Harvard Business School professor, Stefan Thomke, discusses Booking.com's innovative culture driven by large-scale testing and experimentation. Topics include strategy, digital travel, platform, and challenging management norms. Learn how the company sustained growth through a data-driven approach to innovation.
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Quick takeaways
Booking.com's success stemmed from large-scale testing and fostering an innovation-driven culture.
Business experimentation at Booking.com highlights the value of incremental changes and high tolerance for failure.
Deep dives
Booking.com's Innovation Culture and Large-Scale Testing
Booking.com became a billion-dollar digital travel market player by implementing large-scale testing and fostering an innovation-focused culture. They challenged traditional management assumptions and avoided relying on intuition for designing digital experiences. The company's unique experimentation culture allowed for radical experiments, such as changing the optimized landing page, leading to valuable insights into user behavior and responses.
The Power of Business Experimentation
Business experimentation, as exemplified by Booking.com, showcases the effectiveness of small incremental changes over massive breakthrough innovations. With a high tolerance for failure, the company encourages experimentation without seeking perfection. This high-velocity incrementalism approach allows for continuous testing and learning, leading to significant performance improvements and revenue gains.
Balancing Big Data and Experimentation
Booking.com harmoniously combines big data insights with focused hypotheses generated through qualitative research and customer feedback. By funneling diverse sources of hypotheses into a testing pipeline, the company conducts tens of thousands of experiments yearly. This seamless integration of big data analytics and experimentation drives innovation and optimal decision-making.
Creating a Culture of Transparent Experimentation
Booking.com's experimentation process is characterized by democratized decision-making, allowing any employee to propose and test experiments independently. The organization fosters a culture of transparency, peer review, and self-governance to facilitate a robust testing environment. Failures are transformed into learning opportunities that inform future hypotheses, emphasizing a data-driven and iterative approach to innovation.
Booking.com was founded by a Dutch university student in 1996. It grew slowly for almost a decade. By 2011, the company was generating more than a billion dollars in profits annually — making it the most financially successful digital travel market at the time. The secret to that accelerating growth was the company’s use of large-scale testing and experimentation.
In this episode, Harvard Business School professor Stefan Thomke explains how the company created and sustained a culture of innovation that challenged conventional assumptions about management and process.
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