The Importance of Experimentation in Business
Guest post by Howie Bick of The Analyst Handbook, a resource geared towards helping current and aspiring Analysts advance their careers in Business Analysis
The running of a business, creation of new products and services, and exploration of new markets are difficult tasks that requires companies, teams, and people to venture into unknown territory. Many businesses are able to create strong and steady income streams without much experience, foresight, and knowledge about the way ideas, projects, products, or services will turn out. Whether it’s’ creating a prototype, releasing a new marketing or advertising campaign, entering into a new industry, or developing a new product, experimentation and business analysis is an important element within business.
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The Reason Why It’s Important To Experiment
Experimenting and business analysis is important within business for a variety of different reasons. A lot of what experimentation is all about, is about putting together an idea, a campaign, or a project, and releasing it out into the open or market, to see how it performs, what it does, and the results it’s able to achieve. Often times when you’re experimenting, or in the experimentation stage, you’re trying to see how the market receives what you’re putting out. It might be a certain message, it might be a certain product, or it might be within a certain market, but the only way to find out whether a product, campaign, or service will be profitable or successful is by trying it out and experimenting. Without experimenting, it’s virtually impossible to determine whether the idea your contemplating, or the project you’re working on is going to be successful. It’s important to see how the idea performs, and whether it produces the type of results you’re looking for. That way you can better understand what the market you’re trying to cater to is looking for, and whether what you’re producing or developing has an opportunity to be successful.
Large companies experiment on a quarterly basis within their research and development budgets. Many companies categorize a lot of their expenses, and development costs into their R&D budgets. Companies are always looking to find new ways to generate income, enter into new markets, or create and develop new products or services. Testing and experimentation play hand in hand. Testing an idea or experimenting with a new development are how companies or businesses are able to find out if an idea has potential, what the market is looking for, and if they can create something that meets the wants or needs of potential customers.
The Knowledge, Insight, and Information You Gain
Whenever you experiment, you’re able to learn and see the ways you’re experiment succeeds, and where it fails. The knowledge you gain, the information you learn, and the insights you’re able to grasp have the ability to be very valuable for any business or company. As you experiment and test more and more ideas, you’re able to better understand the market you’re catering to, and the way your product or service fares. You’re able to see what’s worked, and what hasn’t worked. The information or insight you learn, can be applied to the existing prototype or idea you have. You can use it to tweak the idea, adjust the product you’re offering, or adapt the message or marketing you’re utilizing. The information you see to be true, when used the right way, can be the difference in turning a failing product, into a successful one. By applying the knowledge, you learn through the experimentation, you can better enhance the product, message, or idea you’re testing. You can increase the likelihood or probability of the next experiments success by tailoring and shaping your offer, message, or idea with the information you were able to learn.
Exploring, Innovating, and Creating
Whenever a company or business tries to explore, innovate, or create, it’s a form of experimentation. A lot of building, creating, and innovating comes down to trial and error. Trying a new idea, a new product, or a new service is a process of trial and error. The process of trial and error takes time, iterations, and changes to get to the type of results you’re looking for. But with enough attempts, applying the type of insight you’ve been able to learn, and upgrading each experiment, eventually you can get what you were looking for, or be able to accomplish what you set out to achieve. When you’re creating or building something, you aren’t sure if what you’re building is what your target market is looking for. You aren’t sure if it’s going to be successful and provide the solution they’re looking to obtain. Once you finish creating, you put the experimentation into action, and see what it produces or the results it generates. Then adjust and adapt for the next trial or the next test. When you’re innovating, trying to rethink a certain process or system, enhance an element of your business, or upgrade a product or service, you’re experimenting with a newer or upgraded version. Seeing whether it succeeds or fails, and how it fares. When you’re exploring a new idea, seeing if it works or doesn’t work, you have to experiment and go through trial and error along the way.
Finding The Right Amount or The Right Number
Each business or company has a different amount of experimentation or testing that is right for them. Depending on the amount of resources you have, the type of capital that’s available to invest, and the type of income that’s coming in, factor in how much a company can experiment and explore new ideas, products, or services. It’s important not to invest too much of your resources into a new experiment, that can hamper or effect the underlying or operating business, but it’s also important to keep experimenting, keep exploring, and keep creating. Finding that balance, where your company can afford to keep its business running and operating without any pressure, while continuing to experiment or test new ideas is the sweet spot you’re looking to find.
The Success or Results You Achieve
The success or results you’re able to achieve is another reason why it’s important for businesses to experiment. Creating new income streams, entering into new markets, or finding new messages to utilize, have the ability to be very profitable for a company. Whether it’s directly though making sales, increasing the number of users, or connecting with more customers, each experiment has the opportunity to provide the results you were looking for, or achieve the type of goal you were looking to achieve.
Conclusion
Experimentation is an important part of any business, and an integral part of creating, innovating, or developing. Having little to no insight into the way decisions, projects, or tasks play out, a lot of business is predicated on experimentation, trial and error, and tests. When you’re experimenting, you’re learning, you’re developing, and you’re figuring out the direction to go in.
Without trying, you’ll never know. You have to put the idea, product or service out there, release it into the world, and see how it fares, or how it does. That’s how you’re able to discover new products, build new revenue streams, and create. Each test or experiment provides you with knowledge and information regardless if it works, or if it’s successful. Using that information and applying your findings can be important to creating a successful product, service, idea, or message.
The success or the results you’re able to achieve through the experiments you perform is a factor to consider when experimenting. You never know if one marketing campaign, one product, or one new idea can make a difference in a business. Creating, innovating, and exploring are aspects of business that heavily involve experimentation. A lot of what business analysts do, is evaluate the results of a company’s creations, innovations, and experiments. To try to understand or predict the type of earnings potential, or the way new ideas or experiments may affect a company’s bottom line or annual expenses.
The right amount of experimentation depends on the amount of resources or capital a company has. It’s important to find the balance between allocating resources to its operations, and its research and development areas. All in all, experimenting is an important element to business throughout creating, innovating, and exploring new ideas, products, services, and markets.
