The Profitability of Proof

Gathering the evidence required to back up a corporate claim has always been important, but the case for effective evidence gathering has never been greater than today. Unfortunately, while the data that organizations ordinarily collect can be useful, it is often insufficient to answer relevant questions. In other words, the evidence required typically isn’t ready to be analyzed and often must be developed using real-world experimentation. This paper examines how businesses can perform randomized controlled trials. To help you conduct better testing for your own business, we also address three questions: What if you can’t run a randomized controlled trial in a lab? Which organizations should conduct tests? How should you conduct your testing? The potential for confusing correlation and causation only becomes greater in a world of big data. Determine if an outcome is significant by using a simple statistical test such as the T-test, and specify your required level of significance before running the test. One way to achieve the best of both worlds is to use a field experiment—an experiment run in the real world but with as many confounding influences as possible removed. Although messier than lab tests, field experiments inspire greater confidence that the results will be relevant. Whenever it is feasible to randomize what you offer your customers, you have the potential to gain a better idea of what works best. Testing can save your organization money, make your actions more effective, and improve outcomes for your customers.

• corporate testing
• decision making
• corporate evidence gathering
• corporate planning