What is your attitude to undertaking business trials? Do you approach them with genuine interest and excitement, or do you feel as confident as a trainee lion tamer who has forgotten to take the chair into the pen? Far from encouraging new thinking and experimentation, many organisations seem filled with indecision and highly polished plans and proposals that will never be implemented.
For example, in “Built to Last”, Jim Collins tells how US bank Chase Manhattan lost ground to Citibank as a result of CEO David Rockefeller’s overly controlling approach. The fear of making decisions led to paralysis and an inability to try new ideas because, as one senior executive understatedly put it, “David might not like it.”
Yet, successful testing is a key discipline of growth-based organisations. Innovation guru, Michael Schrage, has argued that “Effective prototyping may be the most valuable core competence an innovative organisation can hope to have.”
So how do you test, trial and prototype effectively? Here are five golden rules:
- A clear intent. Spending time and energy on clarifying what you really want to achieve helps pace and delivery further down the line. A clear goal also helps you split the trial results from your objectives. Just because your trial may not work, does not mean that the goal is wrong. Amazon.com chief, Jeff Bezos, recently told the Harvard Business Review how the Amazon team developed its new marketplace business. “It’s important to be stubborn on the vision and flexible on the details. We made a lot of twists and turns in the execution. We worked on it for a few years. But we didn’t give up on the vision.”
- Persistence. Six years into its testing of its Express format Tesco still had developed fewer than 20 stores. In the next four years they found a way to make it work on petrol forecourts and grew to over 100 stores. And between 2003 and 2006 management’s persistence enabled them to acquire other convenience chains and create a format with over 750 outlets. Perhaps, given the 12 year timeframe for success, “express” is not the right format name.
- Small-scale/low-cost. Some times you have to jump in with both feet, but mostly you can start small. The advantage of going small is that you can get to grips with the issues more clearly and work-out solutions more quickly. Small-scale tests are also lower cost. Low cost trials enable you take bigger risks – your cost of failure will be lower. Conversely, high cost trials have to work – quickly! – or your neck will be on the line.
- High speed. Speed is a competitive advantage. You only really find out whether a new idea works by actually doing it. That’s why going small-scale and low cost is so helpful. Michael Bloomberg, CEO of Bloomberg, the media company, wrote, “While our competitors are still sucking their thumbs trying to make the design perfect, we’re already on prototype version #5. By the time our rivals are ready with wires and screws, we are on version #10. It gets back to planning versus acting: We act from day one; others plan how to plan-for months.”
- Opportunism. As well as failures, experiments often lead to unexpected successes. Don’t ignore them. Instead, seek to understand what opportunities they represent. For example, Wal-Mart’s personal greeter came about as a result of a single store manager’s experiment to deter shoplifters. Not only did it work in reducing theft, it also had a positive effect on the attitude of the store’s customers. To the credit of the Wal-Mart management they noticed the trial’s success and took action. Greeters are now present in all their stores across the world.
The bottom line
Don’t turn trials into tribulations. Instead, follow the five rules to create a hotbed of action, learning and growth that will drive the future success of your organisation.
To find out more contact Stuart by clicking here or call +44-(0)1636-526111.