Corporate Explorer Fieldbook

CHAPTER 11Business Experiments: De‐risking Execution Spend Through Experiments

Sarah Spoto and Vincent Ducret

INSTINCT OR DATA

There are many examples of how even the most successful entrepreneurs and business managers can fail when they put personal conviction and opinion ahead of data. Andy Grove, Intel's legendary CEO, committed the business to videoconferencing equipment in the late 1990s.¹ Jeff Immelt, another storied CEO, bet GE's future on the “industrial internet of things.” The browser company, Mozilla, reportedly spent $400 million on a new phone operating system. These are decisions made on instinct that failed.

How does a Corporate Explorer replace, or at least supplement, instincts and opinions (assumptions) with data and evidence to demonstrate whether an idea is worth pursuing, or if it requires a pivot or a shutdown? How does a Corporate Explorer answer questions that have a major potential to jeopardize the project's progress and ultimately its future success if not addressed upfront? This chapter describes how incubation tests unproven assumptions of an idea for a new business by de‐risking each element before committing scarce resources to the project.

DE‐RISKING INNOVATION

The high level of uncertainty involved in exploring a new business opportunity makes it very different from the operation of a core business. A new venture has none of the performance information and reference points that come from operating an existing business. The new venture is ...