The benefits of experimenting for your organization

In this article we will learn what experiments are, why they are important for public and private organizations and why it is important to incorporate experiments into the organizational culture.

Think about a project you're working on. Your team has to design a solution to address some challenge, whether it's a government trying to get businesses to comply with environmental regulation, a company trying to get its customers to be loyal to its products, or a financial advisor encouraging a client to start saving for retirement.

What process did you use with your team to design this solution? Without a doubt, they identified the problem, and after some team sessions, they managed to come up with a solution that satisfies all the areas involved and the stakeholders. In addition, through some tests, they have verified that the client is also satisfied with what was offered. However, a question remains: how do we know that this is the most successful solution?

What you can expect is that this solution will influence the behavior we want to change, assuming that this change alone has produced the expected results. In reality, there are other variables that can influence the results we want to measure. Specifically, other contextual factors can influence our results, such as an increase in demand, reactions from competitors or global situations.

“Behavioral economics provides a tool that helps organizations measure the impact of designed solutions and make better decisions based on data and evidence: experiments.”

What are experiments?

Considering the objective of this article, we can define experiments as a tool available to organizations to develop behavioral models, test ideas, and understand the impact of the products and services they offer. This methodology has been largely used in medical fields, and only in recent decades has its application to psychology and economics begun to be extended.

In general, the great purpose of experimenting is to attribute a single cause by varying a single stimulus. But, in relation to behavioral economics and its application, experiments achieve an increasingly important goal:

Experiments help to complement intuition and conjecture with evidence-based decision making.

This is important for all types of organizations, public and private. In particular:

• governments can use experimental results to design and deliver better services.

• companies can use experimental results to improve their human resources practices and offer better products.

Why are experiments important in public and private organizations?

1. Behavioral Problems

Any organization is fundamentally in the business of behavioral change. However, we don't always think of business challenges as behavioral problems.

2. Behavior Change

Once we understand the first point, behavioral change becomes a critical factor for organizational success and we can design solutions to achieve this goal.

3. Behavioral Insights

Before designing solutions, we incorporate behavioral principles into organizations to achieve greater results, improve process efficiency and maximize stakeholder engagement.

4. Art and science

Organizations often rely on intuition when making decisions. Experiments can help supplement intuition and inform policy and management decisions.

The centrality of incorporating experimentation into the organizational culture

“When testing and experimentation are at the core of a culture, a team or company can be more responsive and agile, driving better product and growth along with a better employee experience."- Gillian Tans, Charwomen, Booking.com

Gillian Tans perfectly describes the centrality of incorporating experiments into the organizational culture. Companies such as Booking.com, Facebook, Google, Netflix, among others, have learned first-hand some of the benefits of experimenting:

• Transforming the way businesses and governments make decisions

• Systematize the application of psychological principles to the world of business.

• Build more responsive and agile teams or companies

• Drive better product and growth along with a better employee experience

• Develop behavioral models and test ideas

• Understand the impact of the products and services they provide

Por ello, es cada vez más relevante que las organizaciones cambien el foco hacia la experimentación aplicada a retos conductuales reales y en diferentes contextos.

Takeaway

The integration of Behavioral Economics and experiments is part of a growing area of behavioral research. It experimentally tests ideas from psychology and economics in real-world contexts in order to identify the factors at play in different situations.

Silvia Cottone

Behavioral Science Consultant & Worldwide Speaker

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Luca, M. & Bazerman, M. H. (2020). The Power of Experiments. The MIT Press.