057 Culture of Experimentation
COVID-19 accelerated the four-day week workplace experiment. This is a departure from the traditional five-day week that has been in place for decades. Belgium recently announced that employees could choose to work four days with no decrease in pay and have the right to disconnect after normal working hours. Almost seventy companies in the UK have signed up for a four-day week trial for six months.
Governments and companies are conducting these experiments to improve employee wellbeing in the changing workplace. But what is the right structure for the four-day week?
Learning in ESG
Experiments are important to gather data, test hypotheses, and learn. Some experiments have resulted in new products. Dr. John Pemberton, an American pharmacist, developed the original Coca-Cola recipe in the process of finding a painkiller alternative to morphine. Katy Milkman, a professor at The Wharton School, ran an experiment and found that lotteries would not encourage health behavior change, as expected.
In managing a business around ESG criteria, experimentation is necessary to get smarter in a nascent field and develop better solutions. The more complex and intertwined the problem, the more experiments, and area experts should get involved. So far, around fifty companies have published their non-financial disclosures based on the stakeholder capitalism metrics proposed by the World Economic Forum and provided their feedback on the challenges with the metrics. Their insights will inform standard setters and form the backbone of global frameworks for ESG reporting.
There should be a hypothesis that leaders can test for experiments to work. Can we understand the cause and effect from the experiment? Are the results from the experiment reliable? This means that if we do X, we should get Y, time and again.
To increase the reliability of experiments, you should reduce bias and minimize errors. There should be a control group, which serves as the comparison group and where the status quo is maintained. To test the hypothesis, you could perform a manipulated change on a randomly selected group. Random assignment of conditions or situations can further challenge the robustness of a hypothesis.
A/B testing, also known as split testing, is an approach to compare responses to two versions of a single variable typically performed online to research user behavior. For example, a travel booking company may test two different buttons to highlight on their website to determine which performs the best. The success metric is the number of website visitors who click on the button. So, the button that caused the most visitors to click should be the one they choose to highlight.
Companies such as Meta make tools available to run A/B tests to help businesses determine their target market, improve campaign effectiveness, and grow their business. Such tools are important to measure the results to make decisions based on data rather than gut instinct. You can also use the data to set up future or sequential experiments.
Failing as an Expectation
But experimenting should go beyond determining which email campaigns or types of videos engage users for a longer time. Business experiments could include testing new products or services, target markets, or pricing. How much more will customers pay for sustainable products and packaging? What nudges can retailers introduce to encourage consumers to bring back their products at the end of their use? What services might motivate communities to incorporate more movement and sport in their lives?
Senior leaders are sometimes resistant to running experiments in the market for fear of failure. But that thinking goes contrary to experimentation. Most experiments fail. Jeff Bezos, the founder of Amazon, known for its culture of experimentation, said, “Experiments are by their very nature prone to failure. But a few big successes compensate for dozens and dozens of things that didn't work.”
Amazon Web Services, Amazon Prime, and even the recommendation feature on the website resulted from experiments. The first Amazon smartphone, the Fire phone, was an experiment and a failure. Most experiments are reversible—the important thing is gathering the data and learning from failures.
One way to encourage experimentation is to celebrate failure and appreciate the effort. F**kup Nights, a global event series, honor professional failures. Entrepreneurs and business leaders come together and exchange their stories to create a culture that celebrates trying and practices a growth mindset.
The openness and transparency of acknowledging failed experiments cultivate resilience in the individual and organization. Coca-Cola has a Failure Award to promote creativity and innovation to continue to roll out new products in new markets and grow the business. The reward is for putting in the work to test and learn—learning is never a failure.
Rewarding such efforts also encourage employees to move away from how things have always been done. Change is a constant, and building the team's willingness to do things differently, particularly as companies shift towards stakeholder capitalism, is critical. M-Pesa, launched by Vodafone in Kenya, was a fast and convenient service for the unbanked to transfer money. The service has since expanded to other countries, including Tanzania, DRC, and Ghana, and spurred economic growth in the region.
Playing to Learn
Managing a business in the interests of all stakeholders—customers, employees, suppliers, the environment, and investors—is a new game for business leaders. Creating a culture of experimentation and designing the organization's systems requires leaders to understand the importance of experiments and how to run experiments effectively.
Run experiments with the expectation to fail and with the intention to use the insights to learn. Celebrating effort and rewarding the willingness to take risks in teams will build organizational resilience, creativity, and innovation.
From an individual perspective, if you are interested in shifting careers, look for projects outside your usual scope of work you can volunteer for and where you can show your interests. Are there community projects you can engage in to grow your knowledge in a new area? Perhaps there is a course or a workshop over a weekend that you can take to see if this is where you want to invest your time in the longer term. Approach each attempt as play, and the experiment can be more enjoyable.
"All life is an experiment. The more experiments you make, the better," Ralph Waldo Emerson, American essayist.