Scientific method is not just for science. Business can reap the dividends of a well-structured critical interrogation of efficacy. Rita Gunther McGrath and Thomas Keil explore this angle in the Harvard Business Review’s “The Value Captor’s Process: Getting the Most out of Your New Business Ventures”…
- “Ventures should be treated like scientific experiments, which involve identifying gaps in knowledge, developing a hypothesis, designing a test, conducting the experiment, and evaluating the results. If the hypothesis is supported, further research along the same lines can be undertaken with greater confidence. If it is not, the scientist will reflect on the possible reasons and then either stop or redesign the experiment. Even a hypothesis that is not borne out can be valuable, because it offers new insights. Budget approval processes that require proponents of a new business idea to commit to a return on investment (or net present value) goal inhibit managers from approaching ventures in this fashion. Everyone is forced to focus on success or failure in achieving a specific business outcome rather than on insights arising from the hypothesis that led to the venture. It makes much more sense to focus on the option value of a venture—the value of the opportunities it may open up, not all of which are known at the outset.”
The concept of business as a science experiment reminds me of Thrust SSC. More of a science experiment, than a dare-devil stunt.
We are working on a new business areas in Piero. Rather than throw resources at this bold initiative, we are taking the iterative approach. It’s not necessarily that the objective is bad, but the how to get there is a big question. Yes, some of our great ideas for new products turned out to be duds when we started getting into it. But also, some of our great ideas turned out to have dud ways to progress and great ways to progress.
Iterate and improve. Leaders improve, Managers iterate. Both together fuel grounded innovation.