right. These are for first insights and basic hypotheses.
  • Validation Tests are to determine whether the specific approaches you are talking are likely to work.

  Example of Test Design

  Let’s use the idea of a theater company devoted to providing drama for homeschoolers. We’ll use the “test card” form that the Strategyzer folks have designed.
  
  
  
  A good experiment defines the “who” precisely (test subject), defines the “where” precisely (test context), and defines the “what” precisely (test elements).

  Step 1: Develop a Hypothesis.

  A Desirability Thesis might be: “We believe that drama is currently being used in homeschooling in the United States.” Very broad, but we want to know whether we are breaking new ground, or if it is already mainstream.

  So now we look around in Testing Business Ideas for the type of test that might be most conducive to gathering that information. We find one called “Search Trend Analysis.”
  
  A Search Trend Analysis “uses search data to investigate particular interactions among online searchers, the search engine, or the content during searching episodes.” It is a low cost test (great!) that produces moderately strong evidence that doesn’t take long to set up and run. It is “ideal for performing your own market research.”

  Step Two: Prepare the Test

  • Identify what tools to use (Google, Google Trends, Google Keyword Planner, etc.)
  • Define a geographical area for your search
  • List the topics you want to explore
  Going back to our Test Card, Step 2 asks us to devise a way to verify the hypothesis, using the phrase “to verify that.” So: “To verify that, we will do a targeted Google search and a Google Trend search on the following topics:
  • Drama in homeschool curriculum
  • Using drama in other homeschool disciplines
  • Plays for homeschoolers
  • Improvisation for homeschoolers
  • Using Augusto Boal’s techniques with homeschoolers (this one could be very interesting)
  • Viola Spolin with homeschoolers
  • Resources for drama in homeschooling”
  (As you begin the research, you might tweak search terms to get better information.)

  Step 3: Measuring the Data

  Define how you will measure the data. “And measure the number of high-quality hits result, both websites and also under the “shopping” filter (in order to find out what others are selling).

  Step 4: Criteria for Success

  Define what will be the criteria for success using “We are right if.”
  “We are right if there are at least 50 high quality websites for a topic, and if at least ten other sites are selling materials and resources.” (The Google Trends analysis is simply to add information.)

  Step 5: Execute

  Do the searches, take screenshots, export your results, write down notes about what surprised you. So for instance, when I did a Google Trends search on drama homeschool, I was surprised that the number of people searching that topic spiked at certain times of the year. Then I realized that it trended prior to the fall semester, winter semester, and summer. Makes total sense, right? —planning was happening! And from that, the company might garner an idea of when they should be undertaking marketing efforts to sell their performances or resources. The Google search itself turned up far more than 50 websites devoted to providing resources for using drama in the homeschool curriculum, including books, plays, and articles. I found far fewer examples of Augusto Boal being used in the homeschool context, but what did come up raised interesting possibilities for future research.

  Another Example

  What if you were creating a theater that was committed to doing, say, a mix of contemporary and new plays? How might you discover whether there is any interest in your community? Your Blue Ocean Strategy market research shows that there are three theaters in your area: a community theater that does primarily musicals; a semi-professional theater that does primarily classics; and a children’s theater. You wonder whether spectators at those theaters might be interested in what you want to produce.
  
  Hypothesis: We believe that spectators at existing area theaters have negative ideas about new plays.
  
  Conventional wisdom seems to be that people tend to be risk averse when it comes to theater, and that they are suspicious of plays they’ve never heard of or playwrights they don’t recognize. Is this true in your town? (Later on, you could also conduct a similar test with spectators at other arts events—for instance, are people who go to art galleries or dance concerts more open to new plays?)
  
  Looking through the type of tests available, you decide a “Discovery Survey” might be best. It is a little more costly than the Search Trend Analysis I described earlier, and the evidence strength is weaker, but you decide that, if the survey is well designed, you can get an idea of the kinds of attitudinal obstacles you will need to address in your play choice, marketing, etc. In addition, which theaters or arts events provide the greatest number of responses or positive responses might provide direction for future advertising.
  
  Now prepare the test.
  • Define your goal for the survey and what you are trying to learn
  • Identify your target audience for the survey
  • Assuming a 10-20% response rate, calculate how many people should receive the survey
  • Set a start and stop date for the survey
  • Create your survey
  
  Design the Test: To verify that we will insert a survey request in the programs of the upcoming production of each theater willing to allow us to do so. The insert will provide a URL to take the survey. (It will be designed to ask them to take the survey while they are waiting for the show to start or at intermission.) The survey will be short and designed to be taken on a phone. A reward for taking the survey will be a coupon for a free beverage at intermission.
  
  Measure the Data: And measure their overall resistance to new plays in general and specific characteristics of new plays.
  
  Define the Criteria for Success: We are right if negative responses comprise more than 60% of the submittals.
  
  We also decide to provide in the thank you email a brief description of what we are hoping to do, and an opportunity for respondents to sign up for an email list to receive more information, while explicitly saying that we will not use their email address to contact them without their permission.
  
  Once you’ve run the test, you need to analyze the data and find out what you’ve learned.

  Analyze the Data

  Once again, Strategyzer provides a template for a “Learning Card”:
  
  
  
  And you fill out this form and discuss it with the company members.
  
  The final Learning Card box, labeled “Therefore we will,” defines your next action. If the evidence supports your hypothesis, you can test the next critical hypothesis, or use the same hypothesis with another experiment with a higher confidence level (i.e., the type of evidence generated is more reliable). If the evidence refutes the hypothesis, then your choice is to abandon (kill) or change (pivot) your business idea.
  
  Then you move on to the next test. And the next. And the next. Until you have tested enough hypotheses and received enough information to feel as if you understand your situation. Then you have two choices: move forward, or pull the plug.
  
  Either way, you are doing so with more knowledge, more confidence, and without having lost a boatload of money.
  
  It is certainly possible to skip this process entirely and just take a leap of faith. Occasionally, this has worked out fine. The founders of Steppenwolf didn’t do this kind of planning, they just began doing plays. They did so in a context where the money at stake was low, and they got extremely lucky when Chicago Tribune theater critic Richard Christianson paid an unlikely visit to their space in a suburban church outside of Chicago and he proclaimed them the next big thing.
  
  We hear about these examples because they defy the odds. But for every one of those stories, there are ten about theaters that disappeared without a trace after the first production.
  
  The question you have to answer is how much you want to risk it.
  
  That’s what this process has been about: reducing your risk, and increasing your chance of long term success. It takes a lot of thought and hard work up front, but it might just help you to live your life creating work that is fulfilling.
  
  On the other hand, you don’t want to plan and plan and plan and never take the first step. Set a very clear deadline for the end of this process, and only extend it for extremely good reasons.
  
  Having done any of this at all puts you ahead of most people trying to start a theater company.