I was recently with a retail client of mine, talking about how to drive growth beyond their core business.
I don’t know who fed them the “fail fast” mantra, but they were choking on it and desperately needed the Heimlich manoeuvre.
I see it a lot and – I’m sad to say – it’s often a message coming from other consultants. The new trick seems to be: whip up a failure-celebrating frenzy, get straight to building MVPs, and skip having to think too hard about what they should be building.
Post-truth consulting is here.
Most of our corporate clients are facing what can feel like a challenging dichotomy: bringing innovation to market at the speed of new entrants, whilst also ensuring their effort and investment is focused on opportunities that can scale.
Thinking differently about failure is an important and well-documented part of the answer, but is anyone telling you that the answer to corporate innovation is to “just try stuff and see what sticks” is not working in your best interests.
We often see clients at extreme ends of the risk spectrum: either requiring exhaustive strategic and commercial analysis before investing in a growth initiative or setting dozens of new ventures running without much focus or strategic rationale to any of them.
The former often comes from a culture of risk aversion and a fear of failure. But the corporate world has gradually realised (or remembered) over the last few years that failure is normally a critical stepping-stone on the path to success.
We can learn a lot about failure and its role in success from sport. Dr Pippa Grange is the sports psychologist employed by Gareth Southgate to help change the mind-set of his England football team in advance of the recent Wold Cup. Dr Grange puts it brilliantly:
“It’s a funny paradox – our successes are achieved through trying, and trying most often ends in failure … the important lesson is to learn from our failures, reassess, rethink, move forward (sometimes in a different direction) and keep those dreams and goals alive.”
The value of failure, therefore, lies in pushing us forward.
Experimentation allows us to ‘fail’ quicker, without building the whole answer, thereby de-risking innovation. Experiments are simply learning environments, designed to point toward strategic goals, increase our speed of learning and enable rapid iteration, which should increase in fidelity in proportion to the confidence of the business.
Therefore, there are three key components to creating value through experimentation.
Experiments should be disciplined and considered: a way of ensuring high-frequency feedback on your hypotheses as you move towards launch. But they should also be accompanied by a willingness to be proven wrong and to adapt along the way.
The big strategy consulting firms have always taken a hypothesis-driven approach to strategic problems, building up a data bank and refining hypotheses as they go. In relatively slow moving, mature markets, traditional approaches will tend to deliver sound answers to growth and innovation questions.
However, we’ve found that the rate of change many markets are currently experiencing necessitates a new method of sourcing data to refine hypotheses. If the market is fundamentally shifting, if you’re trying to tap into a nascent consumer behaviour, or if you’re working with emergent technologies that make it hard to benchmark solutions, experimentation can be an invaluable source of data that lets you put your finger on the pulse of “now”.
We have clients across sectors – from insurers trying to disrupt healthcare, to FMCG companies trying to cut out retailers and sell direct – that are seeing the benefits of experimentation as a supplement to our more traditional strategy and innovation toolkit.
Irrespective of sector, the single most important principle of experimentation remains the same.
We recently co-hosted a breakfast as part of Fahrenheit 212’s Innovators’ Circle: a cross-industry collection of people who share a keen interest in innovation. Many of our guests needed no convincing that experimentation was valuable. Instead, one question summed up a lot of the discussion in the room:
“I already have an experimentation toolkit. But how do I know if I’m asking the right questions?”
You can spend a lot of time and effort setting up an experimentation environment, building prototypes, creating fake landing pages, and so on. But if you put rushed observations and obvious questions into forming your hypotheses, you’re unlikely to get much value from running experiments.
At Fahrenheit 212, we have long believed that transformational answers come from transformational questions.
Formulating hypotheses that deliver answers to transformational questions should be a highly strategic activity, based on identifying how the needs of the business and the needs of its customers might converge.
We call this thinking Money & Magic.
We examine the needs and behaviours of consumers and ask ourselves: what would need to be true for them to embrace a new offering? What do we believe will bring them back to repeat purchase?
We also get deep into the business model and the key commercial and operational requirements. Can we produce the product at £1.25 per unit or not? Can the existing assets and infrastructure we have support the volumes we expect from a Pilot?
Any one of these questions or hypotheses has the potential to sink a new venture if the answer is wrong. By taking the time to formulate a well-considered set of questions and hypotheses and testing them effectively through experimentation, you significantly de-risk future investment.
Quite simply, no.
You might build a profitable, scalable, defensible business by luck, but it’s highly unlikely. In our opinion, investment in new products, services, experiences and ventures should always be guided by strategy.
Experimentation and iterative development can help you accelerate learnings, de-risk launches and stage investment appropriately, but they won’t tell you where you should be going.
Your strategy should help you understand the difference between key questions and hypotheses that can make or break your new venture and details to figure out as you launch. When we talk to clients who are struggling to extract the value from experiments, it’s normally because they lack the strategic clarity to prioritise these hypotheses.
To adapt a famous Sun Tzu quotation:
If you’d like to talk about strategic experimentation, get in touch.