Why is a go or no-go might be the most important decision founders make?

A simple answer is Risk. As entrepreneurs, we accept and embrace risk – it comes with the territory. In fact, risk is one of the engines that drives success, and the risk takers of the world are the ones that mitigate it.

If you read our blogs, we talk a great deal about risk because understanding what the risk factors are with any initiative is critical to making informed decisions. Embracing the risks makes us focus and gives purpose to our actions.

The Go / No-Go Decision is exactly what it sounds like – “Do I do this, or not?” However, it isn’t a binary decision, there are a many layers, and it isn’t a simple one-time decision. For startups, it might be the most critical set of decisions you make. I say set of decisions, because G/NG is a series of decisions you will be making during various stage of your journey.

In this article we’ll talk about the following principles. Go / No-Go:

It is a process that is systematic and analytical, and bypasses emotional factors.
It isn’t a one-time decision. You will need to make important decisions multiple times.
You’ll assess the risk. The higher the risk, the more discovery you need to do.
And, most importantly, you have to be prepared to pivot, completely rethink your idea, or even give up it up altogether.

The Startup Journey

To illustrate how the Go/No-Go decision is used for startups, we’ll examine the stages of a typical startup, and how G/NG is used in each scenario. There are many versions of the stages of the startup journey, and for this exercise we’ll keep it simple.

The Idea

Every startup begins with one thing – the idea (concept). We have talked to many founders who have had that idea rattling around in their head for years, and some that just had the light turn on days earlier. To quote The Matrix ...

That feeling is what drives innovation and gives us the emotional fuel to jump into the entrepreneurial pool.

That feeling is what got you here, and it could also take you out! You have to get past just believing an idea is a good one, to validating it the right way. Without that process to thoroughly vet your idea you are just guessing.

This is where you make your first G/NG decision. In my discussions with potential founders, I always ask them, “What makes you think the idea is a good one?” The best answers are from those who have done their homework and have identified an unmet need in a market that they think they can address. Often it is the industry they are active in, and those usually generate the best ideas. They have done their homework, and they think there is an opportunity.

This first G/NG decision is not deciding to go all in and bet the farm on the idea. No, not a all. If you are passionate about the idea, and have done the homework, the first G/NG is to start the journey. That’s all it is. You do it because you think there is an unmet need, a pain point that you think you can solve. And you believe it can be sustainable.

So, how do you do that? As proponents of Design Thinking, it begins by having empathy with the user, understanding their pain points, ideation, prototyping, and testing our hypothesis. We won’t go into Design Thinking here but suffice to say that it is a great framework for making good decisions around developing digital products, or any product for that matter.

There are other tools out there as well, like the excellent LEANSTACK framework for innovation that has many of the same principles of Design Thinking. It is a great system for first-time entrepreneurs that uses time-boxed exercises for innovation and building great products. I recently got exposure to it through mentoring startups for ITEN, which is a local organization that helps startups with ideation and validation, and I recommend them highly.

Go / No-Go Checkpoints

The startup journey is a series of steps you take, with each step requiring an evaluation of what you have learned to inform your decision to stay the course, pivot, or abandon ship.

Design Thinking principles can help. It allows us to answer the questions:

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Is it desired?

Do people want it?

Scales

Is if feasible?

Can you do it? Do you have the resources? Is it technically possible?

Sustain

Is it sustainable?

Does the business model make sense? Can you become profitable?

 

Those questions are disarmingly simple in concept but answering them properly can be challenging to say the least, with many layers and facets in between.

Assumptions

Assumptions are a large part of this process, and they are important because, without them, we wouldn’t begin the startup journey. Usually, assumptions are based on some knowledge about a market, pain point, or unmet need that present an opportunity. Those assumptions are what launched you down this path but relying on assumptions alone is treacherous to say the least.

From a Go / No-Go standpoint let’s look at Desirability. A typical Desirability discovery process will answer these questions:

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Who are the customers for our solution?
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What pain points do our customers have that we can address?
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What problems are we trying to solve?
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How are our customers solving this problem currently?
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Will our customers switch to our solution from their existing one?

Invariably, answering those questions challenges one or more of the assumptions that was the basis for the startup journey. And not necessarily in a negative way – very often the Desirability discovery process uncovers pain points (opportunities) that had been missed.

The point is a Go / No-Go decision isn’t solely do it or don’t do it. It can be a great opportunity for making your Product / Market Fit better, and your Problem / Solution Fit more focused. This same set of exercises are used for the Feasibility and Sustainability essential characteristics. Everything is tested, everything is validated.

We’ll do this at every stage. If we validate our solution and find that there is a good Product / Market fit, we might decide to build an MVP. The MVP is designed to be another validation of the idea, not necessarily your go-to-market product. And it’s another Go / No-Go checkpoint.

Confidence Scoring

OK, let’s talk about risk again. As risk takers, entrepreneurs are in a class by ourselves. We love the challenges, and we typically don’t fear risk.

However, the best entrepreneurs take calculated risks based on information and knowledge gained through a proper discovery process. We can’t eliminate all risk of course but taking the time to evaluate our ideas and assumptions and turn them into an actionable plan with a reasonable chance of success.

Confidence scoring can be a useful exercise for creating clarity around the risks in your plan. We use confidence scoring throughout or development process by asking our team to score major initiatives (or collection of tasks called Epics) on a 1-5 scale for how long it will take, and if there are any unknowns that might become an issue.

For any Go / No-Go decision, asking yourself, and your team, “How confident are we that this is true?” A high confidence score gives you the comfort in going in a certain direction. A low score means you either have to accept the added risk, or you need to do more homework. Either way, it’s an informed decision that you are making.  

Summary

Ideas get us in the game, but validation keeps us in it. Using frameworks like Design Thinking and LEANSTACK can go a long way to helping us with that validation process. By taking the time to create process around our ideas, we’ll be much better prepared to make the Go / No-Go decisions, therefore mitigating risk and developing viable roadmaps and get started.

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