Skip to content

Study summary

Scientific approach training for early stage ventures

< Back to Study Archives < Back to Should I train entrepreneurs on how to make better decisions under uncertainty?

Training early stage entrepreneurs in a scientific approach to decision-making can lead them to discard unprofitable ideas, pivot to better ones and improve the performance of their business projects as a result.

General description

Training in how to use a scientific approach to validate business ideas is added to a four-month training programme on new venture creation for early stage entrepreneurs.

Benchmark programme

A free four-month training programme focused on a set of managerial practices for making decisions about the viability of a new business model or product idea. It consists of five four-hour in-class lectures by The Doers and five one-hour one-to-one sessions with mentors from Lean Startup Machine. The sessions take place every Saturday, alternating activities every other week. 

The training covers the following four steps to explore and develop new business ideas: using a business model canvas to identify the key components of the business; conducting customer interviews to understand customer needs; using a minimum viable product to explore customers’ willingness to pay; and building a prototype to observe customer–product interactions.

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 a country where the entrepreneurial community is characterised by highly educated individuals with low levels of managerial, industry and entrepreneurial experience. 

Participants

Entrepreneurs working in nascent startups. A third of the participants have a business idea that they want to develop further and the rest are already at the development stage. However, none has developed or tested the idea to a significant extent. 

Most participant ventures are internet-based companies (47 per cent), followed by furniture (25 per cent) and retail (9 per cent). The rest are spread across sectors like healthcare, food, leisure and machinery. Most ventures have two or three team members. 

Team members have usually completed college. Half of them were employed at the start of the programme. Overall, they have low levels of industry and managerial experience (about 2.5 years), and they have less than one year of experience working with or in a startup. Participants are representative of the broader entrepreneurial community in the country.

Tweak

As part of the lectures and the one-on-one sessions with the mentors, half of the participants 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

  • Entrepreneurs that were trained to follow a scientific approach to evaluate and develop their business idea were slightly more likely to stop all activities related to their business idea (40 per cent for those trained versus 35 per cent for those untrained) within nine months following the start of the training.
  • Participants that were taught the scientific approach to decision-making were more likely to pivot to a different idea from the one they originally had, with 49 per cent of those trained pivoting at least once and only 21 per cent of the untrained entrepreneurs pivoting at all. 
  • Entrepreneurs that pivoted to new ideas as a result of the scientific approach training were more likely to acquire or activate customers afterwards.
  • Within the first nine months, firms receiving the scientific approach component didn’t have higher odds of seeing revenue. However, they started seeing revenue earlier, and their average revenues were higher.
  • There is suggestive evidence that these effects were driven by an improvement in the entrepreneurs’ precision when predicting the viability of their idea.

Policy implications

  • Entrepreneurial decision-making can benefit from the use of a scientific approach by helping entrepreneurs to increase the precision of their predictions about the viability of their idea.

Full study