Insight:
Growth in the Industrial Age was difficult, as it required physical infrastructure to build anything. Now, we can build digital infrastructure, and test effectiveness by running low cost, low risk experiments, then scaling.
Industry Impact:
Consulting will be a major component of Bookkeepers and Accountants that thrive, and advising on new ventures will need to be managed by using experiments to prove success before scaling.
Overview
All we need is an internet connection and we can become relative experts in almost anything, without needing to formally study the topic. The most esteemed Ivy League Colleges have courses available online, some for free.
For all knowledge which is not contained in a university curriculum, podcast or YouTube video, you need to learn by doing, testing and trying for yourself.
The Industrial Revolution was built with steel and concrete, so to roll out experiments at scale was not very feasible. Thankfully, digital tools have given us the ability to be truly agile. We can design, build, and implement at a fraction of the risk and cost. Testing ideas and measuring the results has never been easier.
Adopting an experimental strategy is a great way to grow yours and your clients’ business, and become an expert in the opportunities that the Digital Revolution is bringing.
The concept of an experiment is well understood from school science class. When you look at experimentation through a business lens, the same principles apply.
Astro Teller, Chief of Moonshots at Google, explains that the following three business principles describe a good experiment:
- 1. Any experiment where you already know the outcome is a BAD experiment.
- 2. Any experiment when the outcome will not change what you are doing is also a BAD experiment.
- 3. Everything else (especially where the input and output are quantifiable) is a GOOD experiment.
Tech companies have shown us what is possible when you adopt an iterative cycle of test, learn, scale. The ‘Lean Startup’ has become a business section classic for outlining the agile business model, where everything is ‘bootstrapped’ with minimal spend in time and money upfront. It is based on creating a feature, testing it with a small group of real customers, listening to their feedback, and adjusting. Once you have iterated enough to discover ‘product-market-fit’, you then invest and scale, with a level of assurance that you will see a happy customer and an ROI.
"Our success at Amazon is a function of how many experiments we do per year, per month, per week, per day…"
Jeff Bezos
Factors
Democratisation of education
Before industrialisation, we learned directly from the experts. We would learn to farm by watching our parents harvest, learn to bake by being an apprentice at the bakery, and learn to speak a language by moving to the region where it was spoken. Industrialisation then created a new framework where we now learn via a mediator, otherwise known as a teacher, who shares the curriculum via books written by the experts. But, there is another shift happening. The internet has given us unprecedented access to be able to learn anything directly from the source again. Whether it is via YouTube videos, or MIT courses online, you can learn literally anything you want, on your terms, at little or no cost.
The New Knowledge
Now there is such an abundance of information on the web, the new skill is not understanding all of the information out there, it is knowing how to navigate it. It has the potential to change how we use our brains; shifting from memory storage of information, to memory storage of the sources of information.
Digitisation of Infrastructure
The ‘Lean Startup’ has become a modern classic in the business section. It talks of the constant iterative cycles of small experiments that pass or fail based on how real customers react to them. The main point of this is that significantly less investment is required compared to industrial growth models. Anything is possible - if you want to know whether people will like your products, you can launch a global shop front in an hour. Imagine the costs of doing that in that days of bricks and mortar - it would take months, or even years.
Instant and accurate feedback loop
Analytics were once always ‘approximate’. Then digital gave us laser-sharp numbers on who, how, when and where people engage with our digital platforms. It has allowed us to create an instant feedback loop on whatever experiments we are conducting. If you want to test whether Japanese Elvis impersonators prefer white or dark chocolate, you can find out within an hour.
Moving forward
Tess has a range of clients, in multiple verticals, all with different business models, and all in the midst of different growth trajectories.
One she is particularly passionate about is Brightspark.
Brightspark promises to find someone to teach anyone, anything, anywhere. The scope for what they teach is constantly changing. In 2018, AI was the most popular topic, by 2020, Blockchain Developers were the hottest thing.
Tess’s parents were both teachers at her local primary school, which back then, looked very different. It used to be a case of all children learning the same thing consecutively, and following a specific direction from their teacher. Now it is much more fluid. The role of AI has
given children the ability to be naturally drawn to things they choose to discover more about. The teacher guides them down their own path as they move through their schooling years. Virtual Reality allows children to be immersed in the African Savanna to watch bison migrate, or travel to the Kennedy Space Centre to look inside the engines of Space X’s shuttles that go to Mars.
Brightspark work closely with Tess to make sure they are always on the frontline of the latest content and technology. To manage that, Tess organises constant experiments, inspired by insight from their data feeds.
“Hello Team Brightspark!” Says Tess as all the faces appear in the video conference window. There is a mix of Brightspark management, developers and teachers all tuning in for the experiment workshop.
“Thank you for joining in from wherever you are. Marcus, how about that snow in Berlin ? I saw the footage this morning on my drive into work, it looks insane!?”
Marcus’s face takes over the display and he responds. “It has probably gotten worse this morning, Tess. I wish I was in Melbourne with you. There was a Virgin Galactic deal on to rocket into Cape Town for 24 hours. I was very tempted, it was only 500 coins”.
“I don’t envy you one bit, mate. Let’s get into it, there is so much to cover. Speaking of rockets Marcus, we have seen a big spike in searches for learning about Aerospace Engineering. It is clearly the hot topic for younger generation coming out of school, with 100 million views of the Space X Academy video in its first week. That coupled with the billions of coins spent in acquiring engineering companies, this is proving to be a huge industry over the next decade. I think we need to setup a pilot program - excuse the pun - to start testing Aerospace Engineering courses. Do we all approve ? ”Tess looks up at the display to see a green dot appear next to each participant in the conference.
“OK, great - that was easy. Other popular topics for learning include Genetic Beauty Treatments and it’s great to see here Marine Biology is making a comeback. Goodness me, I remember having aspirations of being one when I was in primary school!”
After agreeing to the topics, the Brightspark team build up experiments that will let the users decide which courses they like. If it hits the ‘target’ of 1000 enrolments, that topic is then invested in with media budget to find and recruit the best teachers. If the numbers continue to go up, so does the investment. This ensures Brightspark are growing their company only when the customers prove they will buy it, eliminating any risk.
To conclude the workshop, Tess’s AI, Jay, puts an interesting data point on the table. There is a huge concentration of active users in Mexico City, one of the world’s megacities with a population of 40 million people, using Brightspark.
This market is so dense with users and so large in size that it warranted trying something bigger than just ‘online’. They all agree there is an opportunity to experiment and grow the services of Brightspark in Mexico City.
Tess suggests an experiment where they could test the appetite for an actual ‘bricks-and-mortar’ university in Mexico City. Brightspark could create a physical campus with the latest technologies, where people could come and learn in an inspiring, owned environment.
“Let’s set up a website, and ask for enrolments. If we hit 10, 000 enrolments for on-campus learning in our classes in the first 7 days, we have a business case we can take to the board”. They set up a website asking for EOIs, and within two hours, they have several hundred applicants.
When the proposal was taken to the board, it was approved before the team had even finished the presentation.
Tactics
Read this Harvard Business Review article on how to plan an experiment.
Read nowUnderstand experiments and prototypes, read SPRINT by Jake Knapp, Google Venture’s Sprint Process about the how, when and with whom you should run an experiment.
Read nowGo to FinTech meetups, and meet Founders who are looking for a Beta community. Meet the actual technologists to create knowledge overlap, new ideas and possibilities.
FinTech meetupsCarve out an experimentation budget - both financial and time-based. R&D is no longer just the realm of large corporates.
Allow staff experimental time. Google famously gave engineers 20% time for passion projects. This resulted in Google Maps & Gmail. Time given to staff weekly or monthly could result in new efficiencies and revenue. Encourage clients to as well.
Host a Hackathon: this is a brilliant guide to hosting your own rapid prototyping session, and can garner high value IP, for a very little investment, and generate media attention...
Hackathon Guide