Business strategy failures are inevitable, but they can also be valuable sources of learning and improvement. However, to make the most of your failures, you need to test and learn from them systematically and effectively. In this article, we will discuss some practical steps to help you test and learn from your business strategy failures.
The first step to test and learn from your business strategy failures is to identify the assumptions that underlie your strategy. Assumptions are the beliefs, expectations, or hypotheses that you have about your customers, competitors, market, value proposition, or business model. They are often implicit, untested, or based on incomplete or outdated information. By making your assumptions explicit, you can evaluate their validity, relevance, and impact on your strategy.
What makes for good assumptions? Implicit in this part of the process is the ability to take a step back and look at the larger picture. Many times we jump to make assumptions because they might be 'Easy' for us to understand. I believe that is is critical to be able to derive some of your asumptions from FIRST PRINCIPLES. Always question your assumptions.
Assumptions are important to frame a hypothesis which can help preparation of vision statements. Moreover, I found macroeconomic assumptions to be very relevant in validating projections related to the micro-level and any failures need to be checked vis-a-vis validity of assumptions made at the macro level and how it deviated. This will help perfect the model for forecasts.
In my experience, the hypotheses, views and assumptions don’t just magically appear in one’s head. They are formed from experience, education, market intelligence, research and observation. They might turn out to be off but, fundamentally, you can’t wait for perfectly completed information to form a strategy. So calibrating and adjusting assumptions after testing is the way to go on this.
Director @ Grupo Humaniia | MBA Experto en Gerencia de Proyectos y Lean Construction
En mi experiencia es un camino correcto hacer suposiciones sobre todas las áreas, es importante hacerlo cuando se está evaluando la idea de negocio, con ello se pueden establecer herramientas para saber si son ciertas o falsas, e ir corrigiendo la estrategia. Si ya estás ejecutando el negocio seguramente llegarán todas las respuestas de golpe, pero nunca es tarde para hacer el ejercicio ahora con información de realidad, pon atención y evalúa si te es posible asumir el costo de corregir o es mejor cambiar de idea.
The first assumption that needs to be identified is the very one related to the subject matter: business strategy failures. - What do we assume failure is? - What do we assume business strategy is? There are endless articles regarding both of these topics. So, let's take a common sense, fluid and organic approach. Starting with failure, no matter what your results are in relation to any goal, IT IS DATA. Not failure, but additional information to factor into the next steps moving forward. THE ONLY FAILURE WOULD BE FEAR OF FAILING. On business structure. The only purpose of a business is solving the needs of the recipients; staff included. Yet most entrepreneurs start businesses so THEY make money. It's counterintuitive and backwards.
The second step to test and learn from your business strategy failures is to design experiments to test your assumptions. Experiments are systematic and measurable ways to test your assumptions in the real world, with minimal risk and cost. They can be qualitative or quantitative, depending on the type and level of evidence you need. For example, you can use interviews, surveys, focus groups, or observation to test your assumptions about customer needs, preferences, or behavior. You can use prototypes, landing pages, ads, or pilots to test your assumptions about your value proposition, product, or service.
In my experience over the period of time after implementing various ideas , assumptions, intelligence, learnings and research we might be able to build a method which is more successful in terms of output. Such method constantly evolve and improve further which results in better outcome.
It seems rudimentary but ensure the data you will need to validate your experiments is available, readily accessible, has every required data point, and is planned for. I’ve seen this step be missed several times. Nothing worse than not being able to answer the question of “so how did we do”?
Designing experiments is always one of the most challenging stages of the growth process, why? because you can experiment with thousands of things, the question is how to prioritize them. In order to do that I like to use the - ICE framework: - I -> Impact (how much revenue/new customers is this going to generate) - C -> Confidence (based on previous experience how much trust do I have in this experiment) - E -> Effort (how many resources is it going to require?)
I am in strong favour to test assumptions - I often use focus groups or pilot tests, but at the end it is still ones/team strategical decision, because sometimes you don't get relevant feedback from consumers - especially if the sample size is small to mid-size. But you can always use it as an advice to improve and adjust.
According to my experience, to succeed in experiments, the less, the better. Having clarity about the control group, a clear objective, and clear next steps once you have the results, will guarantee you will have the answers expected.
The third step to test and learn from your business strategy failures is to collect and analyze data from your experiments. Data is the evidence that shows whether your assumptions are true or false, and how they affect your strategy. You need to collect data that is relevant, reliable, and valid for your experiments. You also need to analyze data in a rigorous and objective way, using appropriate methods and tools. For example, you can use descriptive statistics, inferential statistics, or data visualization to summarize, compare, or explore your data.
Some example would that be: most common scheme distinguishes four types of assumptions: Desirability — Whether users will find the solution valuable Viability — Whether the solution will drive business benefits Feasibility — Whether the solution can be introduced within a reasonable cost Usability — Whether the solution will be UX-friendly
I'm reminded here of the principles at the heart of tried-and-true innovation methods: the Lean Startup and Design Thinking. While these concepts aren't necessarily new, their essence remains timeless and universally effective. In an era where data is abundant, it's these methodologies that guide us in harnessing the true potential, helping us navigate the dance of strategy, assumptions, and real-world outcomes.
The collection of data from interviews and focus groups (qualitative) would allow generation of keywords that can help to identify and navigate a result of whether the hypothesis still stand. Normally, I'd back my research with quantitative data from surveys or retrieve data points from the company (if avail) for an analysis to cross compare and make reference with the qualitative results to make the conclusion more robust. Understanding which statistical tools to use for data analysis is also very helpful, as it can help with visual representation (ie. pie, table, flow chart etc) when presenting to the board and senior managements.
Gather data from your experiments, focusing on metrics directly tied to your strategy’s objectives. Employ Six Sigma tools like Pareto charts or Fishbone diagrams for systematic analysis. Look for trends, anomalies, and unexpected outcomes. For example, if customer feedback varies significantly from expectations, delve deeper to understand why. This step transforms raw data into meaningful insights, guiding your next moves.
Los datos y su recopilación para un posterior análisis de los mismos es fundamental. Luego podemos tomar decisiones en base a las respuestas y conclusiones
The fourth step to test and learn from your business strategy failures is to learn and adapt based on your data. Learning is the process of extracting insights, lessons, or implications from your data. Adapting is the process of applying your learning to your strategy. You need to learn and adapt in a continuous and iterative way, as you test more assumptions and collect more data. For example, you can use the Build-Measure-Learn loop, the Lean Canvas, or the Strategyzer tools to document, communicate, and update your learning and adaptation.
Incorporating a mindset of resilience and flexibility is crucial when learning and adapting from business strategy failures. Beyond just analyzing data, it's about cultivating an environment where every setback is viewed as a stepping stone towards greater understanding and improvement. Emphasizing the importance of emotional intelligence and resilience in this process is key. Teams that are encouraged to embrace challenges with a positive attitude and a willingness to grow are more likely to find innovative solutions. Furthermore, encouraging open and honest communication about failures and learnings can transform a potentially negative experience into a powerful tool for team bonding and shared learning.
A good way to learn and adapt may be taking the chance to discuss the lessons learned at the end of every project or business initiative.
There never is a "best solution in the world". There is always a best solution AT THE TIME. With whatever existing tools available and constraints faced during that period, we derive a solution for that period of study. But things change, the world is always evolving. We didn't have such high speed technologies 2 decades before, but yet now here we are. And new tech leads to new problems, different problems. And thus, new solutions need to be uncover. Change is a constant and speed is key. How fast you get to the solution and move to the next, is the new motto of the art of survival in the 21st century. Anyone who refuse to iterate and adapt will cease to exist in due course.
One action is to always review the lessons learned from the application of this business strategy. Another action would be to regularly calibrate your business strategy through small surveys to a specific small sample of clients who could be considered “friends and family” to get honest feedback.
Analyze the data to understand what’s working and what isn’t. If results deviate from expectations, explore why. This might involve modifying a product feature, changing a marketing approach, or even rethinking customer segments. Embrace pivoting as a positive step, showing agility and responsiveness. The key is to adapt based on evidence.
The fifth step to test and learn from your business strategy failures is to celebrate and share your achievements and challenges. Celebrating and sharing are important ways to motivate yourself and your team, to acknowledge your progress and efforts, and to solicit feedback and support from others. You can celebrate and share your successes, such as validating your assumptions, creating value for your customers, or achieving your goals. You can also celebrate and share your failures, such as invalidating your assumptions, discovering new problems, or pivoting your strategy.
Many people overlook the fact that it is a process. Which is essentially about learning, it's also essential to celebrate failures. As a result, it is relatively easy to overcome emotional impact and learn valuable lessons quickly. If you have a strategy, don't be afraid to change it; if the wind shifts, you must adapt.
Like what each of us is doing here, sharing our experiences and thoughts, these help to shape how we approach our next strategy paper. With practice, comes mastery. Keep doing it, as something new to discover is always at each corner. A curve ball should not be a surprise, however how we maneuver around that is the key. More people can share their experiences, and it should be taken up with observation instead of speculation.
The sixth and final step to test and learn from your business strategy failures is to review and improve your testing and learning process. This is essential for making sure that your process is effective, efficient, and aligned with your strategy. To do this, consider questions such as how well you identified assumptions, designed experiments, collected and analyzed data, learned and adapted from data, celebrated successes and challenges, and how you can improve the process for the next cycle. By following these six steps, you can test and learn from business strategy failures in a systematic and effective way. This will help you to improve your strategy, create value for customers, and achieve your goals.
Determine how your business will identify, review and improve upon business strategy failures early on is key. Making this stage a fundamental and regular occurrence will ensure the business is proactive when identifying weaknesses, rather than waiting for problems to become fully developed and more time/resource intensive. This approach will also allow the business to adopt an iterative culture that values incremental improvement over spurts (which can be reactive and poorly executed).
That's probably one of the most overlooked steps. We take our coaching clients through the process we call "life's greatest teacher" where we have them review their projects, situations, actions, etc to evaluate what worked, and what could have been better. The greatest value is in the reflection. That's where learning takes place. You can only improve that which you measure, review, and understand.
It is important to sort the reviews for your improvement. However, it is worth considering from whom you get the assessment data. In my case, I have a ladder of gradations, where the social position of people giving this assessment plays a key role. Thus, each step is a certain number of points, when you collect them together you can understand how good you really are, and what is worth working on.
It’s crucial to factor in external elements like market shifts, technological advancements, or regulatory changes. Maintain agility to adjust strategies in response. Additionally, ensure a diversity of perspectives in the evaluation process. Engaging different departments or even external consultants can offer new insights, making your strategy more robust and adaptable to unforeseen challenges
Ensure that a strategy can fail but not the business . So first strategy is to have paths and timeline and exits clearly defined !!
Having multiple methodologies in the tool box is critical as business strategy execution is diverse. Or, another way of saying it is business strategy execution has many components which each have a strategy that must be responsive to change. Lean and Agile are great methodologies to learn and practice, and are universally applicable. Having a digital marketing strategy is critical, and its sub component content strategy, for business to business and business to customer offerings, and knowing how to test how they are received by customers. There has been great advice from contributors here. Each part of their advice requires study but, the good news is most of this subject information is available free online.
Angled assessment is key. Consider whether was it the strategy that failed, its application, its sequence or more simply its intention. Often strategies fail or are discarded when it was the design and not the plan itself that encouraged problems. A strategy should be designed for Success and constructed like one would a building. Was the foundation solid? Did we have the resources and bandwidth to truly execute the strategy well? Were we taking shortcuts? Was the ecosystem impact considered? It is not always the components of a strategy that fail, but their application and environment that determine the outcome.