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Business Modeling

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Scientific Method

A Very Scientific Approach

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Observe & Impartially Consider Data Look for Regularities in Understanding

Develop Hypothesis

Hypothesis cannot be verified, only falsified. Predict Unobserved Phenomena

Using observed initial conditions and hypothesis

Review Hypothesis

Are the observed final conditions explained by the hypothesis, or has the hypothesis been falsified.

‘The Meaning Of It All’ by Richard Feyman

…science as a method of finding things out. This method is based on the principle that observation is the judge of whether something is so or not. All other aspects and characteristics of science can be understood directly when we understand that observation is the ultimate and final judge of the truth of an idea.

Or, put another way, ‘The exception proves that the rule is wrong.’ That is the principle of science. If there is an exception to any rule, and if it can be proved by observation, that rule is wrong.

So the more specific the rule, the more powerful it is, the more liable it is to exceptions, and the more interesting and valuable it is to check.

The method is ‘Try it and see’… and accumulate the information and so on. And so the question ‘If I do it what will happen?’ is a typically scientific question.

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Jakub Smrček
Jakub Smrček

Written by Jakub Smrček

Qualitative investment analysis is about understanding a business before taking out your calculator. This blog teaches you how to do it for common stocks.

Business Modeling
Business Modeling

Published in Business Modeling

Models allowing you to Read a Business Like a Book!