The Scientific Method for Business
SkoutLab applies the scientific method to your business data:1
Observe
Scan data for patterns, anomalies, and potential relationships
2
Hypothesize
Form testable statements about what’s happening
3
Test
Apply statistical methods to validate or refute
4
Report
Present findings with evidence and confidence levels
What is a Hypothesis?
In SkoutLab, a hypothesis is a specific, testable statement about your data:Good Hypotheses
- “Revenue declined because Product X underperformed”
- “Customers who complete onboarding have lower churn”
- “Sales peak on the last day of each month”
Not Hypotheses
- “Revenue is important” (not testable)
- “Something is wrong” (too vague)
- “We should sell more” (opinion)
Hypothesis States
Each hypothesis goes through validation and ends in one of these states:| State | Meaning |
|---|---|
| Confirmed | Statistical evidence supports the hypothesis |
| Refuted | Data contradicts the hypothesis |
| Inconclusive | Not enough evidence either way |
Confirmed
When a hypothesis is confirmed:- Statistical tests passed significance thresholds
- Effect size is meaningful
- Pattern is consistent across the data
SkoutLab uses a significance level of α = 0.05 by default, meaning there’s less than 5% probability the finding is due to random chance.
Refuted
A refuted hypothesis is still valuable! It means:- You can rule out this explanation
- Focus efforts elsewhere
- Avoid acting on false assumptions
Inconclusive
Sometimes there’s not enough data to decide:- Sample size too small
- Effect size unclear
- Need more time or data
Statistical Rigor
SkoutLab doesn’t just look for patterns — it validates them:| Method | Purpose |
|---|---|
| Significance Testing | Is this pattern real or random? |
| Effect Size | How big is the impact? |
| Confidence Intervals | What’s the range of uncertainty? |
| Multiple Testing Correction | Avoid false positives from many tests |
From Hypothesis to Action
Each validated hypothesis leads to:Findings
What we discovered
Evidence
Proof it’s real
Actions
What to do about it
Building Institutional Knowledge
Validated hypotheses are saved and become part of your organization’s knowledge:- Future analyses reference past findings
- Patterns are tracked over time
- Anomalies are flagged when they deviate from known patterns