In Arie Goldshlager’s posterous he says, I found the following interview with MIT Sloan Management Review, Michael Schrage on Value-Creation, Experiments and Why IT does Matter very instructive. Note particularly:
“The cost of experimentation is now the same or less than the cost of analysis. You can get more value for time, more value for dollar, more value for Euro, by doing a quick experiment than from doing a sophisticated analysis. In fact, your quick experiment can make your sophisticated analysis better.”
Michael Schrage also stated later in the interview:
Can you summarize the three things you think companies need to get good at?
The most important thing I would urge companies to do would be to experiment, by crafting good business hypotheses. I can now look executives in the eye and say, “The cost of experimentation is now the same or less than the cost of analysis. You can get more value for time, more value for dollar, more value for euro, by doing a quick experiment than from doing a sophisticated analysis. In fact, your quick experiment can make your sophisticated analysis better.”
The second is to promote greater collaboration, interaction, and diversity—not politically-correct diversity, but diversity of skills and points of view.
And the third is to think more clearly about innovation. It’s no longer about creating new features and functionality. We have to move away from the notion of innovation being about greater creation of choice. Instead, it’s about greater value from use.
With the cost of experimentation being driven so low, what is the value in analysis? With experimentation, you may be limited somewhat but I think the big difference in an experiment is that you understand and trust the results more.
To paraphrase from an outstanding book, Everything Is Obvious: Once You Know the Answer
Most of us (marketers) have more data than we know what to do with. The real problem that exist is what we are doing causing increased sales or what we are measuring is the correlation between the two.
Differentiation between correlation from causation can be extremely difficult. The authors recommend running an experiment. Without an experiment they conclude that it’s actually close to impossible to ascertain cause and effect, and as a result measure real return.
They view experiments not as a one-time exercise that either yields the answer or doesn’t, but rather as part of an ongoing learning process that is built into the process.
Interesting note is that the authors go on to reference a certain MIT professor, Michael Schrage (Small World).
Not trying to be beating a dead horse to death but this certainly sounds like the principles of Lean and more specifically PDCA.
Another coincidence as I am writing this blog, I noticed a statement on Twitter from @tdebaillon: “What happens when customers acquisition is cheaper than cultivating loyalty? That’s the case for most telcos here. Closed oligopoly.”
I am not advocating this but, what happens when we get rid of analysis and customer loyalty in marketing? Instant marketing gratification?
Related Information:
SALES PDCA Framework for Lean Sales and Marketing
Using the Media Engagement Framework as your Kanban?
Little Bets – The Way to take an Affordable Risk
Using the wrong set of 5 whys in problem solving