To succeed in business, you have to deliver the cold, hard numbers: revenue, profit, market share, and shareholder value. But you also need to pay attention to people-oriented issues such as management and leadership. Hence, the classic tension between “hard” and “soft,” numbers and people. The very best executives are able to resolve it. They experiment.
Take Starbucks’ founder and CEO Howard Schultz. Over time, he has learned the value of experimenting. When Shultz first decided to enter the instant coffee market, he planned a big, splashy rollout like the one that launched Sorbetto, a yogurt smoothie drink. After much promotional fanfare across the country – ads, banners, special machines — Sorbetto in a matter of months disappeared without a trace. His team vividly remembered that disappointing reception and convinced Shultz to proceed this time in a more experimental way. Starbucks first piloted its instant coffee product, Via, in the Chicago market. Among other things, they learned that handing out free samples missed the mark. Customers would stuff the samples in their briefcases and forget about them — they needed to actually taste the new product before they would even think about buying it. Pilot sites therefore offered prepared cups of Via, and eventually the national introduction incorporated this idea, to great success.
The next time you need to roll out a new idea in your organization, try a four-step experimentation process:
1. Assess the current situation: Research shows that the biggest barrier to getting things done is mind-set – how you and your people think about a situation. A mind-set is deeply ingrained in organizational culture, a major factor in delivering results. As Lou Gerstner said about his turn-around of IBM: “Culture isn’t just one aspect of the game. It is the game.” Gerstner was known for his prowess as a strategist, but he learned that culture trumps strategy. Lots of other well-known executives have reached a similar conclusion. Therefore, start with an assessment of how you typically think about the challenge you are facing. Shultz, for example, saw that his “all or nothing” way of managing rollouts would not work for instant coffee.
2. Define the change you want: Then identify specific actions designed to reach your goals. This step inevitably involves simplifying a highly complex situation. Consider, for example, the way Mo Ibrahim has set about changing African political culture (described in one of my earlier blogs). With the money he made in his business ventures, he established a foundation that publishes an index that assesses the quality of governance. He defined the change he was looking for, in great detail.
3. Value the proposed actions: Then subject each step to an exacting test linked to financial or other important metrics. The point is to force yourself to evaluate the impact of your proposed actions using measureable outcomes that matter to performance. For management guru Peter Drucker, this is an essential part of “feedback analysis” – predicting outcomes of your actions and assessing their effectiveness against your expectations. A few of my colleagues – Ian MacMillan, Rita McGrath, and Alex Van Putten — have applied this notion to strategic planning. They call their framework “discovery-driven planning.” You can think of this experimental process as “discovery-driven leadership.”
4. Run experiments. This step involves monitoring your activity to see if an idea is taking hold as you expected. If so, continue with the steps you initially identified. If not, try something else, again using the four-step process.
Most plans fail to deliver their predicted results. So try something else: experiment. It works for Howard Shultz. It can work for you.