Business is an Experiment. Not an Equation.

Most organizations want everything to be an equation. They want a world of well defined inputs with predictable outcomes, something that can be explained with an algorithm then optimized for efficiency. The reality is business is an experiment. There are three major hurdles to businesses running effective experiments.

The first barrier to companies experimenting is someone at the organization has to be willing to say "I don't know." This simple yet powerful statement is the foundation for experimentation. The Freakonomics Podcast has a great episode on this subject, The Three Hardest Words in the English Language. Leaders feel they need to have all the answers in order to lead and employees are afraid they will look like they don't know what they are doing if they don't have all the answers. Without the confidence to say "I don't know." organizations are stuck doing only those things they already know how to do.

The second barrier to experimentation is a lack of know-how. Business people, trained in finding and optimizing efficiency, have no idea how to run an experiment. They don't know how to develop a hypothesis, design an experiment to test the hypothesis and interpret the result in the broader context of the company and the customer journey.

The third barrier to companies running experiments is the guarantee of failure. If an experiment is delving into something new and not just confirming a bias then the initial hypotheses will almost certainly be wrong. Although there is often as much to be learned from a failed experiment as there is from a successful experiment, it still takes great courage to propose failure as a path forward.

If a company is unable or unwilling to experiment they will be limited to doing what they already know how to do. As barriers to bringing new products and services to market continue to come down companies that do what they have always done will face increase competition and commoditization. Companies need to develop cultures where "I don't know." is an acceptable answer,  failure is an acceptable outcome to trying something new and the knowledge and skills necessary to experiment are intentionally cultivated.