Business must act more like a laboratory and less like an assembly line.

We are in the middle of massive business, political and societal shifts. The situation goes beyond mere change. Change implies evolution in a predictable direction that can planned for and adapted to. The shifts we are experiencing are volatile, full of rapid, explosive, and sometimes random shifts coming from often unexpected directions.

Responding to volatility is infinitely harder than responding to change. New competition can spring from any direction, new technologies commodify processes and IP and rapid societal changes can make consumer tastes difficult to predict. These pressures are not limited to products and services, they also impact apply to recruiting and retaining employees.

This environment is too unpredictable to be managed using templates. Organizations must become adept at experimentation. Experimentation as a core capability involves observing trends, forming hypotheses, designing low-resource experiments to test the hypothesis, then managing a portfolio to manage investment in the most promising experiments. This is in direct contrast to optimization of existing systems and processes. Experimentation as a core competency is a company-wide, applying to all aspects of the business and not just marketing or product development. 

Organizations face two major barriers to becoming effective experimenters:

Organizations are homogenous

Hypotheses come from observing and connecting previously unrelated concepts. As people can only connect the concepts they know, diversity is a prerequisite for forming good hypotheses. This includes diversity in the race, gender and ethnicity of the workforce but also in culture, thinking, and experiences. Successful organization will recruit the most diverse perspectives and guard against too effective assimilation by creating opportunities for new experiences.

Management is ill-suited for uncertainty

Management as a discipline has evolved to control, focused on optimization not agility. Managers get hired and paid for knowing the right strategies and tactics and to getting workers to execute these strategies in a predictable manner. Experimentation requires relinquishing control and creating an environment that embraces and benefits from volatility. This requires a shift in how companies hire and compensate management.

Technology is remaking our societies in ways we cannot begin to predict. Strategy as usual is insufficient for meeting this volatility. The only way forward is the constant and rapid testing of potential scenarios. Business must act more like a laboratory and less like an assembly line.