Experimental Design: Sampling and Testing

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Questions and Answers

What is a characteristic of innovation projects using divergent experimentation?

A process that is limited to a single team member

A highly iterative process that may span weeks or months (correct)

A short, linear process

A process that only focuses on solving a specific problem

What is the primary advantage of defining innovation in terms of a problem?

It helps to create a specific solution

It forces you to take the customer's point of view (correct)

It allows for a more flexible approach

It increases the project's budget

What is the purpose of defining a scope limit in an innovation project?

To increase the project's budget

To limit the team size

To provide helpful boundaries for the experiment (correct)

To define what the project is seeking to accomplish

Why is diversity of team composition important in an innovation project?

It includes diverse skill sets and people from different backgrounds Signup and view all the answers

What is the primary purpose of observation in an innovation project?

To inform and provide insights for the next stage of the problem Signup and view all the answers

What is the recommended team size for an innovation project?

A 5 person team Signup and view all the answers

What is the main limitation of finding new customers for a value proposition that is losing relevance in its existing market?

There are often limits to how many new customers can be found Signup and view all the answers

What is required for a business to adapt its value proposition?

A willingness to depart from what has brought it success in the past Signup and view all the answers

What is the primary benefit of adapting a value proposition?

Staying relevant to customers' changing needs Signup and view all the answers

What is the likelihood of a mature business uncovering new markets for its same products and services in the digital age?

Low, as digitization has removed many barriers to entry Signup and view all the answers

What strategy can every business apply, even when it appears to be doing well?

Value proposition adaptation Signup and view all the answers

What is the primary benefit of rolling out an innovation in stages?

To validate initial findings and test how it is received by different customers or markets Signup and view all the answers

What is the quote that emphasizes the importance of being prepared for change in a rapidly changing digital environment?

Only the paranoid survive Signup and view all the answers

What is the characteristic of a polished launch?

Offering the innovation to all customers at once Signup and view all the answers

What is the key to compensating for the fallibility of management's own judgment?

Instilling a culture of testing and learning Signup and view all the answers

What is required for a business to embrace experimentation?

A recognition that we do not know what we think we do Signup and view all the answers

What is the role of leadership in an experiment-driven organization?

Empowering employees to experiment and learn Signup and view all the answers

What is the expectation for any new innovation after its launch?

It should be iterated and improved continuously Signup and view all the answers

What is the first step in predicting the possible impact of a new disruptive business model?

Understanding the customer trajectory of the disruptor Signup and view all the answers

Which type of disruptor appeals to customers who could not afford or access the traditional incumbent's services?

Outside-in disruptor Signup and view all the answers

What is a characteristic of inside-out disruptors?

They sell to a segment of the incumbent's current customers Signup and view all the answers

When identifying the customer trajectory of an outside-in disruptor, what question should you ask?

Who is currently most motivated but unable to afford or access your products or services? Signup and view all the answers

What is the purpose of identifying the customer trajectory of a disruptor?

To predict the possible impact of a new disruptive business model Signup and view all the answers

What do you need to ask when identifying the customer trajectory of an inside-out disruptor?

Who among your current customers would be most attracted to the disruptive offer? Signup and view all the answers

What is the primary purpose of Step 3 in the innovation testing process?

To identify the population whose responses to test Signup and view all the answers

What is the typical rule of thumb for sample size in each group being compared?

n = 100 Signup and view all the answers

What is the outcome of finding a desired improvement from an innovation test?

Further iteration and testing of additional ideas is necessary Signup and view all the answers

What is the purpose of Step 7 in the innovation testing process?

To capture and share the learning of the experiment Signup and view all the answers

When is the divergent experimental method particularly useful?

For innovations that are less defined from the outset Signup and view all the answers

What is the benefit of having agreed on a definition of success in Step 1?

It pays off in making a decision based on the findings Signup and view all the answers

Study Notes

Routes Out of a Shrinking Market Position

Three routes to consider:
- Find new customers for the same offering
- Adapt the value proposition to stay relevant to customers' changing needs
- Offer new value to new customers

Adapting Value Proposition

Adapting the value proposition requires a willingness to depart from past successes
Ask "How can I become as valuable to my customers as I used to be?"
Adapting the value proposition is essential for businesses facing decline

Innovation and Experimentation

Divergent experimental method:
- Define the problem
- Set limits (time, money, scope)
- Pick a diverse team
- Observe and solve the problem
Seven-step innovation testing process:
1. Define success
2. Randomize test and control groups
3. Validate the sample
4. Test and analyze
5. Decide based on findings
6. Share learning
- Tool: divergent experimental method
Polished launch vs. iterative innovation
Importance of building a test-and-learn culture

Organizational Challenges of Innovation

Building a test-and-learn culture:
- Recognize the fallibility of management's judgment
- Empower employees to experiment and learn
Leading without deciding:
- Rapid experimentation requires a different kind of leadership
- Leadership becomes less about making big decisions

Disruptive Business Models

Understanding customer trajectory:
- Outside-in disruptors start with non-customers and move inward
- Inside-out disruptors start with a segment of the incumbent's customers and move outward
Identifying early adopters:
- Who among current customers would be most attracted to the disruptor's offer?
- Who is most motivated but unable to afford or access the incumbent's products or services?

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Description

Learn how to design an experiment, from identifying a population to analyzing the data. This quiz covers the crucial steps of randomizing test and control groups, validating sample sizes, and testing hypotheses.