A Smarter Way to Run Business Experiments

Too many companies try out new ideas without knowing how to properly test them, a Harvard professor explains

Stefan Thomke
Marker

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A woman looks at her laptop deep in thought, looking at the results of a business experiment.
Photo: Cavan Images/Cavan/Getty Images

InIn 2016, Jeff Bezos gave shareholders a rare insight into Amazon’s innovation engine. In his annual letter, he explained: “I believe we are the best place in the world to fail (we have plenty of practice!), and failure and invention are inseparable twins. To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment. Most large organizations embrace the idea of invention, but are not willing to suffer the string of failed experiments necessary to get there.”

So it should not have come as a surprise when Amazon acquired Whole Foods about 14 months after Bezos wrote the letter. Amazon’s reputation for fearless innovation was fueled by such radical business experiments — so-called big swings — and, equally important, the tens of thousands of smaller and disciplined experiments that have led to a highly optimized user experience in its web store.

If the case for business experimentation is so compelling, then why don’t more companies conduct rigorous tests of their risky overhauls and expensive innovation proposals in order to make better decisions?

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