Show Me An Example

So how does the scientific method work? Can you show me an example?

For the sake of an example, let’s say that your friends and relatives have told you that you are a great cook and that you should start a restaurant. Please note that the example below is much simplified; there are many details either glossed over or omitted completely for the sake of keeping the example short. To cover all the details would take a book on its own – maybe later.

1. Develop

You keep getting great comments about the food you cook and prepare for friends and relatives, and they always ask for seconds, and thirds …

From many observations, you develop a hypothesis that you are a good, perhaps great cook, and that other people may also agree and pay you to feed them. So far, your hypothesis is based on people you know receiving free food making positive remarks, but would strangers be prepared to pay for your food?

You also have a location in mind for your restaurant, a vacant building along Hope St.

Hypothesis-1: You make food that people you know enjoy, and maybe strangers will pay me to make food for them.

Hypothesis-2: The most obvious location for your restaurant is Hope St., as it is near your home and there are other restaurants there as well.

Hypothesis-3: You will enjoy making food for others as a full-time job, often working late into the night to do so.
2. Observe

Hypothesis-1 has been partially proved by the friends and relatives and their behaviour, but to what extent is it based on free food? Would they pay for it? How do you conduct an experiment that will confirm whether strangers will pay you for the same?

One way could be to open a stall at a market or along Hope St., another could be to set up a food trailer along Hope St., another could be to walk along Hope St. with a platter of food selling it to passers-by.

With Hypothesis-2, how do you know it is a good location? Is the street already a go-to-location for the diner crowd? If so, which crowd, morning tea, lunch, dinner? Furthermore, what is the foot-traffic like? Are there sufficient people in the area or passing through for the respective diner crowds to make another food establishment successful?

Hypothesis-3 is a little harder to check as so far you have only made food for the infrequent family gatherings. How will you fare when making meals for 1, 2, or 3 sittings a day, 5-7 days a week? How can you realistically test this?
3. Learn

Learn from your observations, for example, counting foot traffic over different times of the day and week and whether people buy food. What type of food is purchased and in what quantities? What is the spend profile?

Learn from what happened with your market stall or food cart experiment.

Learn from what factors influenced customer behaviour, that is, the weather, time of day, day of week, weekends, holidays, etc.

Learn from conducting a break-even analysis, that is, how many plates of food will you have to sell to at first break even, and then, how many will you need to sell to reach your target profit?

Learn how you felt making the food and trying to sell it.
4. Modify From what you have learnt, modify your hypothesis and/or your experiments to better match your observations, that is, reality.
5. Repeat Go back out and observe events and confirm that the improved hypothesis better matches reality, or if you created an experiment, re-run the experiment, modifying where required, and again observe. Repeat the above until either you have developed a sound hypothesis, you have pivoted and developed a new hypothesis which you will test (go back to 1), or you have abandoned the exercise as the hypothesis has no validity and it can’t be saved.
6. Act Act on what you have learned by either going forward or abandoning.

Does all the above sound hard and convoluted? Hard yes, convoluted not necessarily. What is hard is this; assuming you are a great cook, that strangers will pay you to feed them, so you take out a lease on a $25k/year building and you fit it out for $50k. And then you must buy food, hire staff, and because of all the costs (rent, loan repayments, wages, food, power, water, rates, …) you need to keep the restaurant open 7-days a week when you were only anticipating 5-days per week. And to top it off, customers are rare. Now that is HARD. Business is hard enough without taking wild and irresponsible gambles thinking, that is, assuming you know anything. Don’t Think, Check!

Will following the principles of the scientific method guarantee success? No, it won’t. However, following the principles will reveal to you the risks involved and the magnitude of those risks. From that position of knowledge, you can then make an educated business investment (which is the whole point), or not.