Why experimentation is important for startups

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While experimentation is arguably important for all firms, it is arguably most important for startups, who often are often facing substantial uncertainties and need to innovate from the status quo. This article explores benefits of experimentation for startups. 

Advantage 1: Discovery of new opportunities

Identifying a new means of competing is important for startups. Going head to head with a firm that is stronger using the same approach is unlikely to be a winning approach for startups – instead success comes from doing things differently. While startups typically lack the resources of more established companies, one of the advantages that they have is that they can more quickly try new things out. 

Experimentation allows startups to capitalized on this benefit that comes with being small – quickly conducting small-scale experiments to explore new areas and develop new ways of competing. 

Advantage 2: Reducing uncertainty and allows you to verify your assumptions

The next advantage of experimentation is that it allows you to verify your assumptions and reduce uncertainty on areas that you are not sure about.  Experimentation can be directed at the parts of your firm that you have the greatest concerns regarding, helping verify the most critical components of your business approach. Small scale experimentation early on in the development process can for example reduce the uncertainties (or identify important problems to be aware of), helping you make the call on whether to continue with the development or adjust your approach. 

Advantage 3: Can help you gain commitment from others

The final benefit of experimentation is that it can help you gain commitment from others. Just as you may have uncertainties regarding the product or service that you are developing, your customers, suppliers, and potential investors may share the same concerns. Such concerns may make them reluctant to commit to your product or service, instead preferring to wait until such a point where the uncertainties are resolved. 

Experimentation is one approach to actively reduce the uncertainties. By verifying that a particular assumption holds, you can address components of your stakeholder concerns. The more concerns that you are able to allay through experimentation, the more likely that they will be willing to commit to your project, helping to bring others on board. 

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