How to generate reasonable business hypotheses?

Business hypothesis generation is coming up with potential explanations for observed business phenomena. It is essential in creating, testing, and refining business strategies. There are several approaches that businesses can use to generate hypotheses, each with its strengths and limitations.

1. Brainstorming: Brainstorming is a classic approach to generating hypotheses, and it’s often used in teams. The goal of brainstorming is to develop as many ideas as possible quickly. Participants can be asked to generate ideas independently or as a group. This approach is best used in the early stages of hypothesis generation when the goal is to develop a wide range of possibilities.
2. Data-driven: Data-driven hypothesis generation uses data to inform the development of hypotheses. This approach is best used when a large amount of data is available on a particular subject. The data can be used to identify patterns and correlations that can then be used to develop hypotheses. For example, suppose data shows that customers are more likely to buy a particular product when it is on sale. In that case, a thesis might be that customers are more price-sensitive than previously thought.
3. Expert Opinion: This approach involves tapping into the expertise of individuals within an organization. Experts can be asked to provide their opinions on potential explanations for a particular business phenomenon. This approach is best used when a lack of or unclear data needs clarification. The individuals' expertise can fill in the gaps and provide valuable insights into the problem.
4. Analogies: Analogies can generate hypotheses by comparing a current business problem to a similar situation that has been solved. This approach involves looking for similarities between the two issues and using these similarities to inform the development of hypotheses. For example, suppose a business is struggling with a particular sales problem. In that case, they might look at similar issues faced by other companies in the same industry to see if they can identify any solutions.
5. Reverse Engineering: Reverse engineering involves starting with the end goal and working backwards to identify potential causes. This approach is best used when there is a clear understanding of the desired outcome. For example, suppose a business wants to increase sales. In that case, they might start by identifying the factors contributing to the low sales and then work backwards to identify potential causes.

The most effective strategy will depend on the specific circumstances, including the available data, the expertise of individuals within the organization, and the business’s goals. By combining these approaches, companies can increase their chances of coming up with accurate and effective hypotheses that can inform their strategies and drive growth.

You can follow me on Medium and LinkedIn, and also reach out at luis@luissoares.tech

I am looking forward to hearing from you!

All the best,

Luis Soares

CTO | Head of Engineering | Blockchain & Fintech SME | Startup Advisor | Board Member

#startups #businessmodels #valueproposition #businesstrategy #strategy #valuesdriven #entrepreneurship