Companies often find that corporate culture is the biggest obstacle to scaling up experiments. Shared behaviors, beliefs and values can make achieving a culture of experimentation difficult or impossible. In this article, I explain how leadership makes the difference in creating an experiment culture. 

This is the third of four articles on the conditions for achieving a culture of experimentation.
1. Three mindsets to achieve a culture of experimentation
2. Organizational structure for an experimental culture
3. How leadership creates a culture of experimentation
4. Centre of Excellence

The need for a new leadership model

With an improved mindset and organizational structure, a new leadership model is needed. The way decisions are made will have to change. In the ideal situation, experimentation is fully democratized. This means that anyone can set up an experiment without permission from upper management. Of course, this requires reliable tools, data, documentation and a process in which everything is safeguarded. This situation is possible only if conducting experiments is cheap, safe and easy, so that anyone can test new ideas.

In addition to democratizing experiments, ideation must also be shared and carried fairly. If someone can come up with ideas and conduct experiments, their outcomes should be leading. In other words, data takes precedence over opinion.

Getting managers to follow this rule is not easy. They are used to making decisions and employees asking them for approval. In 1998, Amazon founder Jeff Bezos referred to two types of decision-making:
Type 1 decisions: “Some decisions are consistent and irreversible or almost irreversible - like a door - and these decisions must be made methodically, carefully, slowly and with great deliberation. and consultation. If you walk through it and you don't like what you see on the other side, you can't go back to where you were before.”
Type 2 decisions: “But most decisions are not like that - they are changeable, reversible - it's like a double door. If you've made a suboptimal Type 2 decision, you don't have to live with the consequences for very long. You can open the doors again and go through them again. Type 2 decisions can and should be made quickly by individuals with high judgment or small groups.”

In larger growing organizations, the type-1 decision-making process is most often used. Even when actually the type-2 decision-making process could be applied. A shame, because this results in inertia, insufficient experimentation, risk aversion and reduced resourcefulness.

Executives must accept this new reality because nothing stops innovation faster than a so-called HiPPO (highest- opinion paid person). In the worst situation, the HiPPO makes the decisions (types 1 and 2). A senior manager decides what happens. In the ideal situation, everyone can come up with ideas, conduct experiments and make decisions based on the results.

What role does management have?
All this begs the question: what is the role of management if all decisions are made based on the results of experiments?

Clearly, managers must establish systems, resources and standards that enable large-scale, reliable experimentation. They must ensure that experiments are integrated into all business and product roadmaps. These roadmaps are flexible based on experimental results.

So are managers redundant? Absolutely not. I sum it up for you below.

1. Build trust

Leaders need to build trust. Without trust in management, people will resist change. Two important things leaders can do to build trust are (1) give enough autonomy and (2) be role models.

To allow everyone in the organization to experiment, ‘autonomy as standard’ is essential. It leads to several positive outcomes for employees, such as higher well-being and engagement. As an authentic role model, managers must follow the same rules as everyone else. This means testing all their ideas and letting experimental outcomes guide them. It also means accepting multiple product horizons, as they may differ due to experimental results.

2. Set big challenges

As mentioned in Stephen Thomke's excellent book Experimentation Works, a manager's job is to set major challenges that can be broken down into testable hypotheses and key performance metrics. For example, they can challenge the company to have the best customer experience in the industry. So a strong and compelling vision is crucial.

3. Encourage a results-oriented organization

Essential to an experimentation culture is customer-centric thinking and working. By focusing on results over output, organizations can create the right products for their customers.

An output is a thing, for example, a product or feature. An output is a change. It can be a change in sales, customer behavior and satisfaction. Results are about the impact the products and features have on customers or the company itself.

Companies that focus on results put their customers at the center of their business. They think first about the outcomes they want to achieve and then what products they need to build or update to achieve that outcome. Of course, the resulting output must be validated through experimentation to analyze whether it indeed results in the expected outcome.

4. Balance exploration versus exploitation and allow for curiosity

Exploration creates value through innovation, while exploitation obtains value through current operations. Executives must find the right balance between the two to maximize results.

Another prerequisite for innovative growth is curiosity. Managers with the wrong mindset may fear curiosity because it increases risk and inefficiency. But without curiosity, discovery is impossible. Leaders can encourage curiosity by hiring naturally curious people (it's contagious), but also by emphasizing learning and letting employees broaden their interests. This can be done by organizing training courses and workshops, for example.

5. Encourage creativity and innovation

As I described earlier in this article, it is important to encourage creativity and innovation. Creativity can be stimulated by generating play, fun and happiness. This not only leads to creativity but also to a healthier life. Catherine Price explains this very nicely in her TED talk:

Time for creative and innovative projects
Innovative ideas need management support, and creative ideas need recognition. In highly hierarchical organizations, innovative ideas from lower levels generally struggle to move up the ladder for approval by upper management. In an experimental organization, however, innovation should be fully supported. Moreover, research shows that there is a strong correlation between workplace fun and creative performance.

6. Set the right consistent rewards

Managers must set appropriately consistent rewards. Thomke's research shows that mixed signals in rewards lead to confusion, distrust and less experimentation.

Other excellent rewards are those for the biggest failures. At an organization where I used to work, the biggest failures were celebrated with champagne, glitter and trophies. This created a very safe environment for failure.
Also, at Online Dialogue, every last Friday of the month is F*ck up Friday. Between 4 and 5 p.m., the team shares its biggest failure(s) of that month, with others applauding and learning.

In conclusion

This was the third article in a series of 4 articles on conditions for a culture of experimentation. I hope to have provided you with relevant tips in 6 steps that you can use in your organization.

Resources
- Experimentation Works - Stefan Thomke
- Online Dialogue's culture scan
- Democratization of online controlled experiments at Booking.com
- Continuous discovery methods - Teresa Torres
- The Business Case for Curiosity