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Experiment with Innovation Like Tesla

Source | LinkedIn : By Gijs van Wulfen

The sooner you can show your new innovative idea is attractive, the better. That’s why it’s an important step to convert an abstract idea into a concrete offering. It helps you to materialize your idea for yourself and others. And it is a great way to test and improve your concept. By experimenting, you validate the future business potential of your new concept.

The basics of experimentation all come down to four steps. First, you design your test: you pick the test-type which fits your innovation project best and select a sufficient number of customers from all potential target groups. You might even include colleagues to get an idea how the new concept will be received internally. Secondly, you execute the test. You might facilitate it yourself or hire external professionals. It is my experience that at big firms, the latter will increase the credibility of the test results. Execute the test in a structured way. You might film it as well; to use parts of it later, for learning – or presentation purposes. As a third step, you analyze and evaluate the feedback with your team. As a final step, you make a decision to improve the concept, or to pivot it into a completely new direction. At this point, I would like to inspire you with a practical innovation experiment by Tesla, using a Lotus Elise to interest potential buyers for their first car.

How Tesla used a Lotus Elise to interest potential buyers for their Roadster

A Re-label pretotype puts a different label on an existing product that looks like the product you want to create. An excellent example comes from Tesla Motors.[iii] In 2003, the founders of Tesla had an ambitious idea (an all-electric 2-door sports car) and a marketing challenge (Tesla was an unknown quantity as a carmaker). In order to convince potential buyers to order its car, Tesla created a pretotype of what the car would look like. The base for the pretotype was a Lotus Elise, the car whose chassis technology was ultimately licensed – and heavily modified – by Tesla to provide the basis for the Roadster chassis. Lotus supplied Tesla with a ‘glider’ Elise – a car without a powertrain – which was filled with models of key components like batteries and AC motors. This was not a prototype, because the vehicle didn’t function, yet with a (relatively) trivial investment, Tesla was able to show prospective buyers a very close proxy for the final design. As if this were not canny enough, Tesla also deployed a Fake Door pretotype to further validate demand. Instead of asking customers whether they “Would buy a Roadster” if Tesla built it, they asked “Will you put down a $5,000 deposit to have it built to order?” This is a true revealed-preference test, from which Tesla secured several hundred deposits, a non-trivial result to reassure Investors.

Of course an experiment may fail, as you may call it. A so-called failed experiment is also a succesful one, as for me fail means: “First Attempt in Learning”. Did you know that the inventor James Dyson had made 5,127 prototypes of his famous Dual Cyclone bagless vacuum cleaner before settling on the model that would make him a billionaire?  It’s surely an amazing example of the perseverance of a true innovator.

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