We know that shifting from knowing to learning drives us to create the right solutions, faster and with greater confidence. How does that shift happen? Iteration–and a lot of it.
Several years ago, a young girl ran her bank account dry to purchase an expensive Marchesa dress to wear to a wedding, even though she had dozens of other dresses in her closet. That girl happened to be the sister of Jennifer Hyman, a Harvard Business School student. When Jennifer asked her sister why she would buy such an expensive dress when she already had other options, her sister told her that she had already been photographed in all of her other dresses and that this new one made her feel beautiful. Jennifer knew there was a business idea in there somewhere. Using the insight provided by her sister, Hyman and her friend, Jennifer Fleiss, tapped into the booming “sharing economy” trend (e.g. watching Netflix instead of buying DVDs; listening to streaming music instead of purchasing a physical copy) and merged it with the ever-increasing consumer desire for personal brand creation via social media. These two trends inspired the women to create the breakthrough online dress-rental service, Rent the Runway.
The concept seemed like a no-brainer. But before Rent the Runway first set up shop, it had a lot of questions that it needed to answer. Rather than spending months or even years gathering customer data, the two women treated their college campus as a testing ground, using small build-test-learn iteration loops based on fundamental questions that needed to be answered.
The first and most critical question was: Would women be willing to rent designer dresses at 1/10th of the price?
Build: Hyman and Fleiss rented a room on Harvard’s campus, obtained donated designer dresses and invited women to the room to try on the dresses.
Test: They measured the number of women who would be willing to rent a designer dress and found that 35% of the women surveyed would do so.
Once the women answered that they would rent a designer dress, the next most critical question was: Would women be willing to rent designer dresses that they can’t try on?
Build: Again, Hyman and Fleiss rented out a room (this time on Yale’s campus) for women to look at designer dresses for rent. But this time, they couldn’t try them on. However, Hyman and Fleiss added in more dress options to look at, since they got feedback from the first trial that some women would have rented a dress had there been more options available that they liked better.
Test: Hyman and Fleiss measured the number of women who would be willing to rent a designer dress without trying it on. The percentage of women willing to rent a dress went up from 35% to 55% since there were more options available; they didn’t seem to mind that they couldn’t physically try on the dress.
Once the majority of women answered that they would still rent a designer dress even though they couldn’t try it on, the next most critical question was: Would women be willing to rent designer dresses they couldn’t see in person?
Build: Hyman and Fleiss went to New York to survey 1,000 people in their target audience about whether or not they would rent a designer dress just from looking at a PDF photo.
Test: About 5% of the audience surveyed said that they would rent a dress from the photo, which demonstrated market viability for the concept.
Throughout these tests, Hyman and Fleiss not only learned that their idea was viable, but they also realized the importance of having women in the community upload and share images of themselves wearing the dress in order to portray a realistic image of how it would fit.
A less entrepreneurial team most likely would have rested on its own assumptions and spent a lot of time and energy on pricing strategies, inventory studies or UX design, taking much longer to come out with a solid product. Instead, Hyman and Fleiss reached a minimum viable product by running tests in small spurts to get to answers faster. Had they sat on the idea, it might not have become the game-changing platform it is today. Rent the Runway isn’t the only company that’s taken this philosophy to heart; even larger companies like Netflix are embracing fast failure and iteration (Netflix churns out a new, slightly tweaked version of its website every two weeks). How can your company use this mindset to get to stay relevant?
Want to learn more about approaches to innovating and growing like a startup? For the second year in a row, The Garage Group will be giving a talk at NewCo Cincinnati 2016: “5 Truths and Hacks for Bringing Startup Thinking to Bigcos.” Don’t miss the talk on Thursday, July 21st at 1:15 in our Longworth Hall office!
Photo credit: Unsplash user Hannah Morgan
