Reaching the final two stages is the most difficult because that requires a cultural change in terms of how your company runs. I can tell you the five questions that you need to address to reach these stages. The first one is cultivating curiousity. You have to bring in a culture where curiosity drives a lot of people, you have to hire curious people who can challenge everything. The second one is creating an environment where data trumps opinion. The third one is democratising experiment. This means you have to empower people to run their own experiments without having to ask for permission every single time. If you create a lot of red tape for experimentation, people won’t do it.
The fourth one is that you need to be ethical about it, because when carrying out an experiment, you cannot expose people to something considered unethical by them. The fifth is rethinking your leadership model as an executive, redefine what is their role in this kind of a world. An executive needs to set up a grand challenge: not just about everyone willy-nilly experimenting but to identify that one big objective that everyone is working towards. Secondly, they have to ensure that the proper resources are available. Also, the executives need to live by the same rules. In the book, I have cited the example of booking.com where a new CEO comes and says he has made a decision on how the logo should look like. Instead of simply accepting that, the team concerned says that they would run a test and let the CEO know what happens. So, the intuition of those at the top should be challenged just like every other employee.
Does continuous experiment put additional strain on day-to-day operations?
It shouldn’t be a strain because you should embed it into your operational execution. The professional digital companies, for example, do it every single day. So you have to ensure that experimentation is just as natural as looking at the financial numbers on a daily basis. Of course, to do that you need to put in the right infrastructure and provide people the requisite tools to bring about this behavioural change.
Will intuition and data-driven experimentation co-exist or the former will cease to matter?
Experimentation is not a substitute for intuition. What I argue is that it is a complement. When you run many experiments, you need many hypotheses. A hypothesis will come from different streams: It will come from intuition; it will come from market research. Organisations do all these and go into decision making. What I am saying is there should be an intermediate step, that you include experimentation in the middle. That will tell you whether the approach is wrong or right. Second, I realise that not every business decision can be tested before getting rolled out, say the case of a merger or an acquisition but those which can be, should be tested. I must also add that at times, even a successful experiment cannot be adopted if there is a legal or an ethical reason to not proceed with it.
How does the famed Indian jugaad compare with your theory of experimentation?
I wouldn’t say it is the same thing but there is connection for sure. When you are resource constrained, you are perhaps more willing to experiment to find alternative ways to perhaps solve the problem. Necessity is the mother of invention but you can also say that necessity is the mother of experimentation.