Events
A Scientific Approach to Entrepreneurial Decision Making
Speaker: Arnaldo Camuffo (Bocconi University, Milan, Italy)
Moderator: Tom Keelin (Keelin Reeds Partners)
A scientific approach to decision-making encourages entrepreneurs to formulate their decision problems as theories of value. Theories are future state spaces, comprising selected attributes and the causal relationships among them, to which they assign a belief. Theories are then used as a guide to determine whether and when to collect evidence that can validate or update beliefs as well as determine the design of the experiments to be conducted. Beliefs on a theory vary in their strength and can be thought of as subjective probabilities. Belief formation through theorizing involves engaging in deliberate cognitive efforts to frame a problem and carefully formulate it as a conceptual causal structure. Theories are then translated into testable hypotheses, to be tested through experiments. Experiments elicit signals that provide evidence about the hypotheses and their assumptions. This information allows to update beliefs in the form of either changes in subjective probabilities or changes on priors on the state space. Entrepreneurs can therefore make more informed decisions about whether to continue with the current plan, pivot to a different business model, or terminate the venture. The positive effects of the adoption of the scientific approach to entrepreneurial decision-making stem from: a) increased efficiency in problem formulation and solution; and b) methodic doubt about the problems they formulate and the solutions they evaluate. The scientific approach fosters critical thinking, contrasting decision-makers' tendencies to unawareness, overconfidence and the neglect of opportunity costs. The evidence coming from a dozen randomized control trials involving approximately 3,000 startups around the world shows that a scientific approach to entrepreneurial decision-making increases the probability of terminating projects, of efficient pivoting and, conditional on survival, leads to higher performance.
Moderator: Tom Keelin (Keelin Reeds Partners)
A scientific approach to decision-making encourages entrepreneurs to formulate their decision problems as theories of value. Theories are future state spaces, comprising selected attributes and the causal relationships among them, to which they assign a belief. Theories are then used as a guide to determine whether and when to collect evidence that can validate or update beliefs as well as determine the design of the experiments to be conducted. Beliefs on a theory vary in their strength and can be thought of as subjective probabilities. Belief formation through theorizing involves engaging in deliberate cognitive efforts to frame a problem and carefully formulate it as a conceptual causal structure. Theories are then translated into testable hypotheses, to be tested through experiments. Experiments elicit signals that provide evidence about the hypotheses and their assumptions. This information allows to update beliefs in the form of either changes in subjective probabilities or changes on priors on the state space. Entrepreneurs can therefore make more informed decisions about whether to continue with the current plan, pivot to a different business model, or terminate the venture. The positive effects of the adoption of the scientific approach to entrepreneurial decision-making stem from: a) increased efficiency in problem formulation and solution; and b) methodic doubt about the problems they formulate and the solutions they evaluate. The scientific approach fosters critical thinking, contrasting decision-makers' tendencies to unawareness, overconfidence and the neglect of opportunity costs. The evidence coming from a dozen randomized control trials involving approximately 3,000 startups around the world shows that a scientific approach to entrepreneurial decision-making increases the probability of terminating projects, of efficient pivoting and, conditional on survival, leads to higher performance.
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Location
Zoom Webinar
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Dates
Jul 17, 2024
08:00 AM - 09:00 AM |
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Contact
Hilda Cherekdjian
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Respondent Email
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Speaker
Arnaldo Camuffo, Professor for Management, Bocconi University, Milan, Italy
Arnaldo Camuffo, Professor of Management, Bocconi University, Milan, Italy. MBA (Sloan School of Management-MIT) and PhD (University of Venice), is Co-director of the ION Management Science Lab. His research on entrepreneurial decision-making, lean systems, modularity and strategic human capital appeared, among others, in Management Science, Organization Science, Academy of Management Journal, Strategic Management Journal, Harvard Business Review, MIT Sloan Management Review and his books have been widely publicized. He has served in the editorial board of several management journals, won scholarly awards and played various roles in the management scholarly community.
Moderator
Tom Keelin, Keelin Reeds Partners
Tom has combined a decision-professional career with innovations to advance the field. Tom is a founder and Managing Partner of Keelin Reeds Partners, a firm that provides strategy, decision analysis, and education services. Previously, over two decades with the Strategic Decisions Group (SDG), Tom co- developed with his colleagues the definition of "decision quality”, supervised or led dozens of decision analysis or strategy engagements for Fortune 1000 companies, founded SDG’s life sciences practice, and served as head of human resources, board member, and Worldwide Managing Director. Tom is a Fellow, a current Board Member, and the 2024 Pioneer Award winner of the Society of Decision Professionals. He holds three Stanford degrees: BA in Economics and MS and PhD in Engineering- Economic Systems.
