If you aren’t failing you’re not trying

Daniel Lock

Ultimately, small scale experimentation pays off in big ways

Many businesses don't grow unless they innovate, and innovation comes from developing and implementing new ideas. However, innovation usually carries a risk of some kind. For example, fundamental assumptions could be wrong, new products may not work sufficiently well, or customers may not accept your ideas.

This is why it's so useful to run business experiments. You can use them to help you understand how your idea might perform on a larger scale. You can also learn from your failures and mistakes, and refine your ideas to make them better.

Business experiments can involve anything from basic tests (for example, changing the welcome message on your website or testing a new process for dealing with telephone enquiries) to more complex projects (for example, testing a new product or service with a small number of customers).

The Right Idea is Priceless

Ideas are cheap and implementing them is expensive, but implementing the right idea is priceless. The question is, how do we find those gems? Experimenting – and through experimenting, learning. Consider IBM and its approach to experimentation.

IBM sponsors crowdsourcing sessions known as InnovationJam. These 72 hour long events involve 150,000 employees, family members, business partners, and clients. Through these collaborate efforts, people with a variety of backgrounds can engage in brainstorming exercises that are meant to bring about the next generation of growth for the company.

In 2006, IBM poured $100 million into 10 experiments that were to be conducted on a small scale. Emerging areas of interest included water, energy, transportation systems, and health care.

Master inventor Colin Harrison, who had participated in these jam sessions, joined a corporate strategy team in New York that endeavored to simulate a venture environment. Ideas were organized and presented directly to the company’s CEO.

In reflecting on the team’s beginnings, Harrison noted that they started very small. Even though he worked with hundreds of people, no one reported to him. Because he had access to so many people with so many different skillsets, he was able to take advantage of resources outside of his realm of expertise.

InnovationJam isn’t the only way IBM has capitalized on innovation. The company has also spearheaded a project known as EBO’s, or emerging business opportunities. Each EBO leader is given the funds and resources to test out the project on a small scale, and thus prove its value. If these initial pilots are successful, teams are then given the opportunity to take experimentation to the next level by involving a few customers.

At each milestone, IBM makes decisions about whether or not to keep supporting the project. Success isn’t always measured by how much money the experiment has made – the difference between $1 million and $50 million may not even matter. What’s more important is whether or not customers and clients think the project is valuable. If customers and clients want to see more, there’s a good chance the final idea will be profitable.

The Value in Learning from Success and Failure

Ducati may not seem like the best example for the business environment. After all, it’s a far cry from the world of IBM. But when the company entered the Grand Prix motorcycle racing circuit for the first time in 2003, their approach ended up saying a lot about the value of testing.

As it was their first year, they didn’t expect much. They approached it more as an opportunity to learn. So they set out to test features that would one day build a better bike by fitting bikes with sensors that captured data on nearly 30 different performance parameters. The data was discussed with riders, who could then adjust their behavior based on feedback.

Their bike ended up being the fastest in the field and they finished near the top in nine different races – a completely surprising result. The next year they grew so excited that they changed approximately 60% of the bike’s features, thinking they could get a title. They still did well, but they didn’t get the first place prize they wanted. Back to the drawing board.

Motivated by what they viewed as failure, they reexamined their approach to design and allowed for additional testing time before the season began. Their thorough testing paid off, and by 2007 Ducati won that world title they had long desired.

Ducati’s story points to the importance of experimentation and learning regardless of whether you have previously experienced success or failure. Testing new ideas comprehensively and piloting them in small, minimal risk environments may test your patience, but it will ensure value.