Behavioral economist Dan Ariely’s talk from the TED conference last month was recently posted online. In the first 4.5 minutes of it, Ariely (who wrote the best-selling book Predictably Irrational) addresses, through his own experience, a topic that is also quite relevant for innovators in an uncertain environment: the importance of testing assumptions through experiments.
This book by Ian Ayres provides a very readable summary of what can be done to improve performance using the incredible volumes of data accumulated in business, government, health care, and education. The chapters about randomized testing are particularly interesting to experimentation based management. Randomized tests are also increasingly being used to evaluate various government programs, finding eg. that additional job location assistance more than paid for itself for those receiving unemployment benefits, guiding HeadStart programs to target those most likely to benefit. Capital One has been running randomized tests since at least 1995 - tests include page layout, and type and size of offers.