HBR On Strategy

Great Strategy Starts with Experimentation

Apr 16, 2025

Stefan Thomke, a Harvard Business School professor and author of "Experimentation Works," delves into the transformative power of experimentation in business. He discusses how successful companies like Netflix and Booking.com leverage A/B testing for competitive advantage. Thomke highlights the pitfalls of relying on intuition, advocating for a data-driven decision-making approach. He shares insights on cultivating an experimental culture within organizations, encouraging all employees to engage in small-scale experiments to drive innovation and growth.

23:28

Episode guests

Stefan Thomke

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Quick takeaways

Embracing a culture of experimentation empowers employees to generate insights that can lead to significant business growth and innovation.

Organizations must establish a supportive framework that normalizes experimentation to overcome fear of failure and encourage data-driven decision-making.

Deep dives

The Importance of Embracing Experimentation

Businesses often prioritize intuition over scientific testing when making decisions, leading to inconsistent results. Embracing a culture of experimentation allows leaders to assess what truly works based on data rather than solely relying on gut feelings. A notable example highlighted is Microsoft's Bing, where a simple experimentation led to over $100 million in additional revenue. By empowering employees to test their ideas, businesses can discover insights and strategies that they might have overlooked.

Intro

3min

The Power of Experimentation in Business

12min

The Dangers of Dominant Opinions in Strategy Development

2min

Embracing Experimentation as a Strategic Imperative

4min

Cultivating a Culture of Experimentation in Organizations

5min

Stefan Thomke, professor at Harvard Business School, says running experiments can give companies tremendous value, but too often business leaders make decisions based on intuition.

While A/B testing on large transaction volumes is common practice at Google, Booking.com, and Netflix, Thomke says even small firms can get a competitive advantage from experiments. He explains how to introduce, run, and learn from them, as well as how to cultivate an experimental mindset at your organization. Thomke is the author of the book Experimentation Works: The Surprising Power of Business Experiments and the HBR article “Building a Culture of Experimentation.”

Key episode topics include: experimentation, data and analytics, risk management, decision-making, strategy

HBR On Strategy curates the best case studies and conversations with the world’s top business and management experts, to help you unlock new ways of doing business. New episodes every week.

· Listen to the full HBR IdeaCast episode: How to Set Up—and Learn—from Experiments

· Find more episodes of HBR IdeaCast

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HBR On Strategy

Great Strategy Starts with Experimentation

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

The Importance of Embracing Experimentation

Overcoming Organizational Barriers

Developing a Culture of Experimentation

Remember Everything You Learn from Podcasts