If you are an entrepreneur or a product manager, you might have heard about the Wizard of Oz business test. It's a valuable technique for validating your product or business idea before investing a considerable amount of time and money. In this blog post, we'll explain what the Wizard of Oz test is, how it works, and provide you with some examples and instructions.
What is the Wizard of Oz business test?
The Wizard of Oz business test is a lean startup methodology that enables entrepreneurs to test their product or service in a low-cost and low-risk manner. The name comes from the famous story where Dorothy and her companions discover that the mighty Wizard of Oz is just a regular person hiding behind a curtain, pulling levers to create an illusion of power.
In the same way, the Wizard of Oz business test creates an illusion of a fully functional product or service, but behind the scenes, everything is being done manually. This approach allows entrepreneurs to test the market demand and validate their assumptions without investing significant resources.
How does the Wizard of Oz business test work?
The Wizard of Oz business test involves creating a minimal viable product (MVP) that appears to be fully automated, but behind the scenes, a human is doing all the work. For example, let's say you want to build a chatbot that can help people order food online. Instead of investing in a complex AI system, you can create a simple landing page with a chat interface that seems to be fully automated. However, behind the scenes, a person is manually handling all the orders.
Once you have created your MVP, you can start testing it with a small group of customers. This approach enables you to collect valuable feedback and validate your assumptions without investing significant resources. If your MVP receives a positive response, you can gradually automate the process and scale it up. If it fails, you can pivot your idea and try something else without losing much time or money.
Examples of Wizard of Oz business tests
Zappos: Before Zappos became a multi-billion dollar company, the founder, Tony Hsieh, tested the market demand for online shoe sales by manually fulfilling all the orders himself. He would go to local shoe stores, purchase the shoes, and ship them out himself. This approach allowed him to validate the market demand and refine his business model without investing in a complex infrastructure.
Airbnb: When Airbnb started, the founders would visit the homes of their early customers and help them take professional-looking photos of their properties. They would then manually upload the photos to the website and handle all the bookings themselves. This approach enabled them to test the market demand and refine their business model without investing in a complex infrastructure.
Instructions for conducting a Wizard of Oz business test
Define your hypothesis: Start by defining your hypothesis and the problem you want to solve. What assumptions are you making about the market demand, customer behavior, and the viability of your idea?
Create a manual MVP: Create a minimal viable product that appears to be fully automated but is being handled manually behind the scenes. This could be a landing page with a chatbot, a concierge service, or a simple website with a fake buy button.
Test your MVP: Start testing your MVP with a small group of customers. Collect feedback, observe customer behavior, and validate your assumptions. Iterate and refine your MVP based on the feedback you receive.
Automate and scale: If your MVP receives a positive response, gradually automate the process and scale it up. If it fails, pivot your idea and try something else.
The Wizard of Oz business test is a powerful technique for validating your product or business idea in a low-cost and low-risk manner. By creating a manual MVP, you can test the market demand and refine your business model without investing significant