In today’s fast-paced and constantly evolving business world, it is essential to stay ahead of the curve and drive business growth. „Either grow or die“ is a phrase that a 400-people CEO once told me.
One of the most effective ways to achieve this is by running business experiments. By testing new ideas and strategies, you can gain valuable insights into what works best for your business and optimize your operations accordingly.
In today’s data-driven world it is not enough anymore to just adopt best-practices and strategies that work well for others. We must generate our own data for our own individual use case.
However, running experiments can be challenging without proper planning and execution. In this article, I will provide a step-by-step guide on how to run business experiments to drive growth and improve your bottom line.
When it comes to running experiments for business growth, it is important to take advantage of the methodology that has been developed in research for a long time already. This means using techniques like hypothesis testing, control groups, and statistical analysis to evaluate the impact of different business strategies.
In this article, we will explore how to transfer research experiments to business experiments and provide some tips for successfully using experimentation to drive actual data-driven business growth.
Frameworks are essential for running successful business experiments. They provide structure and direction to the experiment, helping to ensure that all aspects are considered and accounted for.
Two popular frameworks for running experiments are the Lean Startup methodology and Design Thinking.
The Lean Startup methodology involves creating a Minimum Viable Product (MVP) and testing it with customers to gain feedback and iterate on the product.
Design Thinking, on the other hand, emphasizes empathy with the customer, defining the problem, ideation, prototyping, and testing. By using frameworks such as these, businesses can maximize the effectiveness of their experiments and drive growth.
Weekly sprints are a popular way to run growth experiments in businesses. A sprint is a short, intensive period of work focused on completing a specific set of tasks or goals. In the context of growth experiments, weekly sprints typically involve setting a specific growth goal or several goals for the week, developing a hypothesis and experiment to test it, and then executing and analyzing the results of the experiment either within the week or longer if the experiment requires more time.
By breaking down the process into small, manageable steps, weekly sprints help teams stay focused, track progress, and make adjustments quickly. This allows businesses to test and iterate on growth ideas rapidly, leading to faster learning and ultimately driving business growth.
During my work at Techstars, we used weekly OKR’s to not only define typical business goals for the week, but also „the experiment of the week“. Here our startups had to define at least one experiment per week to start establishing a data-driven company culture in their startups. Thus, to start off one experiment per week os a good benchmark to set for yourself – but always depending on available resources, company size and scope of the experiment.
Before running an experiments for business growth, it’s crucial to have a proper analytics setup in place. This means having the right tools and processes to measure and track the results of your experiments.
Start by defining your key performance indicators (KPIs) or OKR’s and setting up the necessary tracking codes on your website or app. Tools like Google Analytics, Mixpanel, or Amplitude can help you collect and analyze user data. Make sure to test and validate your tracking setup before running experiments to ensure the accuracy of your data. In Google Analytics 4, you would typically do this with Debug-Mode in Google Tag Manager as this facilitates the setup process. Get your data team involved to ensure proper setup.
Having this solid analytics setup will enable you to make data-driven decisions and optimize your experiments for better results.
Not experimenting in business can have serious consequences in a data-driven future. By not testing assumptions and ideas, your business may continue to invest resources in initiatives that are not effective, leading to wasted time and money.
Without experimentation, your business may also miss out on potential opportunities for growth and innovation which is more important than ever in today’s world.
Additionally, failing to experiment can lead to a lack of understanding of customers and their needs, which ultimately results in a loss of market share. As corporations are competing with fast-growing startups, following the main goal of gaining market share quickly, this is a life and death threat.
Therefore, it is important also for traditional businesses and corporations to embrace experimentation as a core component of their growth strategy to mitigate these risks and stay competitive in their industry.
In conclusion, running experiments is essential for driving business growth as it allows businesses to test their assumptions and make data-driven decisions. By using frameworks such as the Lean Startup and weekly sprints, businesses can conduct experiments efficiently with a fast pace.
However, it’s important to keep in mind the risks of not experimenting, such as falling behind competitors and failing to meet customer demands. By embracing experimentation, businesses can continuously improve their products and services, leading to long-term success. Don’t be afraid to experiment and iterate, as it can be the key to unlocking your business’s full potential.