Sunday, April 24, 2011

If you don't question the status quo, you're not doing your job

The link between dreaming and doing is discipline.  Doing things differently and doing different things requires planning, openness to input, tweaking , and persistence.  It also requires employees to think like a scientist.  Engineers and managers should understand the value of "test and learn" where a handful of business experiments can potentially yield big benefits.

Consider the seven rules of experimentation, developed by Eric Anderson, a professor of marketing at Northwestern's Kellogg School of Management - -
  1. Focus on individuals and think short term. - - The most accurate experiments involve actions to individual customers, rather than segments or geographies.
  2. Keep it simple. - - Look for experiments that are easy to execute using existing resources and staff.
  3. Start with a proof-of-concept test. - - First establish proof-of-concept by changing variables in whatever combination you believe is most likely to get the result you want.
  4. When the results come in, slice the data. - - When the data comes in, look for subgroups because most actions affect some customers more than others.
  5. Try out-of-the-box thinking. - - If you never engage in "what-if" thinking, your experiments are unlikely to yield breakthrough improvements.
  6. Measure everything that matters. - - Feedback measures must capture all the relevant effects.
  7. Look for natural experiments. - - If firms can recognize when natural experiments occur, they can learn form them at little or no additional expense.

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