With companies under intense pressure to show year over year improvements, business leaders are continually looking for the next big thing to move the needle. For many industries, the major game-changer is adopting the latest and greatest digital technologies. However, acquiring the newest technology doesn’t always translate to more success; nor does remaining stagnant in your current systems. Instead, businesses should be investing their efforts in digital experimentation.
Take Google Analytics; although useful for setting benchmarks, these metrics can show you data for what has already happened, rather than helping to predict future trends. Recognizing gaps like this should motivate business leaders to experiment with new programs. Companies should be investing in tools to help inform consumer messaging, improve user experience and provide comprehensive statistical evidence to educate future business decisions.
Although it’s not a new concept, digital experimentation is widely undervalued in decision making and typically isn’t used to its full potential. According to the Harvard Business Review, “when experiments are done at scale, performance can increase up to fivefold in revenue, share of wallet, prospect conversion, risk mitigation, or product deployment efficiency.” Even small wins can add up quickly and beat competitors to the punch.
Test, Test, Test
With any experiment, it’s important to remember that correlation does not always mean causation. For example, eating eggs was once frowned upon because there was a correlation between egg consumption and high cholesterol. However, scientists later discovered that avoiding eggs had little or no positive effect on cholesterol levels. This finding was discovered by using a control group and testing one variable at a time. Controlled experiments can also be conducted in the world of business. These experiments help to inform all of the variables at play and to eliminate the systems and tools that are not producing the desired results.
Get the Ball Rolling
Despite the proven power of digital experimentation, companies often struggle on where to get started. Here are three core capabilities that are sure to get you on the right path.
- Create Ideas: Get a team together to brainstorm potential variables that can be tested. Start with what has worked in the past and dive deeper from there. Always ask why past successes have succeeded and why past failures have failed.
- Act on Data: Great, you have been running your experiment for an extended amount of time. Now, dig into that data and make some determinations on what is working and what isn’t.
- Acceleration: Many ideas will have operation implications and your business needs to be ready to adapt to those quickly and effectively. Communicate with your operations team to ensure that everyone is on board and ready to hit the ground running.
Controlled, digital experimentation is becoming a core need for companies to become and remain digitally competitive. Analytics are still important, but they are based on past data and don’t accurately identify what is changing at this very point in time. In the words of Jeff Bezos “In baseball, an “at bat” can score four runs at the most (runners on all bases). In business, every once in awhile you can score 1,000 runs. This long-tailed distribution of returns is why it’s important to be bold. Big winners pay for many experiments.”
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