You can have all the training, do all the reading, have all the discussions. Making decisions and taking action is where the rubber meets the road. While this may sound discouraging, just remember that business, like life, is an experiment. You can only get better with the number of experiments that you make. Given this reality, the question is: How can you decrease the failure rate and increase the success rate of the experiments that you make in the course of running your business? Here are a few suggestions for making smart business experiments:
- Start With Low Hanging Fruits: It helps to begin with activities that the business can implement with ease. These should be activities that are likely to yield quick results and provide clear insights for further action. It may be as simple as a change in price or testing a marketing message. The objective may be limited to observing how customers will react.
- Test And Learn: Even in the age of analytics, with computing power to crunch all kinds of data, you must take a test and learn approach, by taking different actions under different conditions, and comparing your results. This approach will enable you to analyse the outcome of each experiment, interprete the available data, and understand the causes that led to the results that you get. Over time, you will develop the skill of experimentation, which will tell you what works and doesn’t.
- Develop A Scientific Mindset: You must think like a scientist. You must run your business experiments with controls and feedback mechanisms. For example, in the marketing of a product or service, a business may choose to segregate its market by demography or geography, each with different terms and conditions, and measure specific parameters of performance in each of the markets. The resulting feedback could then be used to improve the overall performance of the product or service.
- Measure What Matters: The goal of feedback is to capture and record relevant effects. The results must be viewed in the context of the set objectives of the experiment. An example could be a short-run outcome of driving the acquisition of customers. Start with your goal in mind, know what you are aiming for, and check your results. Yes. Know what to measure.
Irrespective of the outcome, the Small Business Owner must remember the sole goal of these experiments: To validate intuition, make better decisions, and implement ideas based on provable insight. Believe it or not, success in business is a function of the number of experiments that you implement each day, each week, each month, and each year. This is so because the art of business, like laboratory experiments, is not an exact science. It is a matter of trial and error undertaken under certain controlled conditions. The good news is that one big win can be enough to pay for hundreds of failed experiments. In other words, if you have a 10 percent chance of success in every 100 experiments that you perform, you have done well. As a business owner, this is a bet you must take every time, even when it means you will be wrong nine out of 10 times.