Sometimes entrepreneurs get the reputation for being bold risk takers.
Perhaps in some ways that is the case. But in many respects, entrepreneurs are very calculated in their decision making. They look for the choices that skew the odds heavily in their favor.
Obviously that’s not always possible. But most of the time they look for low downside and high upside. They will take that option all day long knowing that they’ll be wrong much fo the time, but when they find something that works it will more than make up for any small loss.
A kicker is that they do their best to avoid decisions that could end the game. Or shutter the business.
One of the commonalities I’ve noticed among successful entrepreneurs, especially those with long-term success, is their attraction to experimentation. They have a certain paradox about them. They are open to all kinds of “crazy” ideas for growing their business. But they’re also cautious. Sometimes extremely so.
Remember, they want growth, but not at the possibility of losing the business.
That’s where experimentation comes in.
An employee has an idea to make the product better?
A colleague is having success with Facebook advertising?
The COO has a feeling that a different procedure will improve efficiency?
The key takeaway is that they want to test it. They don’t want to roll out entirely. Just a relatively small amount of money and a relatively small amount of customers and staff impacted.
Testing In The Catalog Industry
My first job out of college was in the catalog industry. I had a great boss and worked with great people. The company had been successful for over 100 years. Success was part of the culture.
And so was testing.
One of the great things with the catalog industry was that testing was relatively easy. If you wanted to test something in the catalog or on the catalog or anything like that you just did it to about 1-10% of the catalogs set to go out in the next run.
If someone had an idea for something my boss would almost always say:
He was open to just about any idea. He knew that most would fail. But he also knew that failure wouldn’t be even close to catastrophic. And the big payoff might be finding that one idea has legs and it could lead to a big rollout.
But another key aspect I learned in the catalog industry was back testing. Say we tested a different design on the cover of a catalog and the results were positive. Higher sales.
My boss would always say:
Back test it.
You wanted to do the exact same test again to see if the results were a fluke. Then if it looked the same again you rolled it out to more people, but kept the original design the same for a small group. Just to back test to make sure the data kept coming back the same as the original result.
A very conservative approach to change, but a great way to be progressive as well.
To be successful in business you need to be open to change. You need to remove ego and be open to the possibility that you don’t know what will work in the future. But with that freedom you’re able to try just about anything. But not just big rollouts for every new idea. Little tests that give you data so you can make big decisions with positive signs already backing it up.