The Discipline of Business Experimentation

by Stefan Thomke and Jim Manzi

SOON AFTER RON JOHNSON left Apple to become the CEO of J.C. Penney, in 2011, his team implemented a bold plan that eliminated coupons and clearance racks, filled stores with branded boutiques, and used technology to eliminate cashiers, cash registers, and checkout counters. Yet just 17 months after Johnson joined Penney, sales had plunged, losses had soared, and Johnson had lost his job. The retailer then did an about-face.

How could Penney have gone so wrong? Didn’t it have tons of transaction data revealing customers’ tastes and preferences?

Presumably it did, but the problem is that big data can provide clues only about the past behavior of customers—not about how they ...

Get 5 Years of Must Reads from HBR: 2020 Edition (5 Books) now with O’Reilly online learning.

O’Reilly members experience live online training, plus books, videos, and digital content from 200+ publishers.