webinar: the innovator's hypothesis by michael schrage
TRANSCRIPT
Thomson Reuters MDS © 2015
The Innovator’s Hypothesis
WHY CHEAP EXPERIMENTS ARE WORTH MORE THAN ‘GOOD IDEAS’
TIH/MDS © 2015
I explore…
‘Behavioral Economics’ of Enterprise
Experimentation, Innovation & Network EffectsVia their Models, Prototypes & Simulations
My Advisory/Consulting Work
i help organizations design fast, frugal and
high-impact business experiments that make innovation
simpler, safer and scalable…
TIH/MDS © 2015
TIH/MDS © 2015
‘Experiments’ as Means, Medium & Mechanism
For New Value Discovery & Creation
-What Kind of ‘Investment’ Is It?
More Explicitly…..
The Challenge
Organizationally, Operationally and Culturally,
Is Your Enterprise ‘Appropriately’ Investing In
Experiments & Experimentation?
TIH/MDS © 2015
TIH/MDS © 2015
Call To Action/Takeaway
Simply, Quickly and Frugally Explores
‘Experimenting with Experimenting’
-- What Kinds of ‘Innovation Conversations’ Do You Want to Create?
--What ‘Innovation Experimentation’ Should You Encourage?
TIH/MDS © 2015
Our Structure
• Experiments as ‘Investments’
• Experimentation as a ‘Discipline’
• Experimentation as a ‘Future’
The ‘Fundamental’ Challenge
(How) Can We Make a $5,000 Experiment Worth
$100,000 In Fewer Than 100 Days?
- (How) Can a Portfolio of $5K Experiments Unlock $10 Million of Value in a Year?
TIH/MDS © 2015
What Business Hypotheses Might We Test – What Experiments Can We Run – That Might Give us
• 80% of the “Essential” Information/Insight in
• 20% of the Time; with but
•20% of the Resources
TIH/MDS © 2015
Experiments as Media to….
‘Derisk’Innovation
--not ‘Optimization’ but ‘Loss Aversion’
TIH/MDS © 2015
TIH/MDS © 2015
Amazon Recommendation Engine [Greg Linden]
I I I I hacked up a prototype. On a test site, I modified the Amazon.com
shopping cart page to recommend other items you might enjoy
adding to your cart. Looked pretty good to me. I started showing it
around…
At this point, I was told I was forbidden to work on this any further. I was
told Amazon was not ready to launch this feature. It should have
stopped there. Instead, I prepared the feature for an online test. I
believed in shopping cart recommendations. I wanted to measure
the sales impact….
‘We can’t do that because…’
‘Resistance’
is by far the clearest window into understanding
Your Organization’s Innovation Culture
TIH/MDS © 2015
TIH/MDS © 2015
The Greatest Innovation Frustrations Now Are Organizational & Cultural NOT Technical or Financial
TIH/MDS © 2015
What is a ‘Portfolio’?
A Bundle of Experiments Bound Together
By A Value-Driven Theme
TIH/MDS © 2015
Business Hypothesis
A Statement About the Real or Potential Value
of the Business Framed as a Causal Relationship
If We Do ‘X’…Then The [Likely] Result is ‘Y’
‘Own The Experimental Intersection’
‘Great Vision’ ‘Great Problems’
‘Great Arguments’
TIH/MDS © 2015
Consider Taking Rutherford Seriously….
‘If your experiments need statistics, you
you ought to have done a better experiment‘
TIH/MDS © 2015
Consider Taking Rutherford Seriously….
‘An Experiment is not complete until it has been
expressed in simple and correct English.’
TIH/MDS © 2015
TIH/MDS © 2015
Key Takeaways/Heuristics
• Analyze Less; Experiment More
• Privilege ‘Testable Hypotheses’ Over ‘Good Ideas’
• Celebrate ‘Creative Constraints’
• Make ‘Experiment’ Social
• Do The Experiments That Matter Most
• Insights First, ‘Solutions’ Later
• Track The ‘Hypothesis Trajectory’
TIH/MDS © 2015
We’re not ‘smarter’ or ‘better’ but...
The reason why we are on a higher imaginative level is not because we have finer imaginations, but because we have better instruments.
In science, the most important thing that has happened over the last forty years is the advance in instrumental design.…A fresh instrument serves the same purpose as foreign
travel, it shows things in unusual combinations…
The gain is more than a mere addition; it is a transformation.
A.N. Whitehead
An Enquiry Concerning the Principles of Natural Knowledge
Cambridge University Press 1925