Stefan H. Thomke is a professor at Harvard Business School and researches innovation management. He is convinced that the best ideas come from companies that constantly dare to experiment. In his book “Experimentation works: The surprising Power of Business Experiments” he describes how such an experimental corporate culture is created.
t3n: Mr. Thomke, every company wants to be particularly innovative. But how do you come up with really innovative ideas?
First of all, one should say goodbye to the idea that it is all about having a great, ingenious entrepreneurial idea. Hoping for such an inspiration or working towards it can even slow down the innovation process.
t3n: How could it be better?
One should admit: Most of the ideas we have don’t work. Customers usually behave completely differently than the bright minds in marketing, product development or management have considered. That’s the reality. Companies that constantly and directly test ideas on customers know that: 80 to 90 percent of our ideas turn out to be wrong.
t3n: That doesn’t sound very inspiring …
Maybe not at first, but ultimately it means : I don’t have to be a genius to develop groundbreaking innovations. It’s very liberating. Companies like Google, Amazon, Facebook or even Netflix are not so successful because they had a single, great idea. But because they develop, test and discard hundreds or even thousands of small ideas for new or better products and services every day. Over many years, these companies have invested in an infrastructure and culture that enables them to efficiently conduct tens of thousands of tests per year. THAT is the secret of their success: The necessary discipline for always new, controlled experiments.
t3n: Many people do not associate discipline and control with creativity and innovation. The many ideas have to come from somewhere before they can be tested – right?
I prefer to speak of hypotheses rather than ideas. Expertise and experience and intuition are important to make these hypotheses, of course. My intuition may tell me: Our customers might like a new product feature. Or: An improvement in the design of our shop could lead to more customers buying from us. To a certain extent, these ideas arise on the side in everyday life. The art of experimental corporate management lies in never explaining these hypotheses to the truth without being checked, but always testing them. We have to take the time for this intermediate step if we want to progress and make smart decisions.
t3n: So the principle of “trial and error” is declared to be a strategy?
A good culture of experimentation is not about trial and error. Rather, I act like in an experimental laboratory: I make a hypothesis – and then I test whether it is correct by looking at how customers react to it. And I do that as often as possible, repeating tests over and over and only adjusting little things. Until the idea works really, really well. Or it just fails. If 80 to 90 percent of 10,000 ideas are wrong, that means a success rate of ten percent. In other words, a thousand verifiably effective improvements or new, successful product ideas. And maybe there was even a really groundbreaking one. Creative ideas are not magical or mysterious. Once you understand that, it’s a lot of fun to constantly develop and test new ideas. This is also a kind of creative flow.
t3n: In uncertain times like these, do companies really have the time to constantly devise sophisticated tests and meticulously carry them out according to scientific standards?
In the digital environment, tests are no longer time-consuming and expensive. There are so many tools I can use to test people’s reactions to my ideas. And: The more uncertain the times are, the more I have to rely on experiments. Right now, the pandemic is changing an enormous number of habits and behaviors – on a small as well as on a large scale. Only those who constantly test very carefully whether their own product ideas and projects really match these changed needs and framework conditions can come along.