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What is Riskiest Assumption Test (RAT)? How is it Related to MVP?

542 Views | 5 min | Published On: February 28, 2023 Last Updated: February 28, 2023
What is RAT

Every business endeavour comes with a specific level of risk associated with it. One of the biggest challenges that businesses face while tinkering with newer ideas is mitigating the risk. Nonetheless, there are several ways to mitigate the risk. One of the best ways to do so is by following the RAT (riskiest assumption test) approach.

RAT is a new take on the tried-and-trusted method of building an MVP to check a product’s viability and suitability for its customers. In this blog, we will discuss what RAT is and how it helps you to assess your product’s viability. Without any further ado, let’s march on.

What is the Riskiest Assumption Test (RAT)?

Originally proposed by Rik Ingram as an alternative to creating a minimum viable product (as he thought creating a minimum viable product to be unnecessary), RAT aims to identify a business solution’s riskiest assumptions and test them.

Riskiest Assumption Test a.k.a. RAT helps businesses to determine whether customers have an interest in your product before initiating working on a minimum viable product or a (technical) prototype.

The RAT approach is very useful for startups as it helps them to address their biggest assumptions based on the business model, market type, strategy, users, and other major considerations. It saves them from developing a product that has no market need, and hence saves time, effort and money.

In the context of product development, assumptions are beliefs or views that must be true or resolved for the business idea to succeed. These become identifiable once you’ve developed your initial idea in accordance with the business model.

How is RAT Different from MVP?

A minimum viable product is a rendition of a business solution that features only the most essential features. It is used as a tool for collecting user feedback and starting to generate revenue. The collected feedback is used to produce a market-fit product.

Owing to the potential of the riskiest assumption test, performing RAT has become a popular alternative to creating an MVP, especially for startups. Nonetheless, it’s not always practical to substitute a minimum viable product with RAT. In fact, many businesses start working on an MVP only after getting satisfying results performing RAT.

While RAT is the first step in developing a product, an MVP is an actual product that serves the basic function of solving a problem. Because actual software development is involved in producing a minimum viable product, it is much more expensive and time-consuming than RAT.

Riskiest Assumption Test vs Minimum Viable Product

Product owners and stakeholders don’t want their products to fail. Consequently, they add more features to a product than what’s required, and doing so requires more investment. If the product fails, it means thousands of dollars are wasted. Thus, we can say that MVP is riskier than RAT.

In RAT, you simply need to test hypotheses related to your product and see their viability. Unlike MVP, you don’t have to invest money in the actual development and creation of UI and UX.

Every product has its specifications, therefore, identifying the assumptions is the first step to following the RAT approach. Also, testing the riskiest assumptions vary from product to product.

How to Perform RAT?

RAT is simple. You need to test all of your riskiest assumptions but before you can start testing them, you need to list them. This is achieved by developing the riskiest assumption canvas. Here’s how to do it:

1.Come Up With an Idea

Software development starts with an idea. You must know the objectives, features, expectations, etc. from the idea. You can skip this step if you’re already working on a business idea.

2.Develop a Business Model Canvas

A business model canvas helps businesses to develop new business models and document existing ones. To populate the business model canvas, answer questions like:

  • Who will be the targeted audience?
  • Who are our competitors?
  • What is the problem(s) that we are trying to solve?
  • What are the main features and benefits of the solution?

Answering these questions will help you to know the vital aspects that need to be added to your business model canvas.

Business Model Canvas

These include key product features, targeted customer segments, value propositions, cost structure, and revenue streams.

3.List Down All Significant Assumptions

Once the business model canvas is complete, determine the things that you require to make your business idea successful. Listing down these items will help you better identify your assumptions. This step will also help you to label everything that must be done to realise your app.

4.Prepare a List of Risky Assumptions

The next step to develop RAT is to identify the risk-bearing assumptions. You will know which assumptions are the riskiest by paying attention to the most valuable components of your product.

Assumptions Table

5.Build a Hypothesis

Consider your riskiest assumptions for your business to be successful for developing a hypothesis. Creating a hypothesis will help you know whether:

  • The size of the problem
  • Your product is the right way to solve the problem
  • It is possible to develop your product and operate it without running out of funds and resources

Questions that you need to ask to develop a hypothesis include how many users are required for us to be profitable, are we selling the product to the right customers, and how many people can we get to sign up for our product.

6.Choose an Appropriate Testing Method

After successfully creating the hypothesis, you need to analyse and select the most fitting method for testing the assumptions. It depends on your requirements and the peculiarities of the project. There are several ways of doing so, including analysing the market, conducting surveys, and evaluating the competitors, i.e., competitor analysis.

7.Test the Assumptions and Evaluate Your Findings

Once you’ve selected the best way to test your riskiest assumptions, it’s time to actually do it. In addition to surveys and detailed analysis, pools and interviews can also be conducted. Other methods include developing simple landing pages and doing paper prototyping.

RAT Testing Types

You need to tweak your initial hypothesis to make it more suitable. The test results will show how viable your idea is as well as whether it’s worth proceeding to develop a minimum viable product or not.

Conclusion

The RAT approach saves you from beating around the bush when developing a business product. It helps you to start working on a minimum viable product only after ensuring that your product idea is practical and profitable.

For small projects, testing the riskiest assumptions will suffice but for bigger projects, it is advisable to execute RAT before delving into the actual development of a technical product or an MVP.

We admit that developing an MVP is not an easy task. You might seek professional assistance to help you guide through developing a minimum viable product and avoid the pitfalls of app development. Apptunix has a decade of experience in transforming ideas into reality.

Frequently Asked Questions(FAQs)

Q 1. What is an example of riskiest assumption?

“What if the product doesn’t add the value that it is supposed to?” “What if your projections about the targeted audience are wrong?” and “What if we run out of money?” are some examples of the riskiest assumptions.

Q 2. How is RAT different from MVP?

RAT full form is the riskiest assumption test. It is a technique to identify whether a business idea will have some market need or not. An MVP, on the other hand, is a usable product with only the essential features.

Q 3. What are assumptions in lean startup testing?

Assumptions in lean startup testing are unproven beliefs you have regarding the success of your business idea. “You will get customers for your mobile app” and “customers are willing to pay for the premier tier of your product” are examples of assumptions.

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