When developing a well-designed prototype, it is not just about ensuring that it works technically. It should also make economic sense and achieve a positive impact. In this chapter, you will combine the impact-oriented aspect (chapter “Prototype in practice: collecting feedback and measuring impact”) with the business-oriented aspect (chapter “Reality check for impact start-ups: market analysis on the test bench”) of your solution.
You’ve come to the right place if …
- you want to found an impact startup or are already in the middle of it with your team.
- you know your target group exactly.
- you can clearly name the problem, solution and impact.
- you have all the resources to develop a prototype.
- you have already carried out a market analysis.
- you have defined a key metric (OMTM) for early impact measurement and impact measurement methods.
Not quite ready yet?
Then select the appropriate chapter here
This chapter helps to …
- adapt your prototype based on feedback and market insights.
- develop a viable business model.
- further refine your impact metrics.
Evaluate data from the prototype tests
To further develop your prototype, you should analyze the collected data and draw conclusions from it.
1. sort your interview data and form clusters
Collect the data by summarizes all observations, notes and recordings. Then structure the data according to test tasks or areas of the prototype. Identify patterns and trends by look for recurring problems or comments. Pay attention to areas that stood out in a particularly positive or negative way.
2. analyzes the data
Prioritize the findings by Evaluate the severity of the problems identified. Focus on problems that several participants had. Quantify the results by calculating success rates for specific tasks and measuring time spent on different interactions.
Analyze qualitative feedback by contextualizing participants’ verbal comments and identifying key words and themes.
3. visualize your results
Use diagrams or heat maps to visualize the participants’ behaviour. In user flow diagrams, you can visualize the customer journey of the participants. from starting points to actions, decisions, paths and goals. The journey provides information on where the participants encountered problems and where you can improve your solution.
Customer Journeys
Concepts such as the customer journey originally come from the software sector, but can also be used for non-technology-based innovations. There are a few ways in which you can transfer the principles of the customer journey to non-technical innovations, e.g:
- Instead of users, you speak of participants or the target group.
- Instead of clicks or conversions , you look at interactions.
4. adjust your previous assumptions
You may not have fully or correctly captured the underlying problem, set the wrong focus when implementing the solution idea or selected the wrong target group for the test. Don’t be afraid to adjust your previous assumptions based on the data collected in the prototype test and carry out further testing. If necessary, adjust your impact model and your impact metrics if you have gained new insights as a result of the testing.
Develop a business model and merge it with the impact model
A solid business model is the foundation of a successful impact start-up. You can use the Lean Canvas as a tool for development. Here are a few steps that will help.
Target group vs. customers
In the Lean Impact Journey we differentiate between the target group when we deal with the impact model and the product and customers when it comes to the business model.
How you use these two terms for your startup depends on what your solution consists of. In this playbook, the target group is defined as people who use the solution on the one hand and those who benefit from the solution on the other. Depending on the solution, the target group can combine both.
Note that your customers and your target group may use the solution differently or benefit from it differently. Customers and the target group can be entered in parallel in two colors in the Lean Canvas.
1. clearly state the problem
Define the one to three most important problems of your target group. Describe existing alternatives as to how these problems are currently solved.
If you get stuck here, go back to the chapter
“Problem, target group and stakeholder analysis: the first step towards an impact startup”.
2. formulate your Unique Value Proposition (UVP)
Develop a clear, convincing core message that explains why your solution is unique and worth buying — this is your Unique Value Proposition (UVP). The UVP describes the unique added value your solution creates for customers. It answers the question: Why should customers choose your solution? Focus on how your impact startup fulfills customers’ needs better or differently than others.
3. defines customer segments
Identify your customers and early adopters and characterize these groups precisely.
If you get stuck here, go back to the chapter
“Problem, target group and stakeholder analysis: the first step towards an impact startup”.
4. defines suitable channels
This is where you determine how you will reach your customers with your solution. Are they more likely to be contacted online or offline? Should contact be direct or indirect?
5. clearly state the solution
Once you have defined the channels you will use to get in touch with your potential customers, describe your solution as briefly and concisely as possible.
If you get stuck here, go back to the chapter
“Solution design: Finding a solution with which a startup creates impact”.
6. identify your “unfair advantage”
An unfair advantage refers to aspects of the business model that cannot be easily copied or adopted by competitors. It focuses on unique features or resources of the startup that are difficult to replicate. Think about what makes your solution unique and difficult to copy, e.g. a patent.
7. identifies and evaluates potential sources of revenue
This step is about defining possible sources of income. These can be the following, for example:
- Direct sale of products or services
- Subscription models
- Freemium models (basic version free of charge, premium features for a fee)
- License fees
- Consulting services
- Partnerships or sponsoring
Then evaluate each source of income according to these criteria:
- How well does it fit in with your impact goals?
- How sustainable is it in the long term?
- What potential does it have for scaling?
8. also consider innovative business models
Uses profitable areas to finance less profitable but high-impact areas. For example:
- Hybrid model: Combines various sources of income in order to spread risks.
- Impact-oriented pricing: Staggers prices according to social/ecological impact.
- Cross-subsidization: Uses profitable areas to finance high-impact but less profitable areas.
9. analyze your costs
List the most important costs for your business model and your impact model in different colors (e.g. development, marketing, personnel). Also include costs incurred for impact measurement and reporting.
10. define your key metrics
Define the key (impact) metrics by which you will measure the success of your business model. Use the feedback from the field, refine your approach and ensure that both your solution and your business model are based on solid foundations. It makes sense to continuously adapt the impact measurement based on the findings from the prototype tests and the market analysis. This will increase your chances of achieving long-term impact and success — even if your business model continues to evolve.
Next chapter: Develop MVP
You are now at a point where you have ideally validated your prototype, the impact and market potential of your solution and your business model . This means …
- You have successfully tested your prototype and received positive feedback.
- there is initial evidence of the impact of your solution from your target group at outcome level.
- There are clear signs that there is a market for your solution and that it is scalable.
- You have developed an initial business model that shows how you can set up your impact startup sustainably.
If all this is the case, you can read the next chapter develop the first basic version of your solution (MVP).
If not, no problem! The best thing to do is to return to the chapter “Prototyping for impact start-ups: Developing your first prototype and finding key metrics” or go back to the overview page.
Tips for successfully validating your prototype, impact and market potential as well as your business model
Finds a good balance between research and testing
Don’t invest too much time in research at the expense of actual testing. Instead, use research knowledge as a basis for practical testing.
Thoroughly analyzes the market potential
Examine the actual demand — whether there is purely hypothetical interest in your solution is not meaningful enough at this point. Validate the willingness to pay of potential customers.
Remain open to feedback
Always remain flexible and willing to adapt your solution and impact metrics based on current feedback. Consider criticism as a valuable learning experience to further increase the impact of your solution.
Validate your prototype at an early stage
Don’t wait too long to test your prototype. It doesn’t have to be perfect yet. Start testing as soon as you have developed a basic prototype.
Uses real data
Validate your assumptions and impact metrics with real data, not just guesswork. Conduct interviews, surveys and tests with potential customers.
Concentrate on the core problem
Make sure you are solving the right problem. Don’t waste time and resources on trivialities.