Introduction
Hypothesis testing can be used to create informed decisions in business. In an article by Jeff Cornwall in the website Business Insider, he talks about the importance of using the method of hypothesis testing to test the viability of a business idea. This paper will focus on the article of Cornwall and identify the ways that hypothesis testing is used in business.
Article Summary
Business should start with the assumption where an idea should be considered bad until proven otherwise. Entrepreneurs tend to only look at the bright side of ideas and forget about the downside of them. This is why Professor Cornwall was also called a “negative guy”. Professor Cornwall believes that, business ideas are just like in hypothesis testing, if a null hypothesis still stands after testing, then it must be true, and again, hypothesis testing starts with the opposite of what you want to be proved.
Review
The point of view given by Professor Cornwall is like planning contingency plans by predicting possible problems that could arise from a business idea. If there is a possible solution to every problem found, then there is a good possibility that the idea is really good. Planning for the worst is always a good outlook for entrepreneurs. Looking for loopholes on the ideas presented is the best way to plan for a solution for that loophole. As also applied in economics, instead of lingering to the fact that people are profit maximizing entities, economics studies the solution to scarcity.
Conclusion
The article is a good, though still a little abstract, display of how to use hypothesis testing in business. In technical articles, hypothesis testing is used in getting the significance of statistics found in getting the relationship between variables. The conclusion of such articles include recommendations for informed decisions in business.
References
Cornwall, J. (2010, December 10). Entrepreneurs, You Need To Test The Null Hypothesis. Retrieved from Business Insider: http://www.businessinsider.com/the-null-hypothesis-the-best-way-to-uncover-your-business-models-weakness-is-to-prove-that-it-cant-work-2010-12
