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Effective Testing for Social Enterprises: Avoiding an Infinity Loop of Futility

The Trico Foundation testing sheet is all about getting social entrepreneurs to explore their assumptions so they can make sure a test gets them what they need to learn as quickly, frugally, and effectively as possible. 

Assumptions can be tricky, especially the hidden ones (i.e. the ones you are not aware you have). When it comes to finding hidden assumptions the most powerful – but hardest technique – is to examine your paradigms, how you think the world works.

The ‘how you think the world works’ section of the Trico Foundation testing sheet was inspired by the history of blood-letting. Specifically, how society moved from the idea that the best medical treatment was to extract blood to modern medicine’s use of blood transfusions (the idea that the best medical treatment is often to provide blood, not extract it). As gruesome as it is, the history of bloodletting provides two key insights in your modern-day experiments:

  • The infinity loop of futility: We have a troubling suspicion that even if those who believed in bloodletting had the best modern-day techniques of testing – run the best experiments – they would still be caught in an infinite loop of continually adjusting their tests to prove their theory. For example:
    • Test 1: run an experiment on blood-letting and then, when most people did not survive the treatment, move to…
    • Test 2: We did the blood-letting too high on the arm, we should move an inch lower. The failure of the experiment leads to…
    • Test 3: We should move another inch lower. The failure of that experiment leads to…
    • Test 4: We did the blood-letting on the wrong arm, we should move to the other arm. The failure of that experiment leads to
    • Test 5: We did the blood-letting on the correct arm, but we should move an inch higher. The failure of that experiment leads to…       
    • Test 6: We didn’t take enough blood. The failure of that experiment leads to…  
    • Test 7: Maybe it’s the leg? The failure of that experiment leads to…
    • Etc, etc.

The danger here is we can fall into a trap of thinking unsuccessful tests mean our tests were faulty. Instead, we often should be pushing ourselves to question our bigger assumptions – our paradigms. In this case, the problem wasn’t really any specific technique of blood-letting, the problem was the bigger theory (the worldview) blood-letting was based on (blood and other bodily fluids were regarded as “humours” that had to remain in proper balance to maintain health) was wrong. This trap can lead to an infinity loop of futile testing. Blood-letting lasted for 2,000 years!

  • Breaking the infinity loop: The best way to avoid this infinity loop of futile testing is to pull at the thread of your idea and follow it up to a higher level idea that may be where you are making a mistake. This can be very hard, and the testing sheet lists some other techniques to help you with this but for now, using the bloodletting history as an example, just try to think if you have a bigger theory – a bigger, hidden assumption, that could have you trapped. Resist the urge to give up too quickly when you can’t think of anything. Remember, this is trying to save you a world of grief just in case you are on the wrong track. So spend at least a few minutes trying to come up with something. It may help to go through the key steps of what you would do once your results are in, looking at your mountain journey and revisiting what strikes you as the key assumptions you are making, or exploring the Iceberg Model.   

We find it particularly useful/inspiring to hear examples of paradigm shifts and see if they can be applied to the current situation we are grappling with. As a result, here is one more, less graphic, example:

  • Where this example comes from: This story originated in a 2009 class with Stanford business professor Tina Seelig, but we came across it recently from a series of posts on X by @SahilBloom. Thank you Sahil and Professor Seelig (the following is based on Sahil’s posts)!
  • Professor Seelig split her class into groups and issued a challenge: Each group had $5 and 2 hours to earn as much money as possible. At the end, they’d give a short presentation on their strategy.
  • Think for a moment about how you would grapple with this challenge.  
  • Most of the groups followed a simple approach: Use the $5 to buy a few items and then keep bartering or reselling the items as they try to move up the value chain. These groups made a modest return on their initial $5.
  • Note how you could try an infinite loop of testing as you tinkered to find the best techniques to buy and then barter/resell items to make the most money possible from $5 over two hours. Or you could embrace a paradigm shift…
  • Paradigm shift #1:  A few groups ignored the $5 and focused on the two hours. They looked at general ways to make the most money in the allotted time (staying within the rule of not spending more than $5 in ‘start-up funds’). For example, they made and then sold reservations at hot restaurants or they refilled bike tires on campus. These groups made a good return on the initial $5.
  • Again, you could do lots of tests to figure out how to perfect that technique, or you could embrace yet one more paradigm shift…  
  • Paradigm shift #2: The winning team concluded the $5 was a distraction and the two hours was not enough time to make an attractive, outsized return with a mini-business. Their key ‘aha’ was realizing the most valuable ‘asset’ was actually the presentation time in front of a class of Stanford students. Recognizing the value of that asset, they offered the presentation time to companies looking to recruit Stanford students. They sold the slot for $650, a pretty impressive return on the $5 over two hours.    
  • Here is how Professor Seelig described this story.

We love this example because:

  • It perfectly brings home how sometimes it is not about how you execute, it is about what you assume (your paradigm).
  • It perfectly brings home how often those assumptions fail to fully appreciate what resources we really have.
  • While it is early days, a trend we are seeing with social enterprises is, ironically, they tend to focus on the money rather than fully appreciating the social impact (and ultimate financial strength) they can have. We are engaging in our own tests of helping these organizations explore deeper (we would say ‘more synergetic’) ways to blend their social mission with entrepreneurial models. Returning to Professor Seelig’s example, note that by ignoring the most obvious money angle (the $5 opportunity) the winning team made much more money.               

Again, challenging your paradigms can be very difficult. But we guarantee you it is only going to get more difficult once you launch a test and costs start flowing, the clock starts ticking, and expectations (whether from funders, a Board, fellow staff, or those you are trying to serve) start mounting.

So take a deep breath, centre yourself, embrace these examples and techniques, and try your best to look at your paradigms before you move forward.         

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