Growth & Experimentation: How Experiments are Driven Through Risks

• By prioritizing experimentation, celebrating calculated risks, and fostering a culture of learning, organizations can unlock continuous improvement and innovation.

• Experimentation fuels innovation: quickly test ideas (MVE), compare variations (A/B), and gather real-world feedback (guerrilla) for data-driven decisions.

• Learnings from Amazon who have built their empire on a foundation of continuous experimentation. They learn from both successes and failures, fostering a culture that embraces risks to drive innovation.

• Growth experimentation is the methodical testing of ideas to drive user acquisition and engagement. This process fuels growth achieved through experimentation, a data-driven approach for continuous improvement.

• While continuous experimentation fuels growth today, the future lies in harnessing AI, automation, and VR/AR for deeper insights, all with a focus on ethical considerations.

Thriving on the Tightrope: Why Experimentation is the Key to Business Success in a Dynamic Landscape

The business landscape today resembles a high-wire act compared to the seemingly stable ground of decades, or even just a few years, ago. Constant change, fuelled by experimentation and relentless growth, has become the new normal in any industry. Figuring this out requires a delicate balance between risk and the comfort of stability.

Hard work, while desired by all managers, can be a treadmill to nowhere if employees are stuck in stagnant roles. It might bring along stability, but it won't propel a company towards greatness. While the allure of the Fortune 500 is undeniable, the true path to success lies in embracing risks through a culture of embracing experimentation and learning from them.

Investment in research and development sure is a powerful engine, but it is just one piece of the puzzle. Companies need to develop a keen eye for opportunity, seizing them at the right moment.  This demands a culture that fosters innovation, encourages well-measured risks, and even celebrates "calculated failures" – valuable lessons learned from ventures that didn't quite hit the mark.

Furthermore, a company's ability to adapt to technological paradigm shifts is paramount. The landscape is constantly evolving, and those who cling to outdated methods will be left behind.  Businesses must be open to change and embrace new technologies to stay on top. In today's dynamic environment, a company's ability to continuously run experiments, learn, adapt, and take measured risks is the key to not only surviving but thriving on the ever-shifting business tightrope.  

Developing a Mindset for Business Growth & Experimentation 

This area delves into the essential pillars of developing a growth mindset for success,  unlocking the potential for continuous improvement and innovation.

1. Leaders as Champions:

Leaders must be champions, actively promoting long-term growth & encouraging experiments throughout the organization. They should openly share their learning journeys, including failures encountered and how they learned from those experiences. Leaders must regularly and clearly communicate the vital importance of continuous growth and experimentation through risk-taking. By living these values themselves, leaders can inspire and motivate others to embrace a growth-oriented, data-driven approach.

2. Allocating Quality Time for Innovation:

Organizations must dedicate a specific percentage of working hours or budget explicitly for experimentation and innovation activities. Provide time for employees to experiment with new ideas, learn new skills, and indulge their curiosity without distraction. Implementing intrapreneurship programs motivates & enables employees to build and launch new products & services through company funding. 

3. Celebrating Failures:

Cultivate a culture where intelligent failures are embraced as valuable experiences, not sources of punishment or embarrassment. Openly celebrate instances where employees took calculated risks through the experimentation process. Conduct open and blameless post-mortem discussions to analyze what went wrong, identify root causes, and extract key learnings to improve future endeavours. Employees must feel safe to fail forward i.e. learning from mistakes after taking risks rather than having a fear of failure. 

4. Job Rotation Practices:

Implement job rotation programs that allow employees to gain experience & experiment with new roles & responsibilities. This adaptability can be a significant asset during crises like workforce reductions. As employees rotate, they can apply their experiences from other roles to current challenges, reducing organisational risks. It also facilitates cross-pollination of ideas while providing development opportunities.

5. Eliminating Barriers: 

Demonstrate true organizational commitment by dedicating specific resources and infrastructure for experimentation initiatives. Simplify approval processes to eliminate unnecessary administrative hurdles that can inadvertently slow down experimentation. Overall, designing an innovation-conducive ecosystem empowers employees and accelerates the innovation lifecycle from inspiration to implementation. 

Experimentation techniques :

The modern-day culture of experimentation has fuelled countless techniques which are implemented by organisations. Below listed are three such techniques :

Minimum Viable Experiment (MVE):

MVE is a technique used by organisations that delves into testing out hypotheses and optimize ideas quickly. It focuses on the user's experience while interacting with the MVP (Minimum Viable Product). MVEs prioritize answering specific questions about a product or service. By focusing on simplicity, organizations can experiment in the most basic possible manner to test their hypothesis. Ideas are tested with a small audience and inferences are drawn. Data collected, whether positive or negative, is crucial in the decision-making cycle. By adopting feedback in the early stages, organisations save up majorly on development costs as well as time. Managers can then make decisions regarding whether they need to go ahead with their ideas or pivot based on the results. 

A/B Testing:

A/B Testing can be applied at any touch-point throughout the customer journey, be it a website call to action, an email subject line, or to optimize a product page layout. The process begins with identifying a specific area for improvement. Once identified, a clear hypothesis is formulated, predicting the impact of a change on a specific metric, such as conversion rate or click-through rate. Keeping in mind the original version, a second version is created (version B), introducing a modification to the original (version A). Both versions are then presented to a significant number of the target audience. This random selection ensures that there is no element of bias present within the test. The better of the two is then selected for widespread implementation. 

Guerrilla Testing:

Experimentation through Guerrilla testing involves an inexpensive approach wherein low-fidelity elements are used. The main aim is to capture the reaction of the audience in real-time. Guerrilla approaches are non-conventional and usually eye-catching. Rather than taking place in controlled labs, they are directed in public spaces, usually in crowded areas. Recruiting participants is spontaneous and often relies on short explanations and some incentives to encourage participation. While limited control over the variables might be an issue, the guerrilla approach usually generates strong insights due to its real-world testing and at a very budget-friendly cost. It is usually used as an initial step to gather broad feedback before conducting a more in-depth testing. 

A Culture of Experimentation: Learnings from Amazon

Amazon's guide to growth isn't just about meteoric rise, it's a masterclass in calculated risks and experimentation. They've embraced a culture of "Sustainable Growth through Experimentation," fostering innovation, risk-taking and disrupting many industries. Their approaches have yielded tremendous successes like the Kindle and Marketplace. However, it hasn't been without its failures, like the Fire Phone and Amazon Destinations. 

Successful attempts - 

1. Amazon Marketplace :

Amazon debuted its third-party marketplace, zShops, in 2000. Customers were enthusiastic about Amazon Marketplace because it brings them a choice of products at a variety of price points. offering customers the opportunity to buy used merchandise at a lower price, on the same page where Amazon.com sells the item new. Amazon Marketplace is helping customers find and discover new products that they may have been hesitant to experiment with at a higher price point. 

2. Amazon Prime :

Amazon launched its Prime subscription in 2005 at $79 a year wherein it offered unlimited 2-day delivery to their subscribers. Over the years, it has grown into a membership program offering much more, including streaming services (Prime Video), music (Prime Music), unlimited cloud storage (Prime Photos), faster delivery options, and even a Twitch Prime membership.  It has become a one-stop shop for entertainment and shopping benefits.

3. Amazon Web Services (AWS):

AWS started in 2006 with foundational cloud services such as storage (S3) and virtual machines (EC2). These services eliminated the need for companies to manage their physical servers, providing on-demand resources and scalability. AWS then expanded its focus, continuously adding new services. Today, it offers over 200 services, including tools for big data, machine learning, and the Internet of Things.

4. Amazon Kindle :

Kindle revolutionized e-reading. Before 2007, E-books were a niche concept until Amazon decided to step in with their own idea. This gamble completely changed the industry. Kindles started simple but gained features through repeated revisions like touchscreens, backlights, and integration with other devices' apps for seamless reading. Built-in dictionaries and ample storage solidified Kindle's dominance in the e-reader market.

Unsuccessful attempts - 

1. Amazon Fire phone:

Amazon's foray into smartphones with the Fire Phone proved largely unsuccessful. Launched in 2014, the device faced major challenges due to its premium price point & limited app selection compared to competitors like Apple and Samsung. Niche features like object recognition features failed to resonate with consumers. Amazon reportedly incurred a loss of $170 million in a single quarter back in 2014 due to this failure. 

2. Amazon Auctions:

In the early days of e-commerce, Amazon attempted to step into the online auction space with their very own, Amazon Auctions. To no one's surprise, E-Bay was a dominant player in the market and was considered a monopoly. A year after its launch, Amazon stopped its efforts to promote it as a featured service. Recognizing the established strength of its competitor, Amazon wisely pivoted after a year. They chose to focus on areas where they could build a stronger market position.

3. Amazon Dash Button:

The dash button was Amazon's first-ever IoT device. It consisted of physical buttons stuck to appliances and walls allowing users to reorder household items with a single press. The device streamlined grocery shopping by facilitating the creation of shopping lists through barcode scanning. However, in early 2019, with the rise of voice assistants and mobile apps, the dash buttons were discontinued.

4. Amazon Destinations:

In 2015 Amazon decided to sell travel bookings like hotel reservations through a dedicated site called Amazon Destinations. The service closed down after a few months out of the blue. The reasons for closure remain unclear despite fairly successful growth, but speculation points to two such possibilities. One, Amazon may have struggled to compete with established Online Travel Agencies (OTAs) like TripAdvisor which possessed a larger market share and brand name. Two, the service itself might not have resonated with customers, thus failing to offer an advantage over existing options.

Overall, Amazon's experimentation drives innovation and growth. They constantly look for new opportunities to expand to new markets. Amazon also learns from setbacks, adapts, and pivots when necessary.  Embracing both the successes and failures of experimentation, Amazon has established itself as a sustainable brand at the forefront of innovation. This culture of constant iteration keeps them ahead of the curve and guarantees long-term success.

Growth Experimentation vs Growth through Experimentation, What's the Difference? 

The two terms ‘Growth through Experimentation’ and ‘Growth Experimentation’ are similar & deeply intertwined but do not hold the same meaning. 

Growth through experimentation refers to the overall culture of experimentation, risk-taking, and continuous improvement that fuels growth within an organization. It is a much broader term in comparison and it's an ongoing process. This philosophy permeates all aspects of the organization, from product development to marketing strategies. 

Growth Experimentation on the other hand includes a structured testing process which involves a growth experiment template & testing out hypotheses. It is primarily a methodology and a part of Growth through Experimentation. The growth experimentation process involves:

Developing a hypothesis:

Wherein managers identify areas for potential growth and formulate clear, testable hypotheses.  Brainstorming sessions can be conducted where managers can discuss potential areas of growth and formulate multiple hypotheses for each area.

Experiment Design:

A controlled test environment is created to isolate the impact of a specific change and study the results on them (e.g., A/B testing different CTAs). By measuring results in controlled groups, A/B testing isolates the true impact of the change.

Data Collection and Analysis:

Gathering and interpreting data to measure the success or failure of the experiment is paramount & the crux of the whole process. This approach ensures objective evaluation and avoids relying solely on intuition.

Iteration and Learning:

Based on the results obtained, making informed decisions is necessary. Analyze experiment data to pinpoint weaknesses & strengths in existing strategies. If an experiment proves highly successful, create a plan for implementing the change across the entire user base. If not, based on identified weaknesses, brainstorm, iterate, and test potential improvements. 

Looking Ahead: The Future of Experiment Culture 

Today, experimentation is the engine that drives growth. It involves fully committing to the cause & thinking outside the box. Though it is not a one-time event; it's a continuous learning and improvement cycle. By fostering a culture of experimentation, businesses can build the power of innovation into their DNA. This allows them to challenge the status quo and constantly seek ideas that can propel them forward. 

The future of experimentation lies in leveraging the opportunity for learning it provides. By embracing an agile approach, companies can unlock valuable insights that fuel their growth process through trying new things and exploring new territories. Scaling successful experiments before full-scale implementation minimizes the biggest risk associated with change. Ultimately, a commitment to experimentation becomes a stepping stone to success and helps businesses pave the way for sustainable growth. By embracing experimentation as a core tenet of their business strategy, companies can leverage their power to drive growth in an agile and data-driven way.