Experimentation Matters - Unlocking the Potential of New Technologies for Innovation

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Book Author: Stefan H. Thomke

Book Review by : Vivek Gupta
Faculty Member, ICMR (IBS Center for Management Research)

Keywords

experiment, Elli Lily, BMW, Microsoft, idea generation, concept testing, experimentation, market testing, product, NHSTA, National Highway Safety Traffic Administration

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Bank of America

Bank of America (BOA) is the second largest bank in the US operating around 4500 banking centers in 21 states and servicing approximately 27 million households with 2 million business customers. The bank has learned number of lessons from a series of experimentations in spite of being a service-based organization. BOA wanted to successfully combine its workforce and technology in order to give its customers complete satisfaction.

To work on this challenge, BOA's Innovation and Development (I&D) unit - a corporate team was established to work in "real life" laboratories in Atlanta. The total number of these laboratories was kept at 20 and all these branches were fully operating branches with every branch developing new products and services, which were being tested continuously. On the technology side, all the branches had virtual ATMs, video monitors displaying information on various products and services, computer and hosting stations. ll branches closely monitored customers' reactions by conducting customer satisfaction surveys and analyzing data on revenues, deposits and services utilized.

Finally, BOA generated 200 new ideas out of which 40 were tested and 36 were implemented successfully. The bank decided to implement 20 out of 36 ideas nation wide. The four-failed ideas were reanalyzed and finally the bank was able to make one idea successful. The learning that the bank gained during the experimentation were:

* The team felt that the experiment was not close to the real situation and reported the experiments as high fidelity experiment.
* The cycle time of the experiment was not properly designed.
* There was problem on deciding the experimentation capacity. The team was not able to fix the number of times they have to rollover the experiment again as it depended upon few external factors.
* The team had used two technologies named repetition of trials and experimentation controls to minimize the effect of noise.
* The team has learnt more through radical experiments - the experiments, which allows team to explore new possibilities rather than running experiments that allowed improving the banking process.

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