A startup team is evaluating two potential product ideas based on customer feedback and market trends. They decide to conduct a series of experiments to test the viability of each idea before fully investing resources. Which learning-by-thinking method are they employing, and how does it influence their decision-making process?

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Hypothesis-based testing, which allows them to systematically validate assumptions about the market and customer needs.

Intuitive decision-making, relying on gut feelings to choose the better idea.

Random selection of ideas, where they pick one product without analysis.

Group brainstorming, where they discuss ideas without any structured evaluation.

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Answer

They are using a learning‑by‑experiment approach, sometimes called hypothesis‑driven learning. The team first formulates clear hypotheses about each product idea, then designs small experiments—such as landing‑page tests or prototype trials—to collect data that confirms or refutes those hypotheses. By analyzing the results, they can quantify uncertainty and see which idea actually attracts customers or meets market needs. This evidence‑based insight lets them pivot, persevere, or abandon an idea before committing large resources, turning uncertainty into actionable knowledge. For example, if Idea A’s test page gets 200 sign‑ups while Idea B gets none, the team can confidently invest in Idea A.

Detailed Explanation

A hypothesis-based test is a way to check ideas by creating small experiments. Other options are incorrect because Intuitive decision-making relies on gut feelings that can mislead when markets are complex; Randomly picking an idea ignores data and can miss a good opportunity or waste money on a bad one.

Key Concepts

Learning-by-Thinking Methods

Decision-Making in Entrepreneurship

Hypothesis Testing

Topic

Learning-by-Thinking Methods

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