A Scientific Approach to Entrepreneurial Decision Making: Evidence from a Randomized Control Trial | Management Science

A Scientific Approach to Entrepreneurial Decision Making: Evidence from a Randomized Control Trial | Management Science

シリコンバレー最先端、スタートアップの爆速成長のカギを握る Growth （グロース）の本質｜kosuke mori｜note

Entrepreneurs who behave like scientists perform better than those who don't. This is the conclusion of a randomized control trial conducted by Management Science. The study found that entrepreneurs who adopt a scientific approach are more likely to pivot to a different idea and are not more likely to drop out than the control group in the early stages of the startup. But what exactly does it mean to behave like a scientist in the context of entrepreneurship?

According to Kosuke Mori, a prominent figure in the world of Silicon Valley startups, growth is the key to success. He defines growth as the process of intentionally maximizing business progress based on solid evidence obtained through experiments and hypothesis testing. It involves improving the most important metrics for the business and continuously seeking more growth through a cycle of rapid experimentation and learning.

In Mori's team, this cycle of growth experiments is repeated at a high speed. They conduct experiments on a weekly basis, constantly learning from the results and amplifying their learnings to achieve even more growth. The experiments they implement are based on statistically significant findings, ensuring that only the most effective strategies are implemented.

One important aspect of the scientific approach to entrepreneurship is the recognition that poor distribution, not the product itself, is the number one cause of failure. This means that even if a startup has the best product in the market, it won't succeed if it doesn't reach a wide audience. The key is to prioritize and set goals that will lead to effective distribution and user adoption.

To determine the health of a business and ensure its growth, it is crucial to track specific metrics that reflect both the value provided to users and the business value. This metric should be measurable and provide a clear understanding of the business's mission and alignment with goals. One such metric is the ratio of daily expected revenue to customer acquisition cost (CAC). Tracking this ratio on a daily basis allows entrepreneurs to monitor the effectiveness of their growth strategies and make necessary improvements.

There are two essential numerical indicators that cannot be overlooked in the pursuit of growth. The first indicator is the ratio of daily expected revenue to CAC, as mentioned earlier. The second indicator is not explicitly mentioned, but it is implied that it should be a metric that reflects the impact on both user experience and business value. By measuring these indicators, entrepreneurs can identify areas for improvement and drive growth effectively.