The Scientific Method and Business: Entrepreneurs Who Emulate Galileo Do BetterARNALDO CAMUFFO SAYS THIS APPROACH IS A SORT OF INSURANCE POLICY FOR A STARTUP, AS SHOWN IN A STUDY DONE WITH ALFONSO GAMBARDELLA AND ALESSANDRO CORDOVA
What if the ideal firm was a community of scientists, that is entrepreneurs, managers, technicians and workers who apply the scientific method in order to reduce uncertainty? Arnaldo Camuffo, professor at the Department of Management and Technology, thinks so. In an increasingly complex, hypercompetitive, global and uncertain context, it is necessary to make entrepreneurial decisions in a rigorous way. It is more and more necessary to fully understand facts and problems, to build your own theory, to formulate hypotheses and test them through rigorously designed experiments. And, if necessary, to question your own assumptions on the basis of evidence collected.
“This is relevant also and above all for startups. Some of these ideas are already widespread thanks to Lean Startup and Design Thinking. However, we offer a more general and comprehensive perspective and say that eliciting hypotheses and making A/B tests is not enough. Hypotheses must be based on a ‘business theory’ rooted in the observation of reality and must be conceptually and analytically solid”.
Camuffo has tested this idea in Scientific Approach to Entrepreneurial Decision Making: Evidence from a Randomized Control Trial, co-authored with Alessandro Cordova and Alfonso Gambardella. They divided more than a hundred Italian startups into an experimental and a control group. Similar training programs were offered to both, but only the first group was taught to rigorously apply the scientific approach to business decision making.
“We have shown that entrepreneurs who behave like scientists perform better. First of all, they immediately recognize whether an idea is wrong and therefore abandon it before investing time and money. Secondly, they pivot more frequently: being open to change, they can shift their trajectory. Finally, after a certain period of time, they have an higher average revenue. Let’s put it this way: the scientific method is an insurance policy for startups, it is the sextant that allows them to make effective decisions under uncertain conditions”.
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