Editor’s Note: This post was originally published on Seattle 2.0, and imported to GeekWire as part of our acquisition of Seattle 2.0 and its archival content. For more background, see this post.

By Gabe Brown

Making mistakes can been seen as an advantage. No, I’m not talkingabout Buffy in accounting forgetting to charge the customer or Billy inshipping damaging a product. I’m not talking about huge gaffes thatleave a company in a serious lurch. I’m talking about a company makingsmall mistakes in controlled environments that allows it to learn fasterthan it’s competitors. Mistakes challenge long held assumptions, breaknew ground on previously unknown customer needs and open up dialogbetween the people producing a productand the people using it. In my opinion, businesses that can embracechange and failure will be the fastest to learn and the most likelysucceed by quickly learning and adapting.

Experimenting Quickly in Automobiles

Tesla didn’t get it right the first time it created it’s famouselectric cars. It experimented with using large custom Lithium Ionbatteries that would give the car tremendous range and perform well inmost situations. However, it was so expensive that the cars would havebeen out of the price range for most consumers. Tesla experimented withseveral other battery technologies until it settled on a custom builtbattery case using plain old rechargeable batteries that you find inyour home. The team was able to experiment and adapt as it went along,leaving a riddle of mistakes along the way, eventually finding somethingthat worked astonishingly well.

Quick Experimentation in Website Pricing

The same principal applies to businesses in the tech field. Thecost of making mistakes has gotten so low for tech companies that acompany can throw out a few ideas for a product to see how they do withminimal impact to its bottom line. One famous entrepreneur in Columbus,Ohio experimented with how much to charge his customers to use his site.He didn’t really know, so he started guessing at the prices on the siteand got varied results. Some prices produced lots of visitors, but fewpeople that committed. Some prices produced low traffic, but had a highnumber of committed users. This gave him a great idea, what if he couldtry many different price points quickly to figure out which price workedthe best? Later that day he setup his site to charge customers a randomprice between $5 and $1,000 to see what price gave him the best of bothworlds, lots of committed users. This change in effect made hundreds ofmistakes in order to figure out which price would give him the bestresults. It turned out that $99 for his service was the magic number. Itwas high enough to weed out the people who were not serious, but not solow that it wasn’t accessible for most of his customers. Turns out, the$99 price was double the price he previously set on the site. The newprice massively improved the quality of customers, reduced customerservice costs and improved his revenue. His experimentation andwillingness to get it wrong paid off for him in a big way. So the $99question is what mistake are you going to make today that will help yourbusiness?
 
Gabe Brown is a Lecturer at the University of Washington inAgile Development and also a Co-Producer for BizTechDay Seattle comingup on Sept 18th, 2010 at the Bell Harbor International ConferenceCenter.  Seattle 2.0 readers can save 20% off BizTechDay with the code”seattle20″.
 
 
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