Our approach to experimentation
- Business Model Innovation
Innovation. It’s a term that’s much more complex than it seems on the surface. If you’ve been reading our recent posts, you know that experimentation is a crucial piece of the puzzle when it comes to innovation — particularly if you want to de-risk your business .
Today, we’re talking about how BMI builds experimentation into our work with our customers and the models we use to drive success. Have a look.
Build a foundation for innovation
For any innovation project, it’s important to start with a clear vision of where you want to go, why you want to go there, and how you plan to do it.
This is setting yourself up for success and it’s a vital starting point. It involves getting understanding what you’re doing and why, giving yourself a clear scope, and ensuring that you have a multidisciplinary team with the right skills and mindset – able to navigate uncertainty, entrepreneurship, and growth.
With these things secured, you can easily weed out any assumptions that could get in the way of delivering a valuable solution to your customers. This can be done in three stages:
- Developing a customer profile that identifies who you’re targeting and what their pain points are – to give you a better understanding of their needs, behaviour, and the scale of the problem defined.
- Building a value proposition for a potential solution for these pain points — one that can be validated through a rigorous experimentation process. This allows you to test assumptions, consider new business models, and explore other areas.
- Developing a valid business model – as well as being designed, it also needs to be built, tested, and validated.
In the first two stages, you validate the desirability of your solution. In the third, you validate the viability and feasibility of your business model. Iterating on these elements is key to making the solution successful – or helping to make definitive pivot. Sometimes validation helps to determine whether a solution is worth pursuing.
An approach for continuous experimentation
When we take our customers through these three stages, we use our SPEED process to (in)validate assumptions and build confidence in their ideas. The process is first framed with success metrics and criteria — so that you can experiment with a benchmark in mind — and includes the following steps:
- Spot assumptions: In this step, we work with our clients to identify what they think they know about what their customer pain points are, what their interests are, and how they might engage with a product.
- Prioritize assumptions: We place all of the assumptions on a grid that measures how important it is for the business on one axis, and the amount of evidence we already have to support the assumption on the other. High importance assumptions with little evidence are the riskiest, which makes them a good place to start.
- Experiment design: Design your experiment with strong hypotheses in mind. You need to identify a target group, what you expect of the outcome, and the success metrics and criteria that define the benchmark for validation (or invalidation).
- Execute experiment: With your assumption and design ready, it’s time to launch the experiment
- Data analytics: The results of your experiment will determine whether your assumption is true or not. Remember: failing fast is just as valuable as being right. You can use your insights to determine where you should pivot or change your direction, and what areas you can continue to prioritize.
The experimentation process doesn’t stop there. Once you’ve validated or invalidated your assumptions — it’s important to do both, after all — you can run consecutive experiments in different contexts to confirm the results on a bigger scale or to prove yourself wrong. Doing this will provide you with even more evidence that can de-risk your project and prove its value to your executives – giving you even more confidence.
Overall, having a clear scope, yet remaining flexible in the way you work towards your vision, are crucial to success. This kind of approach and attitude enables you to always be honest, evaluate the evidence, and remain open to changes and pivots throughout the process.
That’s not to say that a structured process and a clear vision aren’t important. They serve a purpose. But when they no longer fit, they can – and should – be redrawn. That’s the beauty of experimentation.
Curious to see what this could look like at your organization? Wait no longer, start with our Experimentation Playbook and get out of the building.
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