This week’s guest is an innovation guru from one of the world’s leading business schools. Stefan Thomke is a William Barclay Harding Professor of Business Administration Chair at Harvard Business School and a widely published author around innovation processes. We will discuss Stefan’s new book, “Experimentation Works: The Surprising Power of Business Experiments,” and how experimentation functions as the engine of innovation.
Stefan says he got involved in experimentation while working as an engineering intern. He got tasked with optimizing a chip manufacturing process and was lost on how to do it. Someone mentioned looking into experimentation, and he decided to research and study it. He was able to solve the problem, prompting his realization that experimentation is the engine of innovation.
For many innovators I know, innovation is viewed as stumbling in the dark, hoping you have that “eureka” moment, verses having a methodology. Is that the case for innovators you interact with? Stefan says part of the problem is how we use the word experimentation itself. When people say they experiment, often they mean they are just trying something. They did something, and it didn’t work; therefore, it must be an experiment. I am talking about disciplined experimentation using principles employed in a scientific method. It is important to note because you can’t learn much from an experiment without implementing a process into it.
Failure and Incrementalism
In your book, “Experimentation Works: The Surprising Power of Business Experiments,” you call out the difference between an experiment and a mistake. In your opinion, what is the difference? Stefan says a mistake is something that you learn nothing from. The difference is that a failure has a learning objective, where a mistake does not. Failure is okay when you are learning from it.
Does experimentation get correlated to incrementalism? Stefan says that most innovation in the world is incremental. Most of the significant performance changes we see are the result of the cumulative impact of small changes. Microsoft changed the way they displayed their headlines and increased revenue by 100 million dollars a year. I call it high-velocity incrementalism, which means that you need to run fast but also go for scale. You need to be able to link cause and effect as a business. You want to have a high level of confidence that action A will produce outcome B.
What are some attributes that are needed for an experimentation culture in business? Stefan says that companies often assume if they put the right tools into place, the experimentation will just happen, which is not the case. There are a few elements needed to be successful. Firstly, a company needs to have curious people who value surprises. Secondly, they need to insist that data trumps opinions. Often companies will only accept results that confirm their biases and challenge results that go against our assumptions. Thirdly, we need to empower people to perform experiments. If people have to run it up the chain for every experiment, you’re not going to get the scale that you need run on. Next, you need to ethnically sensitive because we will all react differently to experiments. Lastly, you need to embrace different leadership models.
When it comes to an experimentation culture, how do leaders need to act differently? Firstly, they need to set a grand challenge. The role of the leader is to establish a grand challenge to keep the focus of the organization. Secondly, put in place systems, resources, and organizational designs so the people of the organization can get to work. Lastly, you need to be a role model and subject your ideas to tasks with intellectual humility.
Advice for the Listeners
Can you give us an example of one of the myths in your book and explain it? Stefan says he was giving a lecture to a group of leaders. A man raised his hand and said they didn’t agree with experimentation and said he taught his people to follow their intuition and judgment. I explained to him that it is not one or another. Instead, it is experimentation that compliments intuition and judgment rather than turning it off. It’s about bringing them together rather than doing one or the other.
What is some advice that you could give the listeners on implementing experimentation into the innovation process? Stefan says just to get started. Experimentation is the engine that drives innovation. You can’t innovate without experimentation. You go through different levels as you experiment, but you have to start at point A to reach point B.
About Our Guest: Stefan Thomke
Stefan Thomke is a William Barclay Harding Professor of Business Administration at Harvard Business School. Stefan Specializes in the management of innovation, product development, technology, and operations. Before joining the HBS faculty in 1995, he worked as an electrical engineer and a consultant at McKinsey & Company, where he served manufacturing and service companies in the automotive and energy industries. He is the author of numerous books and articles on business and the innovation experimentation processes.
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To know more about how experimentation functions as the engine of innovation, listen to this week’s show: Experimentation is the Engine of Innovation.