A checkpoint is simply a point in time at which you will learn something. At each checkpoint, you want to be asking two questions. The first is whether what you are learning is worth the cost (or risk, or time) required to achieve it. Elsewhere, I’ve referred to an organization’s “appetite,” which is the determination, in advance, of what we think we will learn and how much that learning is worth to us. The second is whether, given what you are learning, it still makes sense to continue with the plan or whether a shift of some kind is warranted.

In the same way, a good business strategy deals with the edge between the known and the unknown. Again, it is competition with others that pushes us to edges of knowledge. Only there are found the opportunities to keep ahead of rivals. There is no avoiding it. That uneasy sense of ambiguity you feel is real. It is the scent of opportunity…

Similarly, we test a new strategic insight against well-established principles and against our accumulated knowledge about the business. If it passes those hurdles, we are faced with trying it out and seeing what happens.

Given that we are working on the edge, asking for a strategy that is guaranteed to work is like asking a scientist for a hypothesis that is guaranteed to be true—it is a dumb request. The problem of coming up with a good strategy has the same logical structure as the problem of coming up with a good scientific hypothesis. The key differences are that most scientific knowledge is broadly shared, whereas you are working with accumulated wisdom about your business and your industry that is unlike anyone else’s.

A good strategy is, in the end, a hypothesis about what will work. Not a wild theory, but an educated judgment. And there isn’t anyone more educated about your businesses than the group in this room.

To put its wisdom simply, one could say the fundamental human challenge is this:

It’s hard to learn if you already know.

Unfortunately, we are hardwired to feel as if we know—as if we see reality itself rather than a version of reality filtered through our biases, backgrounds, or expertise. But we can unlearn the habit of knowing and reinvigorate our curiosity.

We like to think that we can leap directly from a desire for change to a single insight or decision that will complete our reinvention. As a result, we remain naive about the long, essential testing period when our actions transform (or fail to transform) fuzzy, undefined possibilities into concrete choices we can evaluate.

Scientists use the term natural experiment to refer to situations that occur naturally, without experimental manipulation, yet allow a clean, comparative test. The fact that life events separate some but not all twins, for example, creates a natural experiment that can be used to sort out the effects of nature and nurture. But, in most cases, the only way to learn what we want to know is to design a test ourselves.

Exploration means taking action only to see what happens, without trying to make a prediction or test a hunch. An exploratory experiment is a probing, playful activity by which we get a feel for things. Exploratory experiments succeed when we are able to formulate more specific questions, or when they lead us to a hypothesis or educated guess. Then comes a more rigorous test, a confirmatory experiment, in which the objective is to learn whether the hypothesis is supported or refuted by the evidence.