Thought Experiment #23: 20 building blocks of an Experimentation System

Just as developing platforms create more long-term value for companies than developing products alone - building an experimentation system holds more value than building innovation programs (read: labs). Seems obvious, yet we see too many companies focused on only building solutions and not systems.

This post is a follow-up to the previous one which argues that companies don't need ideation platforms, but experimentation platforms. In the next ten minutes, I will look at 10 of the 20 building blocks of any experimentation system.

Twenty, is surely an overkill? I do not imply you need to execute perfectly on all of the twenty building blocks, but it is important to have a hypothesis about each of the twenty, as you go through your first pass of designing or redesigning your own innovation system. Of course, it is an iterative journey of learning by doing. And, it's deliberately designed as one-page model to stop you from the analysis paralysis that can come with such work.

Before you complete your one-page view of your experimentation system, the key is to reframe the starting point. The starting question should not be how can we produce more innovations, which inevitably leads you to design short-term programs of interventions. The question should be, how do we create a systemic and systematic approach to experimentation.

Before organisations can disrupt markets and competitors with innovations, first they have to disrupt themselves and their approach to experimentation.

In this blog, I do not explore any one of the building blocks in the depth they deserve. Nor, is there any talk about the process of completing this one-page model, as the entry or starting point varies according to individual context and needs.

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By visualising your experimentation system through this one-page view, it helps to bring the hundreds if not thousands of actions and decisions into context. It helps to translate nebulous terms like 'innovation culture' into practical actions. I will explore two blocks at a time and then briefly share how you can view the connects and disconnects between them.

Please email me at zevae@co-create.org for a PDF template of this one-page. I'm interested in genuine two-way conversations with fellow colleagues to critique and build on this one-page design.

The outer blue building blocks - serve as the context and constraints:

1. Purpose. What is the purpose or strategic outcome(s) your experimentation work is driving towards? How you articulate the purpose can fundamentally influence all the other building blocks. For example, it could be to drive X-million in new revenue, or X% of revenue to come from product and services launched in the last 3 years. Even this small change in the way you articulate your purpose can change your experiment system approach significantly. Is it to drive 10x better solutions? To help the organisation understand, evaluate and push them to think and act differently. Or, is it to improve customer experience, reduce costs, find organic growth, or expand to new markets. Easy to list these as bullet points, much harder to quantify. And quantify you must if you want to avoid muddled actions. Easy to say 'all of the above', much harder to choose one to three outcomes that bring clarity and focus to your experimentation-related work.

• 2. Problems: What problems or challenges does your experimentation work exist to solve? Such an easy question to ask, yet so hard to answer with discipline. Is it the slow launch of products, industry regulatory changes, threats from new entrants, higher than expected customer churn, or untapped opportunities and customer needs in the marketplace. You need to designate someone's full or part-time role to run a structured process to get to these problem definitions. It has to be someone's job to not just identify the right urgent and important problems, allow for the iteration of the problem definition which is critical because even problem definitions go through a journey of change, build a community around each problem, get the buy-in from an executive sponsor who owns the problem, and research and communicate the cost of not solving the problem. There are many ways you can support this 'problems' building block. For example, Nesta's work on designing challenges or running [problem] Incubators (point 4).

Once you have articulated these two building blocks, the greatest value comes in exploring the questions, contradictions, and tensions- as well as the conversations and actions that lead you to establish a problem-purpose fit for your experimentation system. For example, if you articulate one of the purpose statements as "Drive $10-million in organic growth through non-customers" then it needs to connect with the right problem(s) that address this purpose - "We currently have no value proposition for the ageing population. By conservative estimates, the cost of not serving this customer group is $100m+. This problem is owned by our Chief Strategy Officer". Which comes first, problem or purpose? That's for another post.

• 3. People: Chances are you already have an innovation/experimentation strategy that feeds into the broader company strategy. But, do you have a people strategy that feeds into your experimentation strategy? Ultimately, experimentation is a people-problem. Just as you design your products and services, you also need to design the ecosystem of people. That's people at the idea or experiment level and people at the experiment system level. You need to facilitate both. It's about taking all the different roles (executive sponsors, senior management, middle management for execution, frontline for insights, internal and external staff, partners, and customers) on a journey. It's important to understand their jobs to be done, what time commitment they can give, and what perspectives they bring. It's not about creating a social-media-esque community, it's about building a cocreation community.
• 4. Progress: Where are you on your experiment journey. You need to be able to communicate how far you've come and what's next.

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The internal white building blocks - serve as the content of your experiment system:

• 5. Selection: Building any experiment system requires solving for the selection challenge. That is, selection of the right people and their ideas. Not everyone is ready to be intrapreneurs inside your organisation. Identify those who are and their jobs to be done. For example, a) Those already in your emerging leader program have a sense of urgency to produce strategic value to the business and prove their worth on an exclusive and usually costly leadership development program. b) New employees, in their first 90 days, have a sense of urgency to justify their hiring. The focus here can be on helping them bring an external experiment to the internal context - before they become 'institutionalised'. c) Sales people: Anyone on the front line has tremendous, nuanced insight into your customers' pain points. Yet most of these pain points get left unaddressed because sales work is measured in this quarter's sales goals, not uncovering and turning pain points into new customer opportunities. There are many more demographics, such as external startup founders, who can bring a different perspective and add value to your experiment system. Get the selection wrong, the rest of the experiment system chugs along.
• 8. Interventions: The list of support programs is endless. For example, ranging from helping individuals and teams run faster, better, cheaper experiments through [experiment] incubators, to [outcome] incubators, to [reduce 100,000 customer hours] incubator, and so on. As well as bigger and more expensive options of experiment-labs, corporate venture capital arms, open-experiment programs, and external innovation agencies like Founders Factory. This building block is deliberately called an 'intervention' because the support programs are meant to do a job for a bigger purpose. They are means to an end, and should not exist for themselves, as often becomes the case with say innovation-labs.

Again, there are questions and tensions to explore in the relationships between these two building blocks, Selection-Intervention fit. Are you providing the right intervention (support) programs for the right people? In our experience with corporate experimentation efforts, the big-bang innovation programs or 'submit your idea here' approach doesn't work for many of the intrapreneurs who have a killer insight but don't know it's value. Running [Experiment] Incubators, for example, can help some employees more significantly than a hackathon or a workshop or any other high visibility intervention.

• 14. Portfolio: What is both the target and current view of your experiment portfolio? For example, your organisation may be interested in creating a portfolio of experiments that are 50% core, 30% adjacent and 10% disruptive innovations.
• 13. Ownership: Creating an explicit ownership model is a critical part of any experiment system. You can't use the 'innovate like startups' mantra if you are asking your employees to take all the emotional and reputational risk with their ideas - without the rewards. There are many drivers open to you: a) These can be monetary related in terms of % income, revenue or equity stake for a defined period of time b) they can be the gift and permission of increasing their time to work on their ideas. c) They could be an alternative internal career path for people to create their own new roles. Whichever combination of drivers you use in this building block, you need to be clear on how you encourage original idea founders to be a central part of the experiment journey as it goes through different stages from an idea, to experiment, to a side project, to a program, to a business unit. Intrapreneurs are not just motivated to solve the problem. Their motivation does not lie in "handing off" that idea to a separate team once a particular threshold is hit. Without that authentic and ongoing sense of ownership, truly intrapreneurial people are more difficult to motivate. You don't just need their vision around their ideas, but also their persistence to push through the countless 'no, not right now" blockers. Finally, designing ownership structures is not just for the intrapreneurs, but also the managers who have to give up some of their staff's time to exploring new initiatives.

It easy to articulate something in each one of these two building blocks. It is much harder to explore and resolve the questions and tensions that exist between these two building blocks. To facilitate the portfolio of experiment you want to see, do you have the right ownership structures in place? For example, core experiments require different ownership structure (which could be more about creating time and new roles) than creating disruptive experiments (which is requiring perhaps more of an equity/revenue/income stake).

• 16. Integration: Experiment always sits in the context of the rest of the organisation's work - so, how does it connect, integrate or align with HR, Strategy, and Business Units? You may decide to pursue deep integration with your strategy unit if you're looking at creating more disruptive experiments. If you're focusing more on experiment culture, then deeper tie in with HR makes more sense. It's not an either-or option, but it is important to be clear on what integration(s) you need to achieve the purpose of your experiment work.
• 17. Decisions: The surest way to kill experiment is have an opaque and slow decision-making process. Therefore, building an experiment decision agenda is critical. It is key to detail the way funding decisions are made, who they are made by, and when they are made. In addition, it should include the success and failure of past decisions.

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In summary, experiment systems thinking and doing can yield more value for organisations. However, just by a first glance at the 19 building blocks, you can see how it can get complicated very quickly. Right now, that complexity is hidden in the myriad of initiatives, hundreds of pages of powerpoints, and countless meetings.

The one-page view can help you simplify the narrative and tell a better experiment-story. It is meant to bring visibility to the connects and disconnects that often exist in so many experiment efforts inside organisations. The one-page can help to bring more alignment between the key stakeholders, bringing them together on the same page - executives (who design the strategy and the constraints), the middle management (who make the decisions), and the intrapreneurs who execute - all need to be aligned to create an experiment system that creates more value than the sum of its parts.

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Finally, please share/like/comment/tag those in your network, IF you feel this blog has some value. I'll explore the other 10 building blocks in my next blog (end of April).

Thank you in advance for reading and engaging with this post.