How to learn as an organization — a CEO’s perspective on experiments

1. Validate faster than you develop

Most people, including myself, tend to have a lot of ideas and then act fast to put the ideas into motion right away. Instead, we should really be validating our ideas first, to see if they are true and relevant for today’s market, before we invest time and resources into developing them.


By skipping the validation step and putting our ideas straight into motion, we can spend a lot of money implementing concepts, only to find out that they fail. In most cases, it is possible to verify the value of our ideas and products fairly quickly, which can save a lot of money in the long run.


To begin the validation process, look at your idea objectively and check the assumptions that your idea is built on. Ask yourself if the base assumption is true or false. If it’s false, does it still make sense to pursue the idea? It may not.


To assist you with validating your assumptions, take a look at this Riskiest Assumptions Canvas.

2. Consider The First Principles of Reasoning

Over the years I’ve learned a lot about Charlie Munger’s approach to Mental Models as a tool to validate our ideas. I specifically like the approach that is similar to the first pricinciple’s reasoning that Elon Musk uses in his business.


If you look at the principle behind the Tesla Secret Master Plan, you’ll see that the main idea behind mobility is energy that is required to travel a specific distance. If electric vehicles required more power than petroleum vehicles, would it still be worth it to build electric cars just because they are more eco-friendly? You could argue that it may be worth it, but our world doesn’t work that way anymore. So, for Tesla, it’s not about building electric cars, it’s about a more efficient way to power vehicles.


As Elon Musk says about his product:

“So if you like fast cars, you’ll love this car. And then oh, by the way, it happens to be electric and it’s twice the efficiency of a Prius.”


When I look at SpaceX’s business, I notice a very similar pattern of using the Mental Model. Do you remember the main reason that space travel was so expensive? It’s because rockets, or rather launchers, were only used once. That’s why SpaceX put their full focus into making them reusable.

3. Don’t Wait For a Miracle – Experiment!

I think we’ve all had those moments when you see a business starting to grow exceptionally fast and we wonder why we didn’t come up with that idea in the first place. It’s almost like regretting that we didn’t win the lottery!


There are millions of ideas (maybe more) that people around the globe are fulfilling every day. In some cases they hit the jackpot or, in other words, they win the lottery. But, should your business be viewed in that way? Is it a matter of incubating millions of ideas and seeing what works?


If you study success stories throughout history, you’ll notice this does actually seem to be the case. Take Thomas Edison for example—he didn’t have the best ideas, but he was running a great number of experiments constantly, that led him to strike it lucky on the best ones.


As Michael Simmons writes in his excellent article about the the 10,000-Experiment Rule:

“What was the key to Edison’s incredible success? In two words—deliberate experimentation. For Edison, building a company was synonymous with building an invention factory.”


The same seems to be true for our modern times. Just take a closer look at big enterprises like Apple, Facebook, and Amazon, and you’ll see that their leaders are always talking about experiments. Jeff Bezos in particular talks a lot about the importance of experimenting.


Of course, what makes it easier for these big enterprises to run constant experiments is their vast database of users to run experiments on. It certainly does give them an advantage.


4. Are Experiments Only For The Biggest Companies?

Absolutely not! Experiments are a universal mode of learning through practice, and apply to companies large and small.


Unfortunately, in many educational systems, we are taught to avoid mistakes and failures at all costs. This psychology is actually deeply rooted in our human nature, as preventing failure used to be an evolutionary survival strategy. But, times have changed, and our fast-changing world has created a place whereby avoiding mistakes and failures we’re actually avoiding growth, and simply learning too slowly.


This is why we have incorporated experiments into our own everyday work at Skyrise, and why we support our valued customers in experimenting within their own businesses as well; especially when it comes to software products.


Time and again we find that it is best to verify the riskiest ideas fast and upfront, in order to reduce the project’s risk of failure, so we focus on Riskiest Assumption Testing (RAT.) We may soon be able to say that Minimum Viable Product (MVP) is dead. Long live the RAT!


If you ever need any assistance as you start to experiment with your ideas, let me know! You can reach me on LinkedIn. I’d be happy to connect.

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