Here's 5 lessons from an expert on why the best entrepreneurs always experiment

24 May 2019

By Professor Mark Dodgson AO, republished from Anthill Magazine online.

Now is not a good time to be in the prediction business. So many attempts to foretell the future go horribly wrong.

At the top end of town, business, technology and political heroes celebrated at the World Economic Forum’s meeting in Davos in 2018 became the zeroes in 2019.

Because the world is changing so rapidly and so beset by uncertainty, no-one knows what the future will hold. The fact is everything is so changeable and unpredictable that the future is to all intents and purposes unknowable.

It is a brave person who can say with certainty what consumers will want, or technologies will emerge, over the next few years, especially with the crazy politics in the world right now.

The good news for entrepreneurs is more uncertainty equals more opportunity. With an eye for an opportunity, and a preparedness to take a risk, entrepreneurs can move in to places established companies fear to tread.

If entrepreneurs rapidly try and test new ideas – that is, if they experiment – they will ride the waves of uncertainty, pivoting quickly as circumstances change.

So, why do the best entrepreneurs experiment?

Experimenting is a great strategy for finding new opportunities when everything seems unclear and ambiguous. It not only helps create responses to future changes, it creates the future. So:

Lesson 1. Experimenting is what you do when the future is uncertain.

We know some things for certain, such as the need to deal with climate change, but we aren’t clear how to do it. The days of being able to predict with accuracy the uptake of a new technology, or the change in demand of customers and clients, are long over.

Now the best you can do is take an intelligent guess (what scientists call hypotheses). Good guesses (or hypotheses) are based on clever and informed thinking and imagination, and sometimes on intuition and

Experiments involve developing an untested idea, but one you are convinced has legs, and thinking about how it can be shaped into a way to provide value for someone else.

Because it is an experiment, and because experiments go wrong all the time, you are prepared for uncertain outcomes.

You can change parameters when new information emerges, and pivot and explore your ideas in different ways to achieve valuable results.

Lesson 2. Experimenting is a way of prototyping and testing ideas.

We have all heard the mantra: ‘fail fast, fail cheaply’, well a much better idea is to ‘learn fast, learn cheaply’. As Thomas Edison said: “I have not failed. I have just found 10000 ways that won’t work”.

No entrepreneurial idea ever emerges perfectly formed, they need to be prototyped and tested, with increasing amounts of finesse as they are developed.

The Lean Start-Up movement is really all about testing ideas to see if anyone will buy them. Software is released in beta-form to encourage feedback and improvements.

Simulation and modelling tools, and virtual reality, help glean good information quickly and cheaply: experimenting with bits rather than atoms.

There’s many ways of tinkering with your ideas through feedback that improves their chances of success.

Lesson 3. The opposite of doing experiments is doing the same thing, over and over again.

It may well be that the ultimate reward of experiments is producing a business or technology that scales. That’s usually when the benefits of seeing opportunities and taking risks pays off big time.

But the question for entrepreneurs, and those that work for entrepreneurs, is whether this floats their boat. There are entrepreneurs who love the challenge of building a business, dealing with finance and HR and regulations.

Some are intrigued by the operational needs of making or delivering something in large markets. And that is brilliant: impact often requires scale.

But there are reasons why entrepreneurs choose to be entrepreneurs.

Exploring the unknown, finding out new things and being inventive, is more likely to give them, and those that work with them, a spring in their step as they walk to work than dealing with the same issues every day.

Lesson 4. Life’s too short not to be playful.

In my recent book The Playful Entrepreneur: How to Adapt and Thrive in an Uncertain World (Yale University Press, 2018), my co-author and I wrote about a wide diversity of successful entrepreneurs who share the common characteristic of being playful.

This didn’t mean, of course, that they aren’t ambitious and serious is what they were doing: they are all successful. It meant that they are constantly learning and adapting, exploring and experimenting.

They are inquisitive and have a joyfulness and generosity of spirit, and they love working collaboratively. They realize that if, as is commonly thought, we work 80,000 hours in our lives, it had better be fun.

And they relish their freedom from the constraints found in large organizations: to decide and not be told.

Lesson 5. If you’re going to experiment, you’d better bring people with you.

Many years ago, I walked into the office of Gerard Fairtlough, CEO of Celltech, the UK’s pioneer biotechnology company, and I found him with his feet on his desk reading a book by Jurgen Habermas.

Reading Habermas, and his theory of communicative rationality, is pretty heavy going, and not what many entrepreneurs (and business academics) have the time for.

But Gerard was amongst the very best of the hundreds of entrepreneurs I have studied over the past 30 years. He knew that when you are working in fast-moving and uncertain markets and technologies you need to bring people along with you.

You need to excel at communicating the decisions you are making and the risks you are taking.

Gerard understood that a crucial adjunct to being entrepreneurial, to experiment with new futures, is being able to explain to your employees, customers, financiers and business partners what opportunities you see and why it worth taking the risk to address them.

It used to be believed that entrepreneurial success depended on highly specified business plans with dedicated commitment to seeing them through.

Of course, this is needed when an entrepreneur’s ideas are proven and embedded, but good luck with that at the early stages of a start-up’s journey.

Having a great entrepreneurial idea, assessing and then fulfilling its potential, is much more a matter of being experimental and playful.

Did you know UQ Business School has a dedicated Entrepreneurial master's degree? Find out more about the Master of Entrepreneurship and Innovation.