The New, Faster Face of Innovation By Erik Brynjolfsson and ...

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The New, Faster Face of Innovation By Erik Brynjolfsson and ...

“In the U.S., we do the vast majority of our concept testing online, which has created truly substantialsavings in money and time,” says Joan Lewis, global consumer and market knowledge officer atProcter & Gamble Co.Finding the LinkWhat does all of this experimentation look like in practice?Consider Google Inc., which runs 50 to 200 search experiments at any given time. In one case,Google asked selected users how many search results they would like to see on a single screen. More,said the users, many more. So Google ran an experiment that tripled the number of search results perscreen to 30. The company found that traffic declined.Journal VideoMichael Schrage talks with the Journal’s Erin White about how managers can strike the right balancein giving employees guidance on innovation—avoiding being too restrictive on the one hand orallowing a free-for-all on the other.THE NEW, FASTER FACE OF INNOVATIONWhat happened? On average it took about a third of a second longer for search results to appear—aseemingly insignificant delay that nonetheless upset many of the users. The greater number of resultsalso made it more likely that a user would click on a page that did not have the information he or shewas seeking.In an environment where experimentation is this quick and efficient, many traditional practices makeless economic sense. For instance, current research-and-development efforts are often driven byconsiderations that the company’s technicians think are important but customers really don’t careabout. Mobile-phone companies, for one, had a reputation for piling on features that added more costand complexity than value.Real-World ResultsBut it’s not just Web-based companies that are taking advantage of technology to run crucialexperiments.Even retailers—who might seem to have tremendous logistical challenges implementing rapidexperiments across lots of stores—can tap this new approach, thanks to the rise of sophisticatedtracking systems that make measuring customer behavior more agile and less expensive.These systems—which track everything from purchases at the cash register to how products movethrough the supply chain—allow stores to cheaply collect terabytes of data on their customerinteractions, the performance of products in the field, employee productivity and other factors.Traditionally, companies have simply rooted through all of that data to look for patterns and trends;they’ve mined their data. But some retailers are beginning to realize that they can get much betterresults by using their digital systems to run experiments.

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