In this lecture, I want to talk about testing your assumptions.

So let's suppose you've been cultivating your purpose and

you've really gotten excited about this idea, this new world of business, and

you're thinking, I want my work and my business to help overcome

a significant social or environmental challenge in my community or the world.

So now what?

So I have suggested a critical next step is testing your assumptions.

So entrepreneurs are often advised to test their assumptions and

usually it's, hey, you need to prototype your products.

You need to begin with a lean startup.

You need to make sure there is actually a market for your products and services.

Do customers actually want what you're producing?

It's a little different when it comes to purpose driven businesses.

All of that is still important.

But it's also going to be very important to test your assumptions about the larger

problems and

solutions that you're considering about how you're going to achieve your purpose.

So, why is this so important?

Why is it important to test your assumptions about these problems,

and challenges and solutions?

Well, it turns out it's easy to go after the wrong problem.

You make an assumption about what the problem is, and

in the process, you get the problem wrong.

So you don't actually solve the real problem.

You may do no benefit.

You may waste a lot of effort.

In some cases, you can actually cause harm.

You can certainly cause cynicism and hopelessness.

So it's important to get the problem right and understand as much as you can about

the challenge you're trying to solve, before you start actually doing it.

To drive home this point, let me give you some examples of the kinds

of problems that purpose-driven companies and leaders are trying to tackle.

They may be trying to improve sanitation in the world's worst slums.

They may be trying to create job opportunities for

people who have been chronically unemployed.

They may be trying to provide lighting to people who have no electricity.

They may be trying to prevent unwanted pregnancies.

These are complex problems, and to make a real difference,

you need to test your assumptions about those problems.

Do I have the problem right?

To give an example of why it's so important to test one's assumptions and

how much you can learn in the process, I want to talk with you about Doug Rauch,

the founder of a remarkable business called Daily Table.

So Doug Rauch is the former President of Trader Joe's,

a very successful chain of grocery stores across the United States.

When Doug retired from Trader Joe's, he knew a few things.

He knew he wanted to make a difference in the world and

he knew that a lot of food in the United States and around the world goes to waste.

A lot of food gets thrown away that’s perfectly safe and should be eaten.

In fact, about 40% of food in the United States goes uneaten.

It’s thrown out before it’s actually gone bad, think crackers, bread, juice,

canned soup.

A lot of it is thrown out because it doesn't look pretty,

so tomatoes that aren't perfectly round, apples with a few bruises,

lettuce leaves that are just a little too short.

All of that food actually doesn't get sold, and doesn't get eaten.

That's a lot of healthy food, good food going to waste.

So Doug knew a few things.

He knew he wanted to make a difference in the world and

he knew that a lot of food goes to waste in the Unites States.

He also assumed a few things and it turned out he got some of these assumptions

wrong, and we'll talk about that.

So he assumed that many Americans are hungry, and

that they literally can't get enough calories to eat on many days.

And he assumed that if you get more food to food banks and

other organizations like churches and community centers,

they’d give food away to people, you could solve the problem.

But Doug was really smart about taking the time to study the problem before actually

launching his new company, the Daily Table.

And what Doug did is, he spoke with experts, he read up on the problem,

he spoke with members of the community, he visited the community and

spoke with the people he wanted to serve and benefit.

And in the process, he learned a lot that challenged his assumptions.

So one of the things that's advised for people as they test their assumptions,

is actually write them out as hypotheses.

So one of Doug's was, many Americans are hungry, on many days,

they can't get enough calories to eat.

Well, turns out that's not exactly right.

There not many Americans who are hungry in a sense of starving, but

there are many Americans who are food insecure, they can't get access

to healthy food, they can't afford healthy food, they worry about how can I pay for

healthy food, how can I feed my children and pay my other expenses.

So the problem isn't so much calories.

They can get enough calories.

They can’t get healthy food.

And, in fact, this problem of food insecurity is actually

associated with obesity in the United States.

They can buy cheap, lousy food that’s not very healthy for

you, but they can’t afford healthier food.

So it’s not so much the people are hungry, that they’re food insecure.

Doug learn that.

Another assumption Doug had was, that if you could just get more food to food

banks and charities, you'd solve the problem.

As he spoke with food banks he learned that's not exactly right.

Food banks don't usually need more food,

they really especially need fresh produce and vegetables.

So that's what they had trouble getting and providing.

And at the same time Doug learned, people don't really like going to food pantries,

to homeless shelters, and the like.

They don't love to go get their food there, because they don't have a lot of

choice over what they eat there, what they're given.

The food, they may be given a big sack of potatoes, for example, or

some food that's difficult and time consuming to prepare.

And they may feel ashamed and embarrassed.

So there were a lot of things that Doug was learning that

didn't quite fit his assumptions.

And he considered various options and thought, well,

how am I going to solve this problem.

Maybe I just should try to change government policy, for example.

Change the food stamps program in the United States.

And, as he talked to experts,

they said Doug, Doug, don't try to solve government policy.

You're not a lobbyist.

You don't know that.

What you know is retail.

Do retail.

And, ultimately, what Doug has done is,

has created this remarkable innovation called the Daily Table.

It's actually a non profit so

that other companies can donate food to the Daily Table.

It's operating in a poor community outside of Boston, Massachusetts.

It opened in June 2015.

The plan is to open other additional stores.

And it is a store that sells healthy food as cheap or

cheaper than fast food, like McDonald's.

It also has a lot of prepared meals, kind of grab and go meals, for

people who lead busy and stressful lives.

And the food is cheap.

So how cheap?

We actually called the Daily Table and asked, well, what does it cost for

a dozen eggs?

Yesterday, a dozen eggs at the Daily Table cost $0.99.

If you look at other stores around the community, a dozen eggs is going to cost

twice that, three times that, or even four times as much.

And here’s how Doug describes the purpose of the Daily Table.

At Daily Table we believe that delicious, wholesome and

affordable food should be available to all.

We're on a mission to help communities make great choices around food

by making it easy for them to choose tasty, healthy, convenient and

truly affordable meals and groceries.

And we do this in a respectful manner,

that honors our customer, engendering dignity.

So pulling together some of those lessons from Doug's example and

best practices, here's how I encourage you to test your assumptions.

First, write your assumptions down.

What are your hypothesis?

We talked about Doug's hypothesis, many Americans are hungry, that's an example.

And then, test your assumptions.

How do you do that?

You talk to experts you ask professors and researchers, hey, do I have this right?

Do I understand the problem?

Am I missing something?

What are common misconceptions about the problem?

Professors, researchers, people who really know the problem, they'll tell you.

It's important to dig into the research.

What is rigorous research actually tell us about these problems?

What is it that we're not understanding?

One of the things that often comes up in research is that subgroups

of the population are different.

Maybe urban areas are different from rural areas.

Maybe children are different from teens are different from adults are different

from the elderly.

Maybe regions of the country are different.

So it's important to dig into the research literature to know,

what's the nature of the problem, and what's been tried and has it worked?

You also want to consult with leaders who work and

live in the communities that you're trying to serve.

What do they think the problems are?

What strategies do they recommend?

What ideas have others tried but turned out that those ideas failed?

And last, and absolutely not least, really important,

is talking with your target audience, the people whose lives you hope to improve.

What would make a difference in their lives?

What would be ideal?

What sounds most appealing?

What sounds insulting or patronizing?

Doug learned a lot from talking to folks in the communities where he, ultimately,

opened the Daily Table.

And he learned about what sounded appealing, dignity, choice, and

what sounded insulting or patronizing.

Of course, at some point you need to come onto actually piloting your strategy

knowing that you're going to make adjustments.

Even with all the work that Doug put into creating the Daily Table,

he's still learning and changing the model as they continue.

So I would say a last point is, test your impact strategy,

pilot the project and then try, try again.

It's going to be important to revise it.

And then, I think one more point that's really

important to make about testing your assumptions, and that is

the recognition that enduring problems are usually multidetermined.

Which means, they have many cases, they're complex problems.

So when you set out to solve a complex problem, if you think you have

found a simple easy answer to a complex problem, you probably haven't.

because most of those really complex problems,

they don't have simple solutions.

So returning to the example of Doug Rauch and the Daily Table.

As Doug dug into the problem of unhealthy eating in poor communities and

this notion that food that would otherwise have gone to waste could be beneficial,

he learned a lot about what was the causes of unhealthy eating in poor communities.

And he learned, for example, it wasn't just a lack of grocery stores, and

it wasn't just limited availability of healthy fruits and vegetables,

and it wasn't just the cost of such food.

And it wasn't just residents' lack of time to prepare food,

and it wasn't just their limited experience preparing and

eating some healthy kinds of food, and it wasn't just the insult to dignity and

choice that they felt when they went to soup kitchens and community centers.

It was all of those things.

And Doug went about trying to solve all of those with his innovation.

So again, I encourage you, as you explore your purpose, to test your assumptions.

Start by writing down your hypothesis, then talk with experts.

Read research reports.

Talk with community leaders.

Talk with recipients, the folks you are actually trying to help.

And be prepared to try, try and try again.

To help you test your assumptions,

we've created a worksheet which will allow you to explore those assumptions,

test your hypotheses, think about how you would do that.

I also encourage you to watch this video with Fred Keller,

Founder and CEO of Cascade Engineering.

Fred has done a lot of work to test his assumptions and to revise his model,

as you'll see.

Test Your Assumptions

Business Strategies for Social Impact

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