In the competitive business world, entrepreneurs often turn to tools like the Business Model Canvas or the Lean Start-Up Method to boost their chances of success. But the most powerful method may be much older: the scientific approach.
A study of 759 start-ups in Milan, Turin, and London, led by researchers from INSEAD, found that companies applying the scientific method—rigorously testing and refining their ideas—consistently outperformed others. These start-ups were better at discarding unworkable ideas, pivoting toward better opportunities, and ultimately generating more revenue.
Testing ideas
What does it mean for a start-up to “use the scientific approach”? It involves treating business ideas as hypotheses to be tested, not as truths to defend.
The study also showed that this scientific mindset can be taught. Entrepreneurs who followed a few key steps saw improvements in decision-making and business results:
- Start with a theory: Begin with your best idea, but stay open to testing alternatives.
- State your hypotheses: Clearly define the assumptions you’re making about your business.
- Validate your hypotheses: Run experiments to test those assumptions.
- Refine and retest: Adjust your ideas based on the evidence and keep testing.
Take MiMoto, an Italian electric-moped sharing service. At first, they believed their main customers would be college students hurrying between classes. But when they tested this by placing mopeds near a university, they found that usage spanned all age groups, with a strong demand from professionals with unpredictable commutes. Armed with this new data, MiMoto shifted its focus to young professionals, which put them on a more successful track.
Another example is Osense, a sustainability-focused start-up. They initially planned to launch a peer-to-peer rental platform but quickly found from their research that it wouldn’t work. Instead, they pivoted to developing a tool for tracking scope 3 carbon emissions, a need identified through interviews with sustainability managers. This evidence-based pivot led them toward a far more promising business.
Shutting down early
One of the study’s key findings is that entrepreneurs who take a scientific approach are more likely to shut down bad ideas early, avoiding the sunk-cost trap that dooms many start-ups. They tend to make one or two major strategic shifts, rather than stubbornly sticking with a flawed model or flailing from one pivot to another. This shows that scientific thinking leads to focused, deliberate change rather than erratic decision-making.
Two forces seem to drive these benefits. The first is efficient search: founders using the scientific method can more easily prioritize ideas with higher chances of success. The second is methodic doubt: they are more likely to question their assumptions and spot potential pitfalls.
The advantages of this approach are especially clear among the top-performing start-ups. In the study, those in the top 25% of revenue made an average of €28,000 more than their peers in the control group, and the top 5% made €492,000 more.
Though the scientific approach boosts a start-up’s chances, it doesn’t guarantee smooth sailing. Failure is still possible, but even failed experiments offer valuable lessons. Success in entrepreneurship, it seems, comes not from clinging to a single vision but from the systematic, disciplined testing of ideas.
The research also offers insights for investors and policymakers, providing a framework to assess and support new ventures. Great ideas are important, but it’s rigorous testing and adaptability that lead to lasting success.
