Embracing unpredictability: what large enterprises can learn from lean strategy experimentation

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“The true method of knowledge is experimentation”, said William Blake famously.

Tom Weckström is Entrepreneur in Residence at Coventures Oy

Learning, testing, tinkering, trying, prodding. Whichever verb one wishes to use, knowledge is produced by trying out different approaches and comparing the outcomes, similar to the scientific method. It’s also key to fending off uncertainty.

We often make assumptions about the future that ignore the multitude of variables lurking around the corner. At the same time, many businesses base their entire existence on a few age-old assumptions. Kinko’s or Kodak anyone?

However, as much as we’d like to think so, future scenarios are not within the realm of predictability, therefore we need to prepare for the eventuality that the current strategy isn’t necessarily a viable one 5 years from today. 

To use a timely analogy, we are currently witnessing a war in Ukraine that will have all kinds of unintended consequences. David Friedberg, commenting on the war, spoke about the second-order effects of the Russian invasion of Ukraine, including an expected major global shortage of fertilizer, which is key to the wheat industry.

“When you have a shortage in a food supply like this of just a few [percentage] points, suddenly there is a real risk. And we already have about 800 million people on Earth who are subsisting on below 1200 calories a day.”

Taking a step away from the horrors of war and potential famine, we can apply a similar dynamic to the world of business. When one key element – in the aforementioned case, wheat – in the production chain upon which our daily food-take relies on (bread, pasta etc.) is affected, the entire globe is at the risk of seeing massive shortages of such items.

When a company builds its entire production line on a single unchanging view of the future without considering the multiple variables that may or may not threaten the feasibility and defensibility of the company’s bottom line, then any change – big or small – can have catastrophic implications.

Startups are born on uncertain territory. When business matures, leaders are often too complacent or too certain about their product and the future outlook, and seem allergic to change and have low tolerance for adversity. Needless to add, neither one is a good quality for a business leader. 

To avoid the situation of being at the mercy of the unknown future, companies have a number of tools to tinker with.

With lean experimentation, which is based on the lean startup concept, the company will experiment to find out how new products or services would do in the market, without building those products or services in full, thus reducing uncertainty.

Can Large Enterprises Experiment?

Strategic plans become outdated quickly. This does not automatically signify that one must throw away or change everything. Instead, refresh what you had and see what to add, or omit.

To ensure a smooth process, consider:

  1. Spending some time assessing the old strategy

 During the strategic plan process, you’ll have to look deep into the future while planning. A company could still use the same methods, but reflect how the plan has helped them.

While thinking of how to refresh the strategy, think of what you need to help you move forward.

  1. Prioritizing implementation planning

The key to accomplishing a strategy is through implementation planning. While planning to revamp your strategy, choose to spend more time focusing on exemplary implementation, asking yourself, “What steps, or intermediate states, should there be for us to be more confident about this new strategic direction?”. 

Amazon’s Jeff Bezos has said “Consider, if your decisions are reversible or irreversible.” Combining this with the lean principle of making hard commitments as late as possible translates into making irreversible decisions as late as possible and lowering your barrier to making reversible decisions to gather more information before you need to make an irreversible decision.

Adopting the Lean Startup Approach

If your goal is to practice the lean experiment, you need to change your approach from maximally exploiting a steady-state mature market to curiously exploring possible shifts in your market. It will help if you start thinking of every idea or product as a hypothesis that needs validation. This is easier said than done, especially if you are used to a mature and rather stable operating environment. 

You can train your mental muscles of embracing uncertainty by considering anything stable in your private life, say your health, and questioning its stability. For example, ask yourself “If I was thinking that I’m gonna be healthy for the next 10 years at least, how would I act differently, if I wasn’t so certain about my health in the coming 10 years?”. Nerve wrecking? Yes, most likely. While your ability to embrace uncertainty is a mental muscle you need to train, the rewards are significant. You will become more aware of the flipsides of the uncertainty – the opportunities that the uncertainty brings with it.

Here is how you can practice the lean experimentation;

  1. Use the “Less is more” approach

Note that the most critical part of this experiment is the time you need to validate the hypothesis.

To shorten the cycle, you must minimize the deliverables and design a great strategy that will help you validate an idea.

So, rather than focusing on selecting the features to prototype, think of what is the absolute minimum you need for validating your assumptions. This minimum can be anything from a teaser-video or a landing page or order form or social media poll. Avoid early automation. Focus on testing user experience and the desirability of your idea. You can handle much of the invisible mechanics manually when testing

  1. Know your goals and metrics

It would help if you had a clear picture of what you want. This should also include knowing how you will measure the product’s success.

Define the metrics you choose to use and ensure that you use the same metrics for every design.

  1. Ensure that you validate a particular design with actual people

Testing your product or service with actual people will help improve the success of your prototype. Before this, ensure that you design a user persona who will guide you on the participants you need to choose. As Alex Kalinovsky, the founder of AgileEngine, said: “By leveraging reality checks in the form of market feedback, product development teams can move with greater precision and agility.”

You can also opt for guerilla testing, which is a great way to vet ideas. This will help you collect insightful ideas in just a few minutes.

  1. Avoid implementing drastic changes

Start small. This will give your team enough time to analyze feedback and turn it into an incremental design. The good thing about doing a lean experiment is that it brings people from various disciplines who quickly come together to form a solution. In the end, the lean experiment will offer value to both the business and the user. 

Conclusions

  • Embrace uncertainty
  • Consider the reversibility of your decisions
  • List your assumptions and validate the riskiest ones first
  • Lower the barrier to make reversible decisions fast so you can learn
  • Delay irreversible decisions so you can make more informed decisions
  • Adapt a minimalistic approach to test your assumptions as cheap as possible
  • Lean strategy experimentation works on every level (company strategy, product strategy, feature strategy, sales strategy, marketing strategy, etc.)
  • People working in enterprises can and should adapt lean strategy experimentation, because the winners in just about every industry have already adopted lean experimental approaches.

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