Senior executives with a history of change-management practice behind them understand the importance of the interdependencies between people, process, and technology. Each of these areas needs to be understood in terms of its potential impact upon the others when an organisation embarks upon a transformation program.

But there is another layer which sits atop all of these traditional pillars, and that is leadership. Successful companies, like successful people, tend to operate with a set of values and principles that govern how they work.

When looking to increase a company’s experimentation (aka “Test and Learn”) culture, there are four principles that should be applied to the process of transformation: humility, velocity, incrementalism and focus.

Let’s start with a little humility.

Leaders often underestimate the impact their words have on the overall team and project. If you have spent time working on project teams, you are likely to be familiar with the concept of the HIPPO — the Highest Paid Person’s Opinion. While accepting the HIPPO may accelerate decision-making, it won’t necessarily lead to the best decisions.

It is important that leaders allow their teams to arrive at the best outcome by drawing upon the expertise and experience of all. Likewise it is important not to allow a team to become hostage to the loudest voice in the room (irrespective of what they are paid).

Humility should be thought of as a team quality, as much as an individual one. It means that team members need to acknowledge that everything can be improved upon, and no one person or team has a monopoly on good ideas.

Likewise, teams must be open to new ways of thinking. It doesn’t matter how it was done in the past, or how similar problems might have been tackled in other departments or by other companies. Every company and every team is unique unto itself.

Bottom line: Have the humility to admit that you may not have identified the best possible way to do something, and that others may find a better way forward.

Experimentation is a great way to tame the HIPPO and provide a safe context for everyone to make a contribution. You can do this by treating every idea like an experiment. For instance, a great way to settle disputes is simply by asking “Why don’t we test it?” This also creates a way to save face when the idea turns out to be misinformed.

Rather than squaring off to entrenched positions, you are simply testing a hypothesis. And if it turns out to be wrong, an environment exists where people do not feel they need to be married to their idea.

Of course you can’t always build for every opinion in the room. But by reaching a point where you have narrowed down options to a few choices you can test each and see how it performs.

Go faster, and reward velocity

The second philosophy concerns speed. Or, more importantly, creating incentives around velocity.

Agile is still a relatively new concept for most people and many companies, so it is not surprising that organisations find it hard to change their mindset when people have just as much trouble.

But if companies genuinely want to work to this principle, they need to look at how they fund development. “Big bang” business plans that go through months of feedback need to be replaced with smaller budgets that fund and reward successful experimentation and continuous improvement.

This principle also requires businesses to engage all internal stakeholders early. Legal and risk departments have a strong vested interest in the outcome. Product development processes need to adjust to ensure their input can be captured early and iteratively.

And that is where our third principle — incrementalism — comes in. Incrementalism both tempers and rewards velocity.

Speed can be improved by focusing on incremental improvements, but this requires a willingness to incentivise velocity and risk-taking. Companies that do this well in my experience create a KPI around velocity and then they build guardrails to protect the quality.

Experimentation encourages teams to see their missteps as a way to learn and build better outcomes in the long term. Perhaps that is why Amazon founder Jeff Bezos says failure and inventions are “inseparable twins”. Teams that build an experimental culture would rather ship product knowing that nine out of ten times it is the right thing do — rather than not shipping those nine to prevent that one mistake.

(Of course, this needs to pass the common sense test. In some businesses — financial services is an example — this approach needs to be tempered by the tolerance of consumers for failure.)

This focus on Incrementalism rather than big bang change is one of the true revelations of cloud-based software delivery. Products can be updated on the fly, allowing for rapid product innovation and a much greater responsiveness to customer needs. Quoting Bezos again, this time from his annual shareholder letter, “To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment. Most large organisations embrace the idea of invention, but are not willing to suffer the string of failed experiments necessary to get there.”

Don’t boil the ocean

The final principle relates to focus. The best way to build a culture of successful experimentation is to get everyone aligned around a very small number of meaningful outcomes.

As Jim Collins wrote in “Good to Great,” if you have more than three priorities then you don’t have any. Worse still, when you have a lot of priorities they can more easily come into conflict.

Aligning around a smaller set of goals helps tame another endless firehose of data feeds that can lead to analysis paralysis. When this happens, teams can lose sight of what’s important and then revert to only measuring their traditional comfortable metrics.

For leaders, the job is to maintain this focus and ensure that everyone can easily recite the things that matter most today. When you survey the team and ask “What is our primary focus this week/month/quarter” you should expect the same, concise answer from everyone. It is a simple technique that should be employed at every opportunity.

About the author

Dan Ross is the ANZ managing director of Optimizely, which is a corporate member of the Which-50 Digital Intelligence Unit. Members provide their insights and analysis for the benefit of our readers. Membership fees apply.


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