Lesson 19, Topic 9
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UPG Team March 17, 2023
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Experimentation is essential for Exponential Organizations (ExOs). The top companies in the world are known for being ruthless experimenters, constantly trying something new. This is especially important in today’s rapidly changing world where markets are volatile, and radical shifts in technology and customer demand are regular occurrences. Amazon’s Jeff Bezos has famously said that their success is a function of the number of experiments they run per year, per month, and per day.

Experimentation involves validating assumptions before making significant investments, and creating a set of learnings that you then use to improve your product, service, or process. It also reflects a culture of risk-taking and constantly creating hypotheses. ExOs are perpetually experimenting, while traditional companies see experimentation as a side activity or novelty.

Jeff Holden is a widely respected inventor in tech, who was instrumental in creating Amazon Prime and leading the creation of added services at Uber. He now heads Atomic Machines, a company focused on transforming manufacturing in the modern economy. Holden’s dream is to begin constructing physical objects from individual molecules and atoms in the same way the digital world is constructed of bits. He believes that intelligent experimentation is the key to success in invention, and has developed a systematic and complex process that requires considerable preparation, the right company culture, very in-depth research, and nearly endless iteration until you find the optimal solution.

The first step in Holden’s process is passion. To be experimental, you must be deeply passionate about the subject to the point that it consumes you. Coming up with a viable new idea is hard, and proving that viability may take months or even years. The second step is culture. Great products and inventions come from companies that have a culture of innovation and experimentation. You need to cultivate that culture from the very beginning. Companies that are innovative are forgiving of the right kind of failure, ones that come after an incredible, intelligent effort. In these companies, bad failures are punished as a waste of time, people, and resources. The goal is where failure is always advancing our understanding.

The third step is the idea. All ideas aren’t equal. The best ideas may prove impractical, while the worst ones may prove the most viable once they have been worked on and perfected. It is crucial to keep an open mind, not to fall in love and stick with an idea too long, and conversely, not to give up on the ugly idea too early. Intense honesty and patience are the key, and you need to cultivate those traits in yourself. The fourth step is first principles. The very best ideas find their grounding or arise from first principles, such as physics, chemistry, and mathematics, even human nature. This requires tremendous amounts of research and investigation, but when you build your idea up from there, it becomes unstoppable.

Holden’s process shows that experimentation is not just about trying every new idea, but it is a systematic and complex process that requires considerable preparation, the right company culture, very in-depth research, and nearly endless iteration until you find the optimal solution. The key to success in invention is intelligent experimentation, which means being willing to take risks and learn from failures, but also being willing to put in the hard work and preparation necessary to succeed.

Google’s Eight Rules of Innovation emphasize the importance of experimentation in the process of developing new products and services. The first rule, focusing on the user, means that everything a company does should solve a problem or fill a need for the user. The second rule highlights the importance of being open to innovation and allowing the crowd to help generate new ideas. The third rule encourages companies to look for ideas everywhere, including crowdsourcing. The fourth rule advises companies to think big but start small, and to aim to positively impact a billion people within a decade. The fifth rule stresses the importance of rapid iteration, or failing fast and failing forward. The sixth rule emphasizes the importance of agility and the use of data-driven decision-making. The seventh rule encourages companies to be a platform for innovation, and the eighth rule stresses the importance of having a mission that matters.

To implement experimentation effectively, companies must ensure that their MTP guides all experimentation and that they have a company culture that accepts the right kind of failure. They must also have in place tools to measure and track experiments, autonomy and dashboards, and a leader and board that support an experimental culture. Experimentation needs specific time and a separate budget to develop validation without interference from the immune system, and autonomy is the main attribute to consider when evaluating an ExO initiative.

The benefits of experimentation include the discovery of unknown opportunities, a chance to discover unknown talent in the organization, faster time to market for minimum viable products, maximization of value capture, and the establishment of a culture of constant learning. Experimentation also helps overcome biases and keeps processes aligned with rapidly changing externalities. However, the challenges of experimentation include the difficulty of failure for employees and boards to stomach, the difficulty of implementing it in legacy organizations and especially public companies, and the difficulty of choosing the right experiments to undertake.

Experimentation is a crucial aspect of innovation and growth for businesses of all sizes. In this article, we will explore several case studies of companies that have successfully embraced experimentation to drive growth and innovation, as well as the future of experimentation and how to get started with your own experimentation initiatives.

Zoho is an India-based platform company that has experienced explosive growth over the past quarter-century. The company currently boasts more than 60 million satisfied customers and was quick to respond to the pandemic and subsequent work-from-home revolution by offering free subscriptions to its platform to its millions of SMB and enterprise clients. This move helped Zoho remain a leader in the industry and continue to innovate and grow.

Atlassian is another company that has embraced experimentation to drive growth and innovation. The Australian software titan offers a complete project management, bug tracking, and all-around IT management platform. The Confluence team management platform allows for company-wide collaboration and dissemination of knowledge in wiki form. In 2020, Atlassian announced it would be pivoting away from server-based products and towards greater emphasis on cloud and data center services.

Templafy is a Danish B2B SaaS company that has established itself as a global powerhouse since its founding in 2014. The company helps clients process business content, including documents, presentations, and emails. Templafy serves more than 2.8 million users, including enterprise customers such as KPMG, IKEA, and BDO. Recently, the company introduced Hive, a new iteration of its platform that enables users to begin business content creation from within their CRM system, DMS, SharePoint, or within Microsoft Office or Google Workspace.

Hootsuite is a Canadian company founded in 2008 that offers an all-in-one SaaS solution for social media management. Hootsuite has over 213,000 paying customers, millions of users, and 1,000 employees around the globe. The company’s platform enables customers to manage all their social media channels from one place, allowing them to create and schedule posts to multiple networks simultaneously, monitor posts, manage and respond to incoming messages from customers, track and manage brand mentions and market activity, easily create and manage advertising campaigns, and measure and analyze users’ performance on social media.

Kickstarter is a crowdfunding platform that allows companies to obtain market validation for a product before building it. For the first time in business history, Kickstarter has made it possible for companies to experiment and receive validation for their ideas without the risk of significant financial loss. In fact, Sony Corporation is listing anonymous Kickstarter projects and then funding them when they succeed. This new approach is an efficient way for companies to experiment and receive valuable feedback.

Cisco Zoom telepresence is a perfect example of how experimentation can lead to success. Eric Yuan, a Chinese immigrant, was one of the first 20 employees of WebEx, eventually becoming Vice President of Engineering. In 2007, WebEx was acquired by Cisco, and Yuan became Cisco’s corporate VP of Engineering. However, he came to realize that WebEx customers were not happy, and the solution was outdated and didn’t support video well. When he tried to convince others at WebEx to build a new solution and start over, nobody listened. So he founded his own company, Zoom. Zoom had a strong start and by 2019 had 10 million daily meeting participants, generating enough revenue for the company to go public. But then, in March 2020, everything changed with the global COVID lockdown. A month later, Zoom’s meeting participants had jumped to 300 million, and it had become a key feature of global business life—all because Eric Yuan decided to experiment.

The future of experimentation is exciting and will extend beyond product, services, and user experiences. With the advancement of technology and the increasing amount of data available, experimentation will play a critical role in shaping public policy, social behavior, and even human biology. Governments, NGOs, and research institutions will increasingly rely on experimentation to develop evidence-based policies and programs that are grounded in data and science.

In addition, experimentation will be increasingly used to study human biology, which will lead to the development of new treatments and cures for diseases. This will be particularly important as the world faces growing health challenges such as pandemics, chronic diseases, and aging populations.

Overall, the future of experimentation is promising, and it will continue to play an important role in advancing science, technology, and human progress. As experimentation becomes more accessible and widespread, it is important that researchers, policymakers, and the public approach it with a thoughtful and ethical mindset that prioritizes safety, privacy, and social responsibility. By doing so, we can harness the power of experimentation to create a better future for all.

Module is complete, keep up the great work change maker!

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