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Study summary

Scientific approach training as part of a pre-acceleration programme

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A scientific approach to decision-making can help early stage entrepreneurs to make better decisions about which business ideas to pursue and which to abandon by increasing the precision of their predictions about the profitability of their business ideas.

General description

Training on how to use a scientific approach to validate business ideas is added to a four-month pre-acceleration programme that trains entrepreneurs on how to go from an initial business idea to product launch.

Benchmark programme

A pre-acceleration programme that focuses on market validation. It consists of eight three-hour training sessions aimed at providing entrepreneurs with information and tools to help them to assess the potential of their business ideas. The programme takes place over four months.

Aim

  1. To help founders to make better decisions about which business ideas to pursue
  2. To improve how founders develop their business ideas

Context

This intervention was tested in the early phase of entrepreneurial decision-making during which entrepreneurs explore and develop ideas about their business models before they commit resources to their venture.

Participants

Founders of nascent startups with a business idea they want to develop further. They’re yet to take significant steps to bring their product or service to the market.

Participant startups operate in a wide range of sectors, with fashion, food, finance and software being the most common ones. The majority (76 per cent) intend to use internet-enabled technologies to bring their product or services to the market. 

Most participants work in founding teams of two to three members. Participants’ average age is around 31 years old, 78 per cent are male and most have a bachelor’s degree. Their expectation at the beginning of the programme is to start seeing revenues from their business idea within slightly less than a year. Participants are representative of entrepreneurs in the country, on the basis of their demographic characteristics and the sectors they operate in.

Tweak

During the sessions, half of the participant startups are taught a scientific approach to decision-making. That is, how to frame, identify, and validate the problem; formulate falsifiable hypotheses; and test them using reliable data and experiments. This includes defining valid metrics and establishing clear thresholds for concluding whether or not a given hypothesis is corroborated.

Results

  • Being taught how to implement a scientific approach to decision-making increased the probability that nascent entrepreneurs ceased all activities related to their business idea (‘exited’) by about 10 per cent. 
  • Entrepreneurs trained in the scientific approach took the decision to exit earlier than those who didn’t receive the training.
  • This effect seemed to be driven by the training on the scientific approach, which helped entrepreneurs to be more precise in their predictions about the profitability of their ideas and therefore likely to realise more often and earlier that very positive scenarios were unlikely to occur.
  • Being trained in the scientific approach to decision-making made the entrepreneurs more likely to pivot to a new business idea once, while it reduced the probability of them pivoting more than twice.
  • There is suggestive evidence that these effects were due to ‘scientific entrepreneurs’ being more able to recognise, pivot and adhere to new versions of their idea that appear more profitable.
  • Within the first year and a half, firms receiving the scientific approach training didn’t have higher odds of seeing revenue, but their average revenues were higher.
  • There is suggestive evidence that this effect was due to the scientific approach allowing entrepreneurs to identify new factors that increased the value of their business idea on the basis of improved understanding of the problem.

Policy implications

  • A scientific approach to decision-making can improve entrepreneurs’ abilities to discard unprofitable ideas and identify more promising ones, thus saving them time and money by avoiding redundant pivoting. 
  • Including scientific approach training in early stage support programmes can make them more effective and efficient by shortening the time dedicated to either refining or discarding a business idea.

Full study