Why Fearless Iteration Sets Innovative Companies Apart| By |Amit Maimon

Remember Amazon’s first foray into the world of smartphones? The one that lost the company nearly $200 million and resulted in a plethora of negative publicity?

To the average entrepreneur, a failure of this scale would be utterly demoralizing and likely lead him or her to pursue a different product offering. Amazon CEO Jeff Bezos, however, saw the Fire Phone’s flop as a sign that his company was on the right track.

Now, just a few short years later, Amazon has boldly re-entered the smartphone market — this time incorporating its popular Alexa technology into a high-performance smartphone made by Huawei.

Though the verdict is still out regarding how this product will fare in the ultracompetitive smartphone market, Amazon is boldly following a product development methodology I feel every modern company should follow: fearless iteration.

True Innovation Requires Fearless Iteration

By definition, an “innovative” product or solution provides users with radically new benefits. Given this reality, your best bet is to put several irons into the fire and try many things at once. From there, you need to know when to continue investing in and iterating upon the ones that work — and when to “kill” the ones that aren’t working and learn from them.

Consumer game companies embody this approach. Candy Crush, for example, took the world by storm and singlehandedly led to the $6 billion acquisition of King Digital Entertainment, the company that created it. Not everyone realizes, however, that King developed and released hundreds of other online games before striking gold with this one. Over the years, it fearlessly released products, tracked its results, killed the games that didn’t stick and eventually created an innovative game the world desperately craved.

Embracing Fearless Iteration

No entrepreneur wants to fail many times before striking gold — but that’s what staying ahead in the innovation game requires. You survive this approach by killing your bad bets quickly and doubling down on the ones that show promise. To instill in your business a culture of fearless iteration, start here:

1. Place many appropriately sized bets

Allow the sizes of your company and your budget to dictate just how many simultaneous projects — or bets — your team works on. Ideally, depending on your capacity, you will always have several ongoing bets that allow you to gather knowledge faster.

Large companies such as Google are known for placing hundreds of bets every year. For every big announcement Google makes about new product lines, it shelves a similar number of failed endeavors. However, with so many bets in progress, the company can afford to fail because the insights it gains can strengthen its future iterations and ultimately lead to big successes.

Google’s fearless approach has spawned products such as Gmail (which was iterated upon internally for three full years before being released) as well as Google Maps.

2. Set an end vision for each bet

Before you sprint 1 million mph into your first iterations, make sure your bets have well-defined ultimate goals. This seems obvious, but companies across all industries struggle to set clear goals and unite their teams around them. In fact, a 2015 survey in Harvard Business Review found that just 16 percent of managers and supervisors feel they understand why their companies set the particular goals they set.

When fearlessly iterating, your end visions will inevitably evolve, but without building a business case at the beginning of each project, your team will struggle to extract the right insights from your inevitable failures.

For example, when I co-founded a tech startup as a graduate student at the Massachusetts Institute of Technology, our first big bet was to create a smartphone app that improved the e-learning industry. We weren’t exactly sure what our app would do, but our end vision was to boost engagement and add personalization to online classes. Defining this ultimate goal aligned our team and allowed us to confidently iterate until we created a product people loved to use.

3. Rigorously track your iterations

Once your end vision has been identified, you need to break it down into bite-sized chunks. These chunks will be your iterations — but they must be workable products people are willing to pay for and use. Without a steady stream of real-life consumer feedback, innovation portfolios spiral out of control and fail to deliver returns.

In fact, Genpact Research estimated in 2016 that companies across the globe invest nearly $600 billion on new digital technology endeavors every year — and about $400 billion of that investment delivers insufficient ROI. At times, fearless iteration will indeed result in lackluster short-term return, but if companies rigorously track their results, the long-term returns will pay off.

Make a list of relevant metrics or milestones that will help you assess whether an iteration is sending you closer to your end vision. Make sure these insights are actually tied to your goals and aren’t vanity metrics that provide you with false hope. For example, if your end vision revolves around creating an engaging product, measure factors such as feature usage and churn rate that illustrate exactly how users interact with your current iteration. On the other hand, if your big goal is to boost sales through your product, study your conversion rate and user lifetime value.

As you track your iterations, double-down on the projects that are progressing in the right direction, and don’t hesitate to pull the plug on apparent lost causes. However, before you send them to the trash heap, dive into the root reason why the bets didn’t pan out, and use those insights to fuel future bets.

Entrepreneurs are often told to “celebrate failure,” but that’s too broad. Massive failures are neither fun nor cause for celebration. Instead, celebrate fearless iteration and the learning that results because small, swift failures lead to bigger, better things. Celebrate that you’ve quickly discovered why you’re failing, and know that your next step will be a productive one.

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