How to fail fast, succeed sooner (and save money) with experiments
The main purpose of a business experiment is to de-risk new initiatives before launching them. Therefore, make sure you only invest in ideas with enough potential to succeed. For every new venture, an organisation sets up financial resources, professionals’ time, knowledge, and efforts into creating and developing those ideas, that seem to be ‘the perfect solution’, but need testing before development.
Testing your business ideas with experiments helps generate evidence and insights that allow you to learn and decide how to proceed with clarity and confidence. Several experiments can be conducted by quickly developing a first or preliminary version of the product or service, and testing them in relevant contexts to gather feedback and learn about the idea’s potential and for instance, creating a fake button to count clicks or observing interactions of customers with new products placed on shelves.
Business experiments can be analysed through three critical lenses — desirability, feasibility, and viability — which serve as the cornerstone for evaluating and guiding innovative endeavours:
Desirability
This aspect focuses on whether the target users find the idea or product desirable. It involves understanding user needs, preferences and behaviours to ensure the product meets a real demand.
Feasibility
This examines whether the idea can be realistically developed and implemented within the current technological and operational constraints. It involves assessing the technical capabilities, resources, and time required to turn the idea into a viable product.
Viability
In this context, if the idea can be a sustainable business model. It involves analysing market potential, competition, revenue models, and cost structures to ensure the product can be profitable and scalable.
From a good idea to a validated business initiative
Learning first, instead of building sets up your new product or feature for real success. You will decrease customers’ behaviour-intention gap by testing on real behaviour instead of collecting intentions by exposing your customers to possible solutions. Let’s find out how to best dive into experimentation during your business idea design journey.
Different Scenarios for Experiments
With business experiments, ideas become tangible and discussions are concrete. So, for companies or teams that need to move from an idea to a project or solution performing tests with real users can be a step in the right direction. We recommend you consider this effort if you are in one of these scenarios:
Scenario 1: Teams have qualitative information from a small sample and need to validate these findings with a larger customer base
Scenario 2: Teams possess a large amount of data and observe patterns but require experiments to identify causations and validate correlations
Scenario 3: Facing egocentric innovation, in which a leader or team strongly believes in an idea and experiments are proposed to validate this belief
Experimentation Stages and Focus: New Business vs Business Increments
If we look into the Koos framework and our experience we can identify two different moments to take advantage of business experiments.
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Derisking new business ideas – between imagine and create phase
In the first stage of experimentation, the researchers aim to explore as much as possible all the ideas that could be useful in designing the new service or product. Focusing on exploring alternatives, and validating the investment before proceeding to materialise them, which would require allocating even more resources.
Disruptive Ideas:
For ideas that significantly deviate from existing offerings, the approach involves conducting experiments that decrease risk to the brand. This might include using white labels to test the idea without directly associating it with the brand and operating in uncontrolled environments where direct access to customers or users is limited. The goal is to gather information from a broader audience without compromising the brand’s reputation by having more flexibility. -
Derisking business increments – scale phase
The second stage is innovation or incremental improvements in products or services, where the customer or business is already familiar with the offer. It is not about bringing a new product or service to the market, is to test new features and/or service flows with the confidence that customers will respond well to the changes.
Incremental Improvements:
The approach leverages the established brand and its channels for enhancements or additions to existing products or services. Providing a controlled environment for experimentation, with direct access to customers and a clear understanding of how people will involved. These experiments have more support from the organisation structure and can use existing platforms to engage with customers.
Companies are increasingly using experimentation as part of their strategic planning. By conducting experiments, organisations can gather valuable information to inform their investment decisions. This mature approach to innovation allows companies to plan their investments based on evidence and insights, rather than rushing into decisions based on untested ideas.
Experiment examples
How to set up your business experiment?
With all the complexity of conducting business experiments, it is important to plan it accordingly, have clear objectives, a well-structured team, and engage your stakeholders throughout the process.
A dedicated team, including key organisational members and external experts, is critical to successful experimentation. To set up a team for success, we recommend including an Innovation Expert to orchestrate the process, internal product managers or owners, visual or UX designers to execute the experiment, data analysts for measuring and interpreting results, and ideally, a head of innovation to champion the experimentation process.
In addition, our framework for conducting business experiments focuses on testing the riskiest assumptions related to desirability, feasibility, and viability. This process involves refining assumptions into testable hypotheses, designing experiments, defining success metrics, and ensuring experiments target the appropriate user group.
*A Real Project Case
In collaboration with a wine company, Koos conducted an experiment exploring the desirability of online advisory services. This case illustrates the application of our framework in a real-world scenario, highlighting the iterative nature of experimentation and the importance of aligning with business objectives and user needs.
Master your business experiments
An innovation process is iterative and requires creativity, resilience, and strategic thinking. The essence of these efforts is based on the principle:
Listen to your customers! Stay curious. Engage in dialogue with them and observe their behaviour using crafted experiments.
- Business experiments are a powerful tool to derisk solutions, allowing organisations to debunk assumptions in a controlled, manageable environment. But, this approach, demands changes in mindset and embracing flexibility, recognising that not all experiments will lead to success and failing is part of the process.
- This openness to failing and learning becomes your ultimate goal, guiding you towards innovation and improvement.
- The pursuit of the perfect experiment is a utopia. Instead, the goal should be to capture insights and learnings with every trial, regardless of its outcome. This journey is not about achieving perfection but about continuous learning and adaptation.
- Finally, the most crucial step is to simply start. Begin with small, manageable experiments. This approach makes the task less daunting and allows quicker learning cycles, enabling more rapid iteration and refinement of ideas.
In essence, the path to mastering business experiment design is built with curiosity, flexibility, creativity, and a willingness to embrace both successes and failures as opportunities for growth. So, take that first step, stay curious, and let the experiments lead you to uncover valuable insights that can drive your business forward.
Reach out to our expert if you want to learn more about our experience with business growth through experiments.