The Innovator’s Hypothesis

“What if innovation could be faster, cheaper, and more effective? The Innovator’s Hypothesis explores how businesses can move beyond traditional R&D and use smart experimentation to drive progress.”

1. Innovation is shifting to fast experiments.

For decades, research and development (R&D) has been the foundation of innovation in many industries. Companies relied on well-funded departments to study markets and create solutions. However, this approach has grown outdated due to high costs and long timelines. The modern shift focuses on quick, scalable experiments instead of drawn-out studies.

Businesses today find it more efficient to test ideas on a small scale before committing resources. This means experimenting with concepts using a version of the scientific method. Unlike traditional R&D, which often takes months or years, these experiments can yield valuable results in days or weeks. The ability to refine and adapt ideas based on immediate feedback lowers the risk of failure.

Examples of this shift include creating hybrid cars or HD televisions. Both required decades of R&D and significant funding. Today, approaches like the trial-and-error refinement process behind computer operating systems such as Mac and Windows highlight the power of inexpensive experiments in driving industry transformation.

Examples

• The early development of the computer mouse through inexpensive tinkering.
• Rapid product iterations in smartphone design based on user feedback.
• Fast fashion brands testing product lines by stocking limited quantities in select stores.

2. The 5x5 model is a game-changer for innovation.

The 5x5 model offers an efficient path for businesses looking to innovate. It gathers five individuals from different specialties to create and test five ideas over five days, with developments to those ideas carried out over five weeks. This method is designed to reduce costs and time significantly while exploring multiple avenues of innovation.

This approach brings diverse skill sets together, encouraging creativity and out-of-the-box thinking. For example, a marketer, engineer, developer, designer, and salesperson might combine their areas of expertise to devise new customer-focused solutions. By dividing teams and resources, companies can test ideas thoroughly and identify the best ones to scale further.

A video game company struggling with newsletter sign-ups illustrates the success of this concept. The company experimented with different approaches to newsletter registration and quickly determined that asking users after gameplay increased conversions. The model avoids months of market research and analysis, allowing businesses to act swiftly based on real-world data.

Examples

• A global hotel brand testing booking system updates with five distinct user interfaces.
• A healthcare startup iterating on five app features to address patient engagement.
• A tech company refining five approaches to reduce website bounce rates.

3. Corporate culture must embrace experimentation.

Introducing experimental models like 5x5 requires a shift in corporate thinking. Many companies cling to traditional, top-down management styles where structured planning drives decision-making. This creates resistance to newer, bottom-up approaches that prioritize small team efforts and experiments.

Executives and managers accustomed to long planning cycles may view tinkering with small-scale experiments as unproductive. Overcoming this resistance involves adopting a mindset that values discovery and learning over exhaustive planning. Leaders must understand that experiments offer actionable insights that can validate ideas before scaling.

Encouraging what the author calls a "searcher mentality" is a critical step. Searchers embrace uncertainty and act on hypotheses, while traditional thinkers, dubbed "planners," rely on established patterns. By recruiting or developing searchers, companies can embed experimentation into their culture, enabling nimble responses to challenges and opportunities.

Examples

• Managers using team brainstorms instead of adhering to pre-designed innovation processes.
• Corporate policies rewarding employees for learning from failed experiments.
• Workshops that transition planner-minded employees into action-oriented searchers.

4. Align experiments with core values.

Aligning experimentation with a company’s core values can build support and reduce resistance throughout an organization. Business hypotheses should connect to values or goals that are deeply ingrained in the company. This alignment makes it easier for senior executives and employees to recognize the purpose behind changes and commit to experimentation.

For instance, a telecom company focused on improving user experience would respond better to ideas aimed at streamlining customer service than unrelated initiatives. By framing innovative concepts as an extension of existing strengths, businesses create buy-in at every level.

Additionally, linking experiments to company-wide objectives encourages collaboration. Employees feel part of the process and contribute regardless of department. Avon’s strategy of transforming customers into salespeople exemplifies this, as it involved multiple areas of the company working together toward a shared goal.

Examples

• A tech company innovating ways for customer service teams to automate email responses.
• A university aligning experiments in green energy with its sustainability mission.
• A retail brand developing loyalty card experiments based on its customer-centric philosophy.

5. Future innovation will lean on artificial intelligence.

Artificial intelligence (AI) is set to play an essential role in helping companies conduct experiments. Just as platforms like Netflix or Spotify recommend movies or songs based on user behavior, future innovation models will rely on AI to suggest experiments and even generate new hypotheses.

This technology will enable businesses to test and iterate more efficiently. By analyzing vast amounts of data in real-time, AI can help identify patterns and suggest experiment directions. Companies will have access to intelligent engines offering ideas based on previous successes and failures from within their industry or beyond.

One example is the automated experimentation already happening in scientific research. AI is helping in fields like biology, where it designs and tests hypotheses without human intervention. Businesses can leverage similar systems to fuel a continuous cycle of experimentation and innovation.

Examples

• AI engines proposing ideas for online stores to improve conversion rates.
• Automated feedback loops helping gaming companies test in-game adjustments.
• AI systems in fashion brands tweaking inventory models based on buyer behavior.

6. Experimentation drives results, not intuition.

Traditional methods of relying on intuition or past successes often fail in a fast-paced market. Schrage emphasizes that innovation thrives when businesses focus on actionable experiments instead. These experiments yield real-world data, allowing businesses to course-correct and refine their ideas.

The success of Windows operating systems reflects this thinking. Early iterations weren’t the result of a single genius but continuous prototyping and data-driven refinement. By monitoring what worked, developers could build on each version, delivering products users wanted.

Teaming ongoing experiments with actionable insights ensures businesses innovate in a way that resonates with their audiences. This replaces arbitrary decision-making with informed, testable strategies that grow over time.

Examples

• A streaming platform tracking user behavior to adjust show recommendations.
• Food companies launching multiple flavors of a single product to gauge customer preferences.
• Social media companies testing user interface updates on small populations before full rollout.

7. Every department has a role in innovation.

For innovative ideas to succeed, they must involve the entire company. Departments like sales, IT, HR, and marketing each contribute unique perspectives and expertise. Collaboration between these entities strengthens experiments and removes boundaries that stifle creativity.

When every team feels included, innovation transforms into a shared goal, not just a responsibility for product designers. Schrage provides the example of Avon turning their customers into sales representatives. Success required synchronized efforts across all departments, from product designs tailored for representatives to HR supporting their training.

A well-rounded business hypothesis integrates cross-departmental cooperation. It assigns roles to each area, ensuring all employees play a part, which fosters commitment to experimentation and innovation.

Examples

• A clothing brand collaborating between marketing and IT to test new virtual fitting rooms.
• HR departments initiating mentorship programs in support of innovation goals.
• Sales and engineering teams collaborating on building customer-driven prototypes.

8. Success depends on acting, not just thinking.

Innovation is not about theorizing endlessly; it’s about acting on ideas. Schrage quotes economist Joseph Schumpeter, who points out that innovation requires willpower as much as intellect. Businesses aiming to innovate must move past brainstorming into real-world action.

Prototyping bridges the gap between ideation and implementation. Even basic prototypes give companies tangible products to refine and observe. This process is core to the modern 5x5 model, which thrives on creating and testing functional ideas.

Schrage stresses that acting on business hypotheses—no matter how simple they seem—fuels the cycle of innovation. Even experiments that fail can point toward better directions for future iterations.

Examples

• A startup building a simple app version for user testing rather than funding an advanced model upfront.
• Subscription services testing three price tiers before finalizing their rates.
• Retailers testing pop-up stores before committing to new locations.

9. Resistance to change can be overcome creatively.

People often resist change, especially when innovation disrupts traditional structures. Schrage suggests combating this by involving those resistant to new methods and aligning goals with their values. Transparency and communication are key.

By making resistant individuals a part of the process, they feel a sense of ownership and begin embracing the change. Showing clear data and results from initial experiments also builds their confidence in the process.

Lastly, framing innovation as a way to build on their existing achievements—rather than replacing them entirely—makes innovation feel less threatening. Employees and managers then better understand the value of collaborative experimentation.

Examples

• Employee workshops highlighting the success of small-scale experiments.
• Leadership teams pairing traditional employees with searcher-minded innovators.
• Companies highlighting incremental improvements achieved through new models.

Takeaways

1. Assemble diverse teams and test business ideas collaboratively using quick experiments like the 5x5 model.
2. Match innovations with company values to gain wider acceptance and achieve stronger outcomes.
3. Embrace action over theory: move quickly from ideation to prototyping to discover what works effectively.