I would like to hear from those folks that have gone through their initial market research and idea validation stages of their start-up and would like to share how they went about making sure their idea was something worth wrapping a business around.
Ultimately, that is the the single most dangerous flaw all entrepreneurs share - they love the process of creating. For most, market research and validation is something like a bad root canal - I've been there before and guilty as well. The easiest way to validate your idea is to perform a first round of hallway testing :
Make sure you tell people that you want an honest answer - otherwise you run the risk of getting (useless) sugar-coated results. Also, make sure that the people generally understand the subject area (so your grandmother might not be the perfect person).
Hallway testing doesn't cost you any money, just the time to do it and to collect feedback / condense valuable information. Once you have this qualitative feedback, move on and try to validate (quantify ) the requirements with surveys, ads, etc - it if this is feasible for your product / service.
I'm in a similar situation. In our case, my business partner and I are working on a B2B application for HR departments. So we've asked our friends to help us out with their opinions (the ones that work in HR) or with contacts.
We offer to buy everyone lunch in exchange for their opinion, especially the people we don't know :)
We ask them general questions about their feedback, but also specific things like what would they pay for our product. Everytime we do this we get better at asking the right questions, we gain knowledge of what all these people really do (I assumed I knew what HR did and I was mostly right, but not completely), how the competition works, what prices they pay, and so on. Everyone has been nice, helpful, and offered extra help.
We wanted to talk to potential customers before we started programming because we've been in the situation before where we've developed something that nobody wanted.
The result is that we're considering a few changes, and we're working on a beta that we hope to test and develop with one of these potential customers. We also have some ideas of where we can go if things don't work out exactly how we imagine them.
The work of Steve Blank and Eric Ries have been a help to us in this area. If you're interested here are a couple of resources:
From the perspective of what I refer to as innovation methodology, I try to focus product and service designers on solving a problem for their potential customers. As applied to your HR centric product, I would encourage you to talk with people in that audience about what makes their job hard and what makes it easy. To the extent you solve their problems for them your product will be considered innovative. Next deconstruct those people in to various groups who are part of the process, and ask each of them the same questions related to problems which can be solved. HR might be deconstructed into groups of Recruiters, Hiring managers, Compensation managers (people who create the packages to bring in top talent), Staff managers, and HR generalists who usually support the staff managers. Each will likely give you a different perspective on the topic and potential to create a tool to solve their problems.
I want to credit Hans for stating this (somewhat differently), but it is important to recognize that people will almost always give you an answer that is not insulting or hurtful, so you will often get answers biased toward your product being good as it is. I would suggest you focus on watching them react (video if they will allow it). You will often see a "sour" face followed up by a verbal compliment. Most people don't even realize they are not being 100% accurate to how they really felt, so just know the human decency bias exists.
(again +1 to Hans) Always put something in their hands to touch, even if it is just a mock up with pictures of buttons rather than something that works. Prototypes are critical and you should only test one or two features at a time. Tell the viewers what to ignore. (i.e. "This is not the real case we will use for our widget, so I am interested in seeing how you might use this menu during your daily task of _ _."
Just as another common pitfall, don't ask for input on how to make something innovative. Almost as a universal rule, people giving feedback can not provide answers that our outside their current world view. As such, they have a hard time envisioning a world after a disruptive innovation. Imagine asking people to imagine a world with the iPhone back when our cell phones were the size and shape of a typical masonry brick. Again what they are great experts on is the tasks they do during their daily lives, and the problems the might be having. Your task is to make the innovative tools that will help them with those problems.
I would like to say all the answers here are insightful. From a product point of view when vetting and creating an idea, ensure that you do "Voice of the Customer". That means that you have clearly defined who your target audience is. A great book that I read recently on Design Thinking takes you through tools that can be used to capture the Voice of the Customer and turn it into data to help to validate your idea.
Read The Lean Startup, period. It's all about validation and experimentation through building minimal viable products while spending the least amount of time and money.