Experimentation Works, by Stefan H. Thomke

I can't remember who recommended this book but I'm glad they did. I'm talking about Experimentation Works by Stefan H. Thomke. The subtitle sums it up quite well: The surprising power of business experiments.

I'm still fairly early in this one but here are a few of my favorite highlights so far:

At Booking.com all employees can define a hypothesis and launch an experiment on millions of users without permission from management.

Even though the business world glorifies disruptive ideas, most progress is achieved by implementing hundreds or thousands of minor improvements that can have a big cumulative impact.

The serendipitous breakthroughs may be more likely to occur when managers are clear that understanding what does not work is as important as learning what does.

True experimentation organizations not only appreciate surprises, they cherish and capitalize on them.

I encourage you to take a few minutes to stop and think about each of those points individually. I'm particularly hung up on the last one. Why? Like a lot of people, I tend to view surprises as bad, mostly. An experiment that doesn't turn out the way I expected it to means I didn't know as much as I thought I did. I need to get past that though and embrace those surprises as the author suggests.

The book can feel overly academic at times as you'll sometimes think you're stuck in the middle of a textbook. If you skim through those sections and focus exclusively on the company success and failure stories I'm confident you'll find it worth the price of admission.


Secrets of Sand Hill Road

I decided to read Secrets of Sand Hill Road after hearing an author interview on one of my favorite podcasts. The VC market can be so mysterious and this book helped bring clarity to many aspects of the startup fundraising process. Here are just a few of the many excerpts I highlighted along the way:

Most VCs assume that the product that is initially conceived of and pitched is not likely the product that will ultimately prevail.

Max Planck, German scientist, put it best by saying "Science advances one funeral at a time." Simply put, it's hard to get people to adopt new technologies.

Products are either vitamins (nice to have) or aspirins (need to have); VCs want to fund aspirins.

How much money should you raise? The answer is to raise as much money as you can that enables you to safely achieve the key milestones you will need for the next fund-raising.

If you allow yourself or a VC to overvalue the company at the current round, then you have just raised the stakes for what it will take to clear that valuation bar for the next round and get paid for the progress you have made.

VCs love infinite learners.

Companies are definitely staying private longer, resulting in more of the appreciation of startups going to those investors in the private markets, at the expense of those in the public markets.

[Beware of becoming] the most advanced dinosaur, where you may think you look differentiated relative to others but are at risk of being the last generation in the evolutionary chain...


Loonshots, by Safi Bahcall

Several smart people I follow have talked about reading a book called Loonshots, by Safi Bahcall, so I figured I better have a look. It's a great read that's loaded with interesting stories and provocative perspectives.

I still have about 60 pages to go but I've already learned about how radar was almost completely overlooked as a breakthrough technology, why Pan Am is no more and how Polaroid met its demise. You might think you already know most, if not all, of these stories but I promise you the author presents new information you probably never previously heard or considered.

The most intriguing part of the book is where he talks about The Moses Trap:

[The Moses Trap is] when ideas advance only at the pleasure of a holy leader -- rather than the balanced exchange of ideas and feedback between soldiers in the field and creatives at the bench selecting loonshots on merit -- that is exactly when teams and companies get trapped. The leader raises his staff and parts the seas to make way for the chosen loonshot. The dangerous virtuous cycle spins faster and faster: loonshot feeds franchise feeds bigger, faster, more. The all-powerful leader begins acting for love of loonshots rather than strength of strategy. And then the wheel turns one too many times.

Bahcall distinguishes between what he refers to as P-type and S-type loonshots. The former is product-based whereas the latter is strategy-based. The S-types are similar to the examples Clay Christensen refers to in my favorite business book, The Innovator's Dilemma, which is probably another reason why I've thoroughly enjoyed Loonshots.


Embracing the subscription economy

I'm about halfway through a terrific book called Subscribed, by Tien Tzuo. I highly recommend it for anyone interested in disrupting an existing business or creating a completely new one. The author was an early Salesforce employee and used to be their chief marketing officer as well as chief strategy officer, so he obviously knows a thing or two about subscription models.

The overall premise covered in the book, where more customers are shifting from owning to renting products, isn't exactly new, but the author provides countless thought-provoking examples and visions of a subscription-based future. Here's a wonderful example:

But just imagine what would happen at the next Apple keynote if Tim Cook announced a simple monthly Apple subscription plan that covered everything: network provider charges, automatic hardware upgrades, and add-on options for extra devices, music and video content, specialty software, gaming, etc. Not just an upgrade program, but Apple as a Service.

If you dismiss this logic because you can't imagine your products or services in a SaaS-like subscription model, consider this:

Here's the secret we use -- tease out the service-level agreement that sits behind the product [or service]. It works for everything. So instead of a refrigerator, it's the guarantee of free, cold food. Instead of a roof, maybe it's a guaranteed source of solar energy. Instead of excavators, it's the expeditious removal of a certain amount of dirt.

There's an added dimension to consider here as well: the community engagement you have the opportunity to develop and lead. The author points out that, "loyal newspaper subscribers are willing to pay for enhanced experiences." My local paper, for example, is working hard to create an insider program featuring access to community-oriented products and services which serve as add-ons to the core subscription. Over time, it's easy to see where the original product simply becomes one of many elements of a more robust subscription. In short, you're forced to think more about the solution and experience while focusing less on the individual product.

I hope you'll take the time to read Subscribed and consider how it affects your own business segment as well as the broader consumer experience.


Disrupting and improving communication with machine learning

The topic of artificial intelligence (AI) is generating a lot of buzz these days and it's often difficult separating fact from fiction. For example, what are the most interesting AI applications today and where is the technology heading tomorrow?

I recently started reading a good book on the topic called Prediction Machines, by Ajay Agrawal, Joshua Gans, and Avi Goldfarb. Prediction Machines offers a solid overview of AI fundamentals while also providing plenty of real-world examples. One of my favorite examples is Grammarly, a tool to help improve written communication. Here's how the authors describe the service:

Grammarly achieved these corrections both by examining a corpus of documents that skilled editors had corrected and by learning from the feedback of users who accepted or rejected the suggestions. In both cases, Grammarly predicted what a human editor would do. It goes beyond the mechanical application of grammar rules to also assess whether deviations from perfect grammar are preferred by human readers.

Years ago there were a few grammar-checker software products that tried to solve the problem the old-fashioned way, with brute force. They certainly helped fix a lot of grammatical errors but they often didn't produce the results you'd get from a good human editor.

I'm using the free Grammarly service, both as a standalone app and as a Chrome plug-in, so this article was made better thanks to Grammarly. I'm also going to let Grammarly have a look at some of the documents I write at work.

There's a danger in all of this. Google has dumbed us down, making us over-reliant on their search and map services, for example. I spend less time thinking about the best route and instead simply plug the address into Waze and let it tell me. The same thing could happen with Grammarly where my writing skills decline as I get lazy and rely on the service to fix my errors. My plan is to stop and think about each correction Grammarly recommends and do my best to avoid making the same mistake again but we'll see...

I hope you'll try out the Grammarly service as well. If you're interested in where AI is heading, be sure to read Prediction Machines and think about how this rapidly changing technology is likely to impact your business and your job.