Researching Approaches: Intuition versus Scientific Thinking

In a study conducted in Milan, researchers sought to compare entrepreneurs who used intuitive methods with those who adopted a scientific and experimental framework. They initiated a randomized control trial involving 116 startup founders from Italy, who participated in a four-month entrepreneurship training program. This program encompassed business strategy development, customer interviews, minimum viable product (MVP) creation, and idea refinement.

Initially, each startup presented its business concept and introduced its founders. Using this information, the researchers classified the startups by industry, maturity, and location, then employed stratified random sampling to allocate startups to either a treatment group or a control group.

Both groups underwent ten training sessions focusing on feedback collection and assessing the feasibility of their concepts. The treatment group was specifically instructed to identify and validate problems, create falsifiable hypotheses, conduct thorough tests with defined metrics, and draw decisions based on their findings. Conversely, the control group lacked these structured decision-making criteria and relied on their instincts and intuition to interpret feedback.

Customer Interviews: Structuring Feedback

All startups were trained in customer interviews to better grasp their target market and discern customer needs for evaluating their product concepts. However, the treatment group received additional training to distill this information into general frameworks and specific hypotheses regarding customer behavior.

In contrast, the control group conducted interviews with less structure, often creating biased samples by using social media to distribute surveys. They typically asked leading, closed questions, such as "Did you find it difficult to locate an artist online?" which limited the depth of understanding regarding customer experiences. Their blunt inquiries about their ideas, like "Do you like this feature?" or "Would you utilize this service?" often lacked follow-up, leading to misleading positive feedback.

As a result, without a clear hypothesis and evaluation framework, entrepreneurs frequently gathered generic feedback that did not adequately challenge their ideas or inform their business models. In contrast, the treated startups were more inclined to engage with a broader client base, ask open-ended questions like, "Can you describe your process for searching for artists online?" and establish clear metrics to validate their hypotheses.

This structured approach enabled treated startups to evaluate their ideas more honestly and recognize when it was necessary to pivot and explore alternative solutions.

Developing a Minimum Viable Product (MVP)

Every entrepreneur learned the importance of creating a basic version of their product or service before finalizing it, allowing them to test it with customers and gauge market viability. Many startups developed a website to showcase their product and offered options for purchase or enrollment in a free beta program.

Startups in the control group were more likely to launch their sites without gathering feedback on design or forming hypotheses. They often sought input primarily from friends and acquaintances and assessed success or failure without clear metrics or evaluation standards.

In contrast, treated startups were more likely to seek expert feedback on their website designs, conduct A/B testing to evaluate different versions, and set success metrics (e.g., number of orders placed, email sign-ups) to guide their decisions.

Monitoring and Refining Ideas

After launching their MVP, entrepreneurs needed to monitor its adoption and explore avenues for refinement. Startups in the control group typically focused on collecting general satisfaction ratings and relied on founders to provide the service, potentially reinforcing confirmation bias.

Conversely, treatment group startups prioritized observing customer behavior over merely listening to what they said, employing various behavioral metrics and continuing to gather feedback from diverse customers.

Research Outcomes: Revenue Growth

The benefits of a scientific mindset and training were evident. Startups in the treatment group reported significantly higher revenue, with 85 positive revenue observations compared to just 22 in the control group over one year. The average and median revenue figures for the treatment group were €7,800 ($9,400) and €1,300 ($1,565), respectively, whereas the control group averaged €900 ($1,085) and €500 ($600).

Additionally, treated startups attracted customers at a faster pace and generated revenue more quickly.

Recognizing the Need for Pivoting

Entrepreneurs in the control group were more susceptible to confirmation bias, often clinging to their original concepts without developing frameworks and metrics for evaluation. In contrast, treatment group entrepreneurs were more inclined to seek counterfactual information and rigorously test their theories to obtain valid feedback. When their hypotheses were unsupported, they were more open to reassessing their business models and pivoting as necessary.

The treatment group exhibited more pivots (19) compared to the control group (11). Among the 19 firms in the treated group that pivoted, five did so a second time, one a third time, and one a fourth time. Conversely, of the 11 firms in the control group that pivoted, only one did so a second time.

Key Takeaways: A Scientific Approach

Training entrepreneurs to adopt a scientific mindset—formulating clear hypotheses and rigorously testing them—can mitigate the risk of persisting with unviable ideas. Founders who develop evaluation frameworks and pursue diverse, open-ended, and representative feedback are more likely to succeed. By identifying assumptions, comprehensively assessing their business models, designing experiments, establishing success criteria, and analyzing data, entrepreneurs can make more informed and less biased decisions.

Entrepreneurs who embrace a scientific and experimental approach are better equipped to evaluate their ideas honestly, recognize when pivoting is necessary, and achieve greater revenue than their peers who lean on intuition and trial-and-error methods.

While we celebrate strong-minded entrepreneurs and leaders, it is crucial to foster an environment where they can adapt their strategies based on new insights and developments. In today’s fast-paced and competitive landscape, entrepreneurs must continuously and honestly assess their business's viability and adapt accordingly. Implementing a rigorous analytical framework can enhance their decision-making and elevate their chances of success.

The first video, The Mindset Shift: Scarcity vs. Abundance, explores how a shift in perspective can transform entrepreneurial outcomes by fostering an abundance mindset.

The second video, How to Increase Your Willpower & Tenacity | Huberman Lab Podcast, delves into the psychological strategies that can enhance determination and resilience in the entrepreneurial journey.

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