Unfortunately, Augustín did not validate his idea by testing his assumptions. Rather, he drove his idea to fruition through his instincts alone. Assumption testing would have provided much-needed insights as to where Augustín’s current strategy fell short and/or misaligned with consumer expectations. By taking the proactive route and testing his assumptions, Augustín would have been able to pivot his idea as needed through various prototypes and tests to avoid overwhelming financial losses. Impulsive (and costly) strategy shifts like Augustín’s can be avoided through inexpensive and meaningful assumption tests!
If Augustín ran assumption tests on his idea, he would have better understood Emilia and the value it can deliver to consumers. One of Augustín’s boldest moves was the interior redesign of all Emilia stores to bolster appeal toward younger demographics. If he wanted to test and validate this idea, Augustín could have produced models of various store interiors and gotten impressions on them from focus groups of young-age consumers. These tests could have provided drastically different results than what Augustín ended up doing. For example, he could have found that young consumers are not as interested in socializing as they are to get in and get out as quickly as possible. So, instead of investing so much money in overhauling the store design, this could have simply involved the introduction of mobile check-out or reorienting the layout and moving certain departments closer to checkout.
If I recently advised Augustín, I would immediately recommend that he test all current and future assumptions to achieve an optimal outcome! While certain parts of the strategy, like the store redesigns, cannot be changed as easily, other parts, like the pricing of the merchandise, can be changed and tested to match consumer expectations. If he believes that his consumers don’t want gimmicky sales and prefer hablar claro, he should test that by all means. Is that truly what consumers value, or is there something else that appeals to them? This would only become clearer to Augustín when he tests those assumptions and brings in actual consumers to hear out. By conducting tests like these and focusing on the short-term changes he can make, I am sure Augustín will be able to start redirecting Emilia’s trajectory toward success.
