The Politics of Experimentation

40 Pages Posted: 13 Apr 2020

See all articles by Todd A. Hall

Todd A. Hall

Duke University

Sharique Hasan

Duke University - Fuqua School of Business

Date Written: April 8, 2020

Abstract

Many startups have embraced formal experimentation — i.e., A/B testing — to improve the performance of their products and services. Experimentation, some have argued, should democratize innovation inside organizations by creating a platform to rigorously test new ideas, regardless of origin. In this article, we argue that experimentation's promise hinges on having the right organizational decision-making process — one that encourages innovation but without the added risk of unanticipated failures. We study this question by developing a model of experimentation inside organizations where decisions to implement are either centralized or decentralized — a tension identified by practitioners and scholars alike. We find that startups with centralized mechanisms that rely too much on the input of other teams benefit least from experimentation, as do ones with completely decentralized ones. In contrast, startups with mostly decentralized decisions, with a single authority that sets consistent thresholds for implementation, achieve growth but with less downside risk. Thus, without considering the politics that guide organizational decision-making, the benefits of experimentation may be limited.

Keywords: Entrepreneurial Strategy, Startups, A/B Testing, Data-Driven Decision-Making, Experimentation

Suggested Citation

Hall, Todd and Hasan, Sharique, The Politics of Experimentation (April 8, 2020). Available at SSRN: https://ssrn.com/abstract=3571296 or http://dx.doi.org/10.2139/ssrn.3571296

Todd Hall

Duke University ( email )

100 Fuqua Drive
Durham, NC 27708-0204
United States

Sharique Hasan (Contact Author)

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States

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