How Planned Experiments Can Help You Accelerate Your Business
photo source: chemistry.about.com
As I extend my work beyond high-tech companies and start-ups, I’ve noticed that agility and continuous innovation, the two secret sauce components of the industry, can benefit other industries significantly, helping them to reduce waste, pivot business strategy, and transform organizations.
This blog summarizes the larger context around planned experimentation, a key ingredient to successful innovations, where the outcome is viable, feasible, and sustainable in the marketplace. I’ll speak specifically to applications in specific industries in my future blogs.
Note: The perspective that I hold on innovations is one seen through the lens of leadership, culture, and people. Innovation is designed by the people and for the people (one thing that we cannot automate!). The various methodologies provide a useful framework; however, without creating an internal culture to cultivate the innovative spirit, true innovation cannot flourish. See Want to Innovate and Win? Design It into Your Culture ….
Why are hypotheses driven experimentations important?
In today’s fast paced, competitive world:
Customers’ needs are illusive
The new age customers don’t know what they want until they have it. Customers are no longer seeking out products and services; rather, their needs are anticipated and sometimes created by companies. Thus, companies, more than ever before, need to continue to innovate and provide new offerings to capture their share of the wallet. If they don’t, they are at the mercy of their competitors and quickly become irrelevant. Whoever thought smartphones, online food delivery, and car share services could be part of our daily life? These innovations quickly disrupt the way we do things and swiftly shift our behavior overnight.
Customers are finicky — In the past, customers might have tolerated things because there were not many alternatives or options. This is no longer true. The cost of switching is low and ”trying the next best thing” has become the norm.
Customers are demanding — As the Internet levels the playing field of information transparency and symmetry, customers can very easily find alternatives if their experience is not up to their expectation. Competitors can easily replicate one another quickly, flattening the competitive advantage that one may have overnight. The first-to-market advantage is rarely sustainable, and monopolies are quickly crushed if incumbents do not continuously focus on creating new values for these illusive customers. This is true even in the nonprofit and social enterprise world, where the competitions may or may not be other entities, but rather scarce resources such as the customer’s time.
So how do you win the innovation game?
1. Deep customer-centricity
The basic, overarching needs of being human have not shifted. We all want to be part of a social system, being plugged in to what’s going on, being flattered, having freedom and independence, etc. Understanding the underlying emotive needs of your customers and their motivations is the basis for innovation.
Continuing to ground your daily operation and product innovation on the fundamental truths of your customer is critical.
Conducting ethnographical research at the natural habitats of your customers is a great way to develop this deep empathy — an intuitive understanding of your customers’ pain points, motivations, challenges, barriers, and aspirations will help with designing the product/service from their perspective (rather than one that is internal).
2. It’s a continuous learning process — speed and iteration is key
Given that there is no existing model in the marketplace, it would take a fortune teller to “get it right” the first time. There are too many pieces that are unknown and hypotheses need to be tested. To successfully innovate, continuous iterations of testing and experimentation are needed to arrive at a high potential solution which is viable and feasible. As customers are illusive, finicky, and demanding, this needs to be done with a speed that allows iterative learning in a short amount time. This process helps to reduce risks and costs as early in the innovation funnel as possible, making it an efficient model.
3. Create an engaged, empowered culture that fosters innovative spirit
It takes a special kind of leadership to not stomp on innovative thinking, even though sometimes the ability to take action may not be immediate (or happen at all).
Once innovation gets blocked, risk aversion sets in as the norm of the organization. People recoil to their protective space, and their potential is blocked.
For that reason, I truly believe that you cannot have true innovation without an empowered and engaged culture.
I’ve found that the word “experimentation” conveys a sense of unpreparedness and sloppiness in organizations with a culture that focuses on operations excellence.
o How can we roll out half-baked solutions? How is it going to reflect on our brand?
o We need to explicitly define the operation parameters and impact of this … what if our customers complain? What if our brand gets compromised?
o Why are we spending all these resources on “experiments?” They distract us from our current work. We are not ready for it now.
o We don’t have the right resources to execute this. This may be a longer-term plan.
While these concerns are natural, particularly with highly successful traditional business managers, they bring innovation to an abrupt stop.
It’s a commitment. Are you ready?
It is true — innovation may not be at the top of the strategic agenda if your day-to-day operation is at risk. It takes active investment, and perhaps sometimes a leap of faith, to realize a vision that is tremendously different from the status quo.
However, when a business is viewed through a myopic lens of business optimization and risk mitigation, the spirit of innovation gets thrown out of the window. It takes an active re-wiring of the business management mindset to see the duality of the two truths.
An analogy to planned experiments comes to mind: Imagine a scientist who is looking for the next formula to cure cancer. The experimentation is structured and built on sound hypotheses and informed by data from secondary and primary research. The intermediary solutions are “tried on” by a small group of testers where observations and feedback are key factors in creating a refined solution. It is very similar in the business world when we want to create innovative new products.
One important thing: If not carefully managed and designed, “experimentation” can be used as a crutch for carelessness.
1. Determine the problem to solve. Make sure the problem is big enough and painful enough to innovate around. In other words, there is a real immediate value add to your end customers. This can be backed by ethnographic research, market sizing exercises, and opportunity mapping.
2. Pick a very tangible way to solve this problem – determine your Minimum Viable Product. While the solution may ladder up to a higher vision (i.e. ending poverty through building savings behavior), the scope of the “product” itself needs to be defined specifically and backed by customer insight (i.e. the biggest barrier to developing a savings habit is xyz, and our solution is specifically designed to address xyz). Narrow the scope and approach to something that is specific enough to create in under six months, while keeping a larger vision for the “final product vision” and keeping track of that on your roadmap.
3. Form Hypotheses. Start with a set of hypotheses prioritized by how critical they are to your business assumptions. Start by listing all assumptions that you may be making about your customers and the marketplace as you envision your solution. Some of these can already be validated with secondary research.
4. Test your Concepts. Fast prototype concepts that will help validate your key hypotheses, and test your assumptions with real customers. At this stage, you are really trying to get an indication of market demand for the way that you are intending to solve the problem, and you are gaining some initial user insights about how to solve them.
5. Design UX/wireframe and Conduct Usability Testing: Before investing time to code particular features, you want to not only validate that there is significant value add (with concept testing + user insights), but also if the way you are adding the value is one that users want (and will not be confused by). High-level usability testing focused on the look and feel of the product, the major navigations, and the product-feature hierarchy can help. Simply put: mock-up what you think the product should look like, hardcode/fake functionalities. The wireframe will be a communication vehicle to your engineers.
6. Focus on lean, seamless, prototyping. Focus on seamlessly solving that “slice” of the problem that will help validate your top hypotheses. Fast prototyping (alpha) with the intent to release for feedback within 3–6 months is the goal.
*Note: this does not mean solving the problem sloppily. The aim is to solve a particular problem really well, so that your alpha feedback will be on the impact/efficacy of your offering, rather than on how clunky or problematic the execution is.
7. Release alpha to limited users for feedback. I have seen alpha as small as only 50 users — it really depends on the complexity of the product and what you are looking to test. What’s really important for alpha is:
a. Finding a group of “advocates” or early adopters who are forgiving —because you know it will not be perfect. Cultivate this relationship actively throughout the year. Some people love being alpha users and offering their feedback.
b. Defining what specific questions you have for your alpha users upfront — and ladder up how these answers can help validate the key hypothesis.
c. Structuring the test so that your alpha users are using your product in their natural environment over a period of time if your product is a “continuous usage” product (versus a single transaction).
d. Gathering qualitative feedback as well as actual usage analytics. I found that interviews and focus groups often give you much deeper insights to why things work/don’t work — so rather than simply surfacing the symptoms, it points you to the cause. Instrument your product with tracking so that you can observe the actual usage and navigation. Sometimes what people remember or are able to articulate may be different from reality.
8. Determine what your standard is for beta and general release. (i.e. We are going to continue to iterate until metrics xyz get to be abc. )
9. Quickly fix bugs, continue to iterate, release, and learn until the standards are met.
10. Prepare to go to marketing (GTM)! There are lots of brand, legal, operations, and marketing considerations needed in order to prepare for a successful launch. This effort can take a minimum of 2–3 months — so while your tech/product team is focused on getting the product as good as it can get, start thinking about how you want to release, where and why, and what operation considerations needs to be in place to seamlessly roll out your product.
