Lesson 4: Learning What Works
In Lesson three we developed our new initiatives by choosing the right metrics for each new test and pre-defining success.
Here's a brief recap:
Lesson 4: Learning What Works
Why is it a good idea to 'fail fast'? When should we push forward and when should we ‘pivot’?
Sometimes it all works out just as you planned. The trial period comes to an end and your pre-defined goals have been smashed, your customers are all singing positive feedback and your tills are ringing away merrily. The way forward in this case is clear - more of the same. It's important to keep watching those numbers but you should now carry out a more complete implementation of your trial concept.
On other occasions, the results won't be so positive and the way forward will be much less clear. There will be a natural temptation to put a big X in the 'FAIL' column and scrap the whole thing. There will also be a temptation to hit yourself over the head for the sheer stupidity of thinking it was worth doing in the first place. Neither of these is a good idea.
You have to remember that the goal of each trial isn't just higher sales and a growing business, it's 'validated learning' about what is responsible for that growth. Every trial, successful or not, feeds our understanding of what does/doesn't bring customers through the front door. It is also rare that an idea is 100% bad. There will often be a part of the idea that is worth pursuing.
There are two steps to put in place when dealing with a situation where your numbers aren't quite there.
- Embrace Failure
- Identify the Opportunity (Pivot)
It is easy to become emotionally invested in the outcome of our trials and take the negative outcomes personally. In fact, the whole process of innovating can put you on a roller-coaster that offers amazing highs as well as isolating and demoralizing lows.
At these moments, it's important to remember that failure is a normal and in fact crucial part of learning what works.
Here's some tricks for embracing failure:
Accept that Failure Happens
The key to getting through the bad moments is accepting that failure is an essential part of the innovation process. It's not a by-product or an exceptional circumstance; it's an absolutely intrinsic part of how a lean retailer runs their business. Trial and error only works if you accept error as part of your day-to-day and actually learn to embrace it.
Always Fail With Friends
The challenges you'll face and the ups and downs of running a business are a big part of the reason why it's important to build up a retail community. Friends and family are great but it is vital to have a group of knowledgeable, experienced people around you who understand what you are dealing with and can offer advice and support when it's needed.
Always Fail Fast
We need to make sure that our trials are quick, cheap and efficient. Even if you end up with less data to base your decision on, a two-week trial is almost always better than a three-month trial. In the event the initiative doesn't work out, you'll be able to dedicate your limited time and resources to another idea that might be more effective. If the idea is looking promising but you want more data, you can always extend.
Identify the Opportunity
The Build-Measure-Learn process is not a one off endeavor, it is a cyclical process where the lessons taken from one experiment form the inspiration for the next. As such, when an initiative doesn't meet our pre-defined criteria for success, we have to take the time to analyze what really went wrong. Sometimes we will come to conclusion that the whole idea was just completely terrible. More likely, however, we will be able to identify an aspect of the idea that could still bear fruit.
In the 1970s/80s, Dunkin' Donuts was, as the name may suggest, primarily a donut retailer. They sold donuts. Their mascot was 'Fred the Baker' and when you drove past Dunkin' Donuts you'd see a big donut on the roof. It was pretty clear what they were all about.
Fast forward to today and the self-declared 'beverage company' now makes 58% of it's annual revenue from Lattes and 'Frozen Coffee Bean Mocha Coolattas'. Fred has been replaced by a coffee cup; the giant donuts on the roofs have morphed into giant coffee cups; and the slogan 'America Runs on Dunkin' makes it clear that coffee is now central to their offering. Dunkin' have executed what is known as a pivot. They still sell both coffee and donuts but it is clear the business has fundamentally changed.
So what is a pivot?
In the technology startup industry, a pivot comes about when a team realizes that people are using their new product in unforeseen ways and/or in very low numbers. Confronted with metrics that don't meet their pre-defined targets (and taking into account significant customer feedback), the development team has to decide whether to keep trying to attract new users to the existing product, to scrap the product all-together or to pivot to a new, but related, idea. Crucially they don't jump to something completely different, they keep one foot firmly on the ground - hence the term, pivot.
A pivot doesn't have to happen on such a grand, business altering scale. It can be as simple as trialling a tray of cupcakes by your cashier hoping to increase cupcake sales. During this time you may notice feedback about preferred flavors, about customer buying habits at different times of day or about the ability of your cashiers to up-sell. Each of these insights could lead to a new trial initiative that will, ultimately, get you closer to your initial goal of higher sales.
As you are assessing the success of each initiative, make a note of potential new ideas and 'pivots' that could lead to your next trials.
|Idea||What Worked||What Didn't||The Pivot|
|Selling cupcakes at cashier as impulse items||Customers who had the cupcakes really liked them!||Not enough sales :-(||Put free samples of cupcakes on counter to entice people to try, then buy|