What is the value of experimentation & measurement?

TL;DR

This paper evaluates the value of experimentation and measurement capabilities in organizations, quantifying how they reduce uncertainty and improve decision-making for new propositions.

Contribution

It introduces a method to measure the contribution of E&M platforms to organizational success by analyzing their impact on reducing estimation uncertainty.

Findings

E&M capabilities decrease estimation uncertainty

Reduced uncertainty leads to better prioritization of propositions

Guidance on valuing and investing in E&M platforms

Abstract

Experimentation and Measurement (E&M) capabilities allow organizations to accurately assess the impact of new propositions and to experiment with many variants of existing products. However, until now, the question of measuring the measurer, or valuing the contribution of an E&M capability to organizational success has not been addressed. We tackle this problem by analyzing how, by decreasing estimation uncertainty, E&M platforms allow for better prioritization. We quantify this benefit in terms of expected relative improvement in the performance of all new propositions and provide guidance for how much an E&M capability is worth and when organizations should invest in one.