We all know experiments work – after all, this is how we got the IPhone, the planes and the vaccines. Yet, Stefan H. Thomke brings experimenting to a whole new level. His heavily-researched book (“Experimentation Works”) looks in-depth at how the businesses can create, develop and adjust their business models without committing too many resources in advance.
“Experimentation Works” is a book about a book – it looks at how a for-profit organization can re-arrange its activities so that they extract maximum value from pre-launching them. Thomke attempts to apply the classical scientific method in research to new business problems. The approach in itself is centuries old – and has been heavily popularized by Karl Popper in his 20th century scientific methods famous book. Yet, so far the method has failed to make substantial inroads in the mainstream business – and this is where Thomke tries to make a serious point about it.
The main issue with experimentation in business remains the risk aversion. Thomke warns that many organizations are reluctant to fund “uncertain-results” experiments – and this creates long-term serious development issues. If a business fails to experiment, it actually fails on a large extent to innovate. And if a business fails to innovate, it will slowly fall behind its competition – which becomes a kind of a downwards spiral.
Naturally, the business leaders are aware of the need for innovation. Yet, research shows that the vast majority of businesses put less-than-enough efforts into experimentation. On the long term, this can only lead to sub-marginal benefits and internal conflicts. And here comes the power of “Experimentation Works” – it actually suggests a way of doing these things without killing the company’s budget and without creating more problems than benefits.
What are the answers? Without spoiling the book, I can only say that there is not a single-bullet solution to this thorny problem. To succeed in experimentation, businesses must do several things in sync:
- Accept variable results from experiments and not punishing failures,
- Create an experimentation culture,
- Encourage employees to take calculated risks,
- Reward good results and its promoters,
- Scale up the successful experiments as quickly as possible.
I know, this sounds like a CEO’s job – and it is. There are many companies out there who succeeded in not only growing, but also in becoming dominant market players – by just applying the correct approach to experimenting. Booking.com, Amazon, GE and countless others have managed to push the boundaries of their businesses and create new product offerings – with minimal costs and reasonable efforts. At the end of the day, what differentiates a successful company from a less-successful one is only its products offerings – and with the fierce competition today, things will only get “better”.
One more remark about the books timing – even if “Experimentation Works” was published right before the emergence of the COVID pandemic, it remains more actual than ever. There are many examples inside of experiments that can be done remotely or with empowered employees. Thus, lots of food for thinking inside!
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Title: “Experimentation Works – The Surprising Power of Business Experiments”
Author: Stefan H. Thomke
Publisher: Harvard Business Review Press
Publishing Date – February 2020