strategic innovation & design

Fundamentals of Business Experimentation

culture & capability data intelligence design insight

Ideas that eventually reshape industries very often fly in the face of the collective wisdom and experience. In the absence of historical data to provide any comfort that value can be created from such ideas, it becomes vital for businesses to develop competency in experimentation.

sarah leslie consulting designing experiments for business innovation

Eric Ries' Lean Startup methodology has much to teach businesses of any scale about the value applying a scientific approach to eliminate waste in the development of new offerings, and the use of an iterative, test and learn cycle to de-risk the innovation process.

But before embarking on business experimentation, consider these key questions: 

  1. What is the purpose of the experiment? Will it definitively answer a question about a specific course of action under consideration?
  2. Is there sufficient buy-in across the organisation that stakeholders will act upon the results?
  3. Is it feasible to conduct an experiment that will answer the question?
  4. Can the experiment be designed to assure reliable, repeatable results?
  5. How will maximum value be gained from the experiment?

The potential causes of business outcomes are often unknown or uncertain, and the linkages between them are often complex and easily misunderstood. In an ideal experiment, cause and effect may be verified through manipulating a single variable that is presumed to effect the desired and observable result, whilst holding all other potential causes, and the environment, constant. But of course, the business environment isn't controllable - it's constantly changing. 

Whilst many businesses are developing the ability to analyse the rivers of big data that are flowing through them, making executive decisions based on observed correlations may be misguided. Only through rigorous experimentation can causality be established.

Businesses that hone their ability to design business experiments, as well as their expertise in data analytics, and incorporate experimentation as a necessary step in the process for approving new concepts, initiatives and ideas, are far better equipped to challenge convention and innovate with confidence.

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