A powerful way to frame discussions is to ask, what do you need to believe for XYZ-something to be true? This framing helps generate insights where there is a lack of information by tapping into your intuition of what’s feasible and realistic.
Two examples, let’s say you’re doing some financial modeling and want to ensure profitability.
- You don’t know anything about revenues (monetization strategy, target audience, etc.). But you know that the bare minimum unit costs are $100/product sold. Now ask, is it believable that revenue per sale would be >$100? Perhaps yes, if the product is a cool gadget and you’re selling to people with high income. But if you’re just making a new food item, the likelihood for profitability might be lower.
- Or, you don’t know anything about cost, but you know that the maximum willingness-to-pay from consumers is $20. Now ask, is it believable that unit costs would be <$20? Perhaps it would take 3 years to reach the scale at which such a low unit cost would be feasible, in which case that might invalidate the business itself if such a runway can’t be funded.
This blarticle was originally published on my Medium Blog and was written in the context of building a service that rents outdoors gear for camping, backpacking, snow sports, etc. Last Minute Gear (www.lastmingear.com) rents and delivers equipment up to 1 hour before a trip!