Why Failing Fast leads to Success
It’s incredibly fun (& rewarding) to see “wins” on a daily, weekly, and monthly basis. While we’ve had many spurts of positive momentum, the most recent string of successes is tied directly to a cultural philosophy that we are trying to ingrain here at Lendio: Failing Fast.
As an Executive Team, we decided to read, study, and apply the principles of the book Lean Startup. Specifically, here are some of the items that have made a positive impact on the speed of innovation here at Lendio.
- Hypothesis: When we decide that we want to improve or change a process, product, message, landing page, sales pitch, etc. … we first come up with a test hypothesis. For example, if we wanted to improve a landing page, we’d provide a hypothesis that reads something like this: “If we add this widget to our landing page, then our conversion rate will improve.” We aren’t quite sure if it will really improve, but we believe that the change will improve the conversion rate and we feel like it’s worth a test.
- Minimum Viable Product (MVP): The next step in “failing fast” is to figure out a way to test your hypothesis with as little resources as possible. The last thing that we want to do is to get our dev. team involved to code a full-functioning product. This would require way too much time and way too many resources… and in the end, the hypothesis maybe completely wrong! So, in contrast, we figure out how to pull something together with as few of resources as possible that will allow us to test the hypothesis. Ideally, the timeframe to put together the test and get it to market would be 1-2 days.
- Analysis of Hypothesis: Once we’ve had the test running long enough to get a decent sample size, we are able to analyze the data to decide the success or failure of the hypothesis. If the test results improved, then we continue to add resources and attention until we can do a full launch. However, if the stats shows a decrease, then we pronounce the hypothesis a failure and move on. Usually, we come up with another hypothesis and start the process over again.
- Implementation: Under this model, we believe that we are getting maximum use of our resources because we only put resources towards something that has already been tested with positive results.
The key for us is to create a culture that embraces failures. When team members feel comfortable failing, it creates an environment of creativity and thinking outside of the box. Creativity fosters innovation and improvement. If that same team member was chastised for having an unsuccessful test, she would never want to take a chance again in the future. Embracing failure allows us to be nimble, fast-moving, and innovative.
Of course, so much of this seems incredibly basic and intuitive. However, I’d venture to say that most organizations do not operate this way. Too many organizations just take orders from the top because the “Exec. team knows best.” Usually, that means allocating significant resources only to have a lot of the assumptions be inaccurate.
We have some incredible talent here at Lendio that has really embraced this culture. We’ve made some fantastic progress with product development, strategy development, landing page improvement, marketing channel testing, persona creation, and more because of this strategy. With each test, our goal is to improve what we are doing to help our customers get access to the small business loan that they are looking for.
Have you used any similar strategies to help your organization? Or are you in an organization that punishes failures? I’d love to hear about it.