InsightsAnalyticsAdopting a Culture of Experimentation

Adopting a Culture of Experimentation

To change an organization's culture to being customer focused you must remove the data and work silos and have leadership that supports and rewards risk.

“Almost any question can be answered cheaply, quickly and finally, by a test campaign. And that’s the way to answer them – not by arguments around a table. Go to the court of last resort – buyers of your products.”

“Scientific Advertising” was published in 1923 by Claude Hopkins, who began to evangelize the need for testing and experimentation in marketing and advertising. Forty years later David Ogilvy, a huge disciple of Hopkins, was quoted as saying that “Nobody, at any level, should be allowed to have anything to do with advertising until he has read this book seven times.”

Yet, some 50 years after Oglivy attempted to popularize the need for experimentation: “Companies pay amazing amounts of money to get answers from consultants with overdeveloped confidence in their own intuition. Managers rely on focus groups – a dozen people riffing on something they know little about – to set strategies. And yet, companies won’t experiment to find evidence of the right way forward,” finds Dan Ariely, author of “Predictably Irrational.”

In my last column, I discussed how Scott Cook, co-founder and chairman of Intuit, shared in his presentation at SXSW how he has been successfully moving his traditional research- and intuition-based company of 30 years to a culture of experimentation. What stands in the way of getting our companies there? The longer the tenure of leadership, the more likely they are to stay entrenched in their ways. Dan Ariely points out that leadership stays stuck with their “overdeveloped confidence in their own intuition.”

One way to change the organizational issues that handicap a corporate culture from experimenting is getting the corporate leaders to take responsibility for evidence gathering and to “remove the speed bumps in the experimenters’ way!” according to Cook.

A traditional company that has been famous for its quantity of testing is Capital One. In fact, it did a reported 80,000 tests in 2003 – on everything from marketing copy to price points. Of course, many of us know the success Amazon has had doing a reported 200+ tests at any given moment, and with its constant focus on data-driven optimization on every aspect of its business from merchandising to promotions to warehousing and logistics. These are just two exemplary examples of analytically rigorous, knowledge-driven business success, but there are many more. That is not to say that creativity and intuition don’t have their place, but we must find a proper balance.

How does Capital One drive this level of experimentation in its organization? It claims “it differentiates its marketing operations on three dimensions:”

1) state-of-the-art technology; 2) rigorous testing and analysis of products, segments and consumer behaviors; and 3) flexible operations and services that enable the organization to capitalize on the intelligence it generates and pursue new opportunities.

This fits with what I shared were the three traditional stumbling blocks that keep most organizations from experimenting:

  • Technological limitations, imagined and real
  • Legal limitations, imagined and real
  • Organizational culture

To change an organization’s culture to being customer focused you must remove the data and work silos. Then you need leadership that supports and rewards risk because they themselves use data to support assumptions and hypothesis and to steer the company in real time.

Next week I am headed to the Monetate Agility Summit in Philadelphia. I’m excited because Monetate’s testing and experimentation platform has enabled companies to go from the industry average of two to five tests a month to a client average of 59 concurrent tests in a month. It has obviously removed the technological limitations many companies experience when trying to adopt testing online. I’m looking forward to speaking to many of these companies as they are transforming into analytically rigorous, knowledge-driven business successes. For example, one client jumped out of the gate and started running a staggering 600 test campaigns in their first 60 days on the platform. Let me know what you would like to learn from them.

Not everyone can or should be a Monetate client. There are other ways for an organization to remove the technological limitations. However, when technological and legal issues are overcome, the organization’s culture issues may hold them back. Why is that?

Why do you think people and companies fail to experiment? Do you think they don’t understand what an actual experiment is? Do you believe they think that they might already be doing experimentation? Are they too afraid of risk and failures? Why do companies fail to adopt a culture of experimentation? I have some ideas but I’d love to hear what you think.

Image on home page via Shutterstock.


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