Experimentation Matters: Unlocking the Potential of New Technologies for Innovation

Overview


Every company's ability to innovate depends on a process of experimentation whereby new products and services are created and existing ones improved. But the cost of experimentation often limits innovation. New technologies—including computer modeling and simulation—promise to lift that constraint by changing the economics of experimentation. Never before has it been so economically feasible to ask "what-if" questions and generate preliminary answers. These technologies amplify the impact of learning, paving the...
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Overview


Every company's ability to innovate depends on a process of experimentation whereby new products and services are created and existing ones improved. But the cost of experimentation often limits innovation. New technologies—including computer modeling and simulation—promise to lift that constraint by changing the economics of experimentation. Never before has it been so economically feasible to ask "what-if" questions and generate preliminary answers. These technologies amplify the impact of learning, paving the way for higher R&D performance and innovation and new ways of creating value for customers.In Experimentation Matters, Stefan Thomke argues that to unlock such potential, companies must not only understand the power of experimentation and new technologies, but also change their processes, organization, and management of innovation. He explains why experimentation is so critical to innovation, underscores the impact of new technologies, and outlines what managers must do to integrate them successfully. Drawing on a decade of research in multiple industries as diverse as automotive, semiconductors, pharmaceuticals, chemicals, and banking, Thomke provides striking illustrations of how companies drive strategy and value creation by accommodating their organizations to new experimentation technologies.As in the outcome of any effective experiment, Thomke also reveals where that has not happened, and explains why. In particular, he shows managers how to: implement "front-loaded" innovation processes that identify potential problems before resources are committed and design decisions locked in; experiment and test frequently without overloading their organizations; integrate new technologies into the current innovation system; organize for rapid experimentation; fail early and often, but avoid wasteful "mistakes"; and manage projects as experiments.Pointing to the custom integrated circuit industry—a multibillion dollar market—Thomke also shows what happens when new experimentation technologies are taken beyond firm boundaries, thereby changing the way companies create new products and services with customers and suppliers. Probing and thoughtful, Experimentation Matters will influence how both executives and academics think about experimentation in general and innovation processes in particular. Experimentation has always been the engine of innovation, and Thomke reveals how it works today.
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Editorial Reviews

Inc.com
Experimentation Matters offers many useful insights into innovation and demonstrates how new technologies can have profound effects on business experimentation.
September 30, 2003
Stern's Management Review
This is a highly informative and comprehensive work. Very highly recommended.
September 22, 2003
Today's Books
A must-read.
August 4, 2003
Soundview Executive Book Summaries
Unlocking The Potencial Of Innovatin Through New Technologies
Stefan Thomke, an associate professor of technology and operations management at Harvard Business School, believes there is a vast store of potential innovation in new technologies. To help companies unlock that potential, he writes that they must tap the power of experimentation and new technologies while changing their processes, organization and management of innovation. He explains that computer modeling and simulation have made experimentation less expensive than ever before, and research and development (R&D) teams now have tools at their disposal that can be used to create new value for customers.

Many of the scientific breakthroughs, products and even services that we take for granted today are the result of computer-based modeling and simulation. Computer generated experiments were once primarily used for scientific and military research, but computer simulations are used today in a variety of fields, ranging from the sequencing and analysis of the human genome and the design of modern airplanes and automobiles to understanding the flow of fluids in the development of baby diapers. Running these experiments continues to become cheaper and faster, and even financial institutions are using computer simulations to test new financial instruments and products.

Managing Experimentation
Using new technologies for experimentation is not easy, and Thomke explains that it requires companies to learn how to manage, organize and structure their innovation processes. In Experimentation Matters, he shows organizations how they can fully integrate new technologies into their experimentation process by offering six principles for managing experimentation and explaining how they can be used to drive innovative product development. They are:

  1. Anticipate and exploit early information through "front-loaded" innovation processes. Thomke explains how there is much value in finding potential failures as early as possible. Considering the vast expense of late-stage failures, whether they are in drug experiments, software development, automobile crash simulations, or aircraft development, using new technologies early in R&D projects helps teams avoid potential problems downstream. Examples from Microsoft, Boeing and Toyota show how millions of dollars can be saved through early experimentation.
  2. Experiment frequently but do not overload your organization. Although many early tests can minimize problem-solving delays and costs of redesign, organizations must be ready to handle the increasing amount of information that the experimentation will bring. Thomke uses an extensive and detailed case study from BMW to highlight this principle.
  3. Technology Integration

  4. Integrate new and traditional technologies to unlock performance. New technologies can create impressive results, but they are not perfect and are not stand-alone techniques. Thomke writes, "To unlock their potential, a company must understand not only how new and traditional technologies can coexist within such a process but also how they enhance and complement each other."
  5. Organize for rapid experimentation. The ability to experiment quickly is an important component to effective learning. Since virtual experimentation brings organizations information earlier, managers are able to use results to guide their decisions about the use of major resources and avoid reworking bad designs after a company has committed itself to them. Thomke shows how rapid experimentation helped BMW learn how to make cars safer.
  6. Fail early and often but avoid "mistakes." New ideas are bound to fail, so early failures help to eliminate unfavorable options quickly and facilitate learning. Failures can produce new and useful information.
  7. Manage projects as experiments. Leaders should have a portfolio of experimental projects from which they can learn that are managed with the same seriousness that is applied to other business processes. Using a project as a learning experiment and an agent of change can help a company investigate diverse concepts.


Why We Like This Book
Experimentation Matters offers many useful insights into innovation and demonstrates how new technologies can have profound effects on business experimentation. By addressing management's roles in the innovation process, and demonstrating the use of new technologies through numerous revealing case studies of successful companies, Thomke presents a probing and thoughtful technical foundation on which organizations can build and grow from their innovation processes. Copyright © 2003 Soundview Executive Book Summaries

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Product Details

  • ISBN-13: 9781578517503
  • Publisher: Harvard Business Review Press
  • Publication date: 7/1/2003
  • Pages: 320
  • Product dimensions: 6.38 (w) x 9.48 (h) x 1.13 (d)

Meet the Author


Stefan H. Thomke grew up and was educated in Calw (near Stuttgart and Baden-Baden), Germany. He holds B.S. and M.S. degrees in Electrical Engineering, a S.M. degree in Operations Research, a S.M./ MBA degree from the MIT Sloan School of Management, and a Ph.D. degree in Electrical Engineering and Management from the Massachusetts Institute of Technology (MIT) where he was awarded a Lemelson-MIT doctoral fellowship for invention and innovation research.
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Table of Contents

Acknowledgments
Introduction 1
Pt. I Why Experimentation Matters
1 New Technologies for Experimentation 19
2 New Technologies at Work: The Integrated Circuit Industry 61
3 Experimentation and Learning 89
4 The Reality of Technology Introduction 129
Pt. II Unlocking Potential by Managing Experimentation
5 Experimenting Early and Often 161
6 Organizing for Rapid Iteration 201
7 Shifting the Locus of Experimentation 241
Epilogue 273
Bibliography 279
Index 295
About the Author 307
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