Why business leaders need to think like scientists? (2/2)

In this part, we’re going to take a deeper look into the different ways that business leaders can use scientific thinking for better business results and to increase innovation.

Markets

As entrepreneurs and business leaders, we need to know everything about the markets we operate in – and also the markets we wish to expand to. Due to the nature of the economic marketplace, a business leader can never have perfect information about the various forces that are affecting the market. Hence, adopting a scientific approach to discovering knowledge about the market will ensure that important information about the market is uncovered.

 Some factors that affect market opportunities include:

1. Competition
2. Related industries 
3. Historic precedence

 When entering a market, it is imperative to do the due diligence on the other companies in the space. You have to ask questions around what other companies are doing in the market and why. For instance, is the status quo a necessity for the market or is it because the incumbents are comfortable and resist change? Is there an opportunity here to disrupt?

 You will also have to set about discovering knowledge about related verticals and how changes in those verticals will affect your market. For instance, will a technological innovation from a supplier change how this market operates? As the business leader, you need to be the one posing this question, and looking for the answer before it happens.

 Like competition, the historic precedence of an industry can raise important questions about what you can expect from the market. Pose questions around previous innovations in the market, and see if you can observe trends that are recurring such as how the market reacts to macroeconomic shifts.

Customers

Arguably the most important place where scientific thinking is needed is in understanding the complexities of the customer. 

 Despite our impressive intellectual achievements, it is said that humans are often irrational beings, and this also applies in the business. After all, you are selling to other humans, not to fictional business entities. 

 We don’t always know exactly what we want. We may think we want something, but if an alternative is presented we may go with that option instead.

 Uncovering hidden knowledge about your customer’s problems, needs and motivations is what separates the companies that fail from the ones that succeed. The challenge of course lies in taking a scientific approach to understanding your customer. We want to establish observable fact, but when it comes to humans the truth isn’t always so clear.

For some products such as software applications, there are more scientific ways to gather truth.

Technology companies can track user behaviour and create different experiments in order to observe results – commonly known as A/B testing. This is a more quantitative way to collect information about customer truths as opposed to just interviewing customers, but may not always give a complete picture.

Technology

All the innovations that are taking place at the forefront of business are backed by scientific literature. Either created by scientists themselves or discovered through trial and error by the company.

 If you are in a space where you’ re developing cutting edge technology, or you need a technological edge to beat the competition, then you are likely already using some type of scientific methodology.

 For cutting edge technologies such as quantum computing or nanomaterials, the need to create and discover knowledge represents the lifeblood of these ventures. In many ways, they aren’t business ventures, but scientific ventures as they are the individuals that are actively creating knowledge in this field. 

Understanding the science behind what drives human behaviour is critical for business leaders. Naturally, you want to get the best out of your people, but you won’t be able to do so if you are shooting from the hip with your own improvised style of leadership. Instead, consult the literature as to what motivates people. 

 The most basic idea that every business leader knows is the paradigm of reward and punishment.

 Go beyond that and take a look at the science of what makes people happy and fulfilled – things which would make them go the extra mile for your company.

Motivation

Understanding the science behind what drives human behaviour is critical for business leaders. Naturally, you want to get the best out of your people, but you won’t be able to do so if you are shooting from the hip with your own improvised style of leadership. Instead, consult the literature as to what motivates people. 

 The most basic idea that every business leader knows is the paradigm of reward and punishment.

 Go beyond that and take a look at the science of what makes people happy and fulfilled – things which would make them go the extra mile for your company.

Using Scientific Theory

You may be in a space where you may not have to discover new knowledge about your market, customers or technology.

 Regardless, there is still a case to be made about appreciating, understanding and applying scientific literature to how you run your business. There are tens of thousands of scientific papers published each month with useful insights that can help you transform your business. 

 Even without keeping up with the latest insights, there are common ideas that can help you maximise your business outcome.

As business is a human endeavour, most of these insights will pertain to people that you do business with and how you run your organization. Two major aspects of business you should read up on include the motivation of people and optimizing business processes.

Business Processes

You may not be running your business in the most efficient way. Depending on your industry, there are many factors that you could optimize such as inter-departmental collaboration, organizational structure, and product execution. 

 For instance, Apple understands that a key part of innovation involves seemingly irrelevant ideas intermixing. With this understanding, they designed the Apple Park in a way that encourages chance encounters between employees – increasing the cross pollination of ideas.

 The process in which your team develops and builds out product ideas should also be examined. Agile processes have become common in the software world and for good reason. It’s likely the most efficient approach to software development we have, allowing teams to minimize waste, reduce risk and get to certainty faster.

A Catalyst for Innovation

Both the scientific method and the business centered design thinking are crucial for companies undergoing digital transformation.

ArgoVenture Studio is the enabler of business leaders and entrepreneurs when it comes to innovation.

Get in touch to learn more about how we can help you apply these methods to your business. Follow us on Twitter to gain even more insights from us.