FWIW, there’s a fairly rich research literature that argues abductive reasoning is the primary form of reasoning entrepreneurs engage in.
I can’t find a use for it (though b-schools are obviously interested, because pedagogical reasons), but I thought it was really interesting.
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The basic form of abduction is "I observe X, I abduce Y as a reason for X." The nuance comes from the fact that Y is testable. It allows you to verify via experimentation/practice. (Screenshot from en.wikipedia.org/wiki/Abductive)
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You can see why this might be the sort of thinking entrepreneurs do. When faced with uncertainty, you could a) deduce from some theory that Y is going on; b) perform the sort of calibrated probabilistic judgment to induce a possible explanation (i.e. Bayesian updating).
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OR c) you could just pick the most likely explanation, and then move quickly with a course of action that assumes it is true and protects your downside, and re-eval later when your actions give you new information.
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A simpler way of putting this:
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I keep coming back to this model of decision making that @berkun articulated in The Year Without Pants.
I didn't have the words for it before. The time you spend doing expected utility calculations is better spent picking one path and running hard and getting new information.
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The next time you are faced with uncertainty (e.g. you observe X in the market and X may be explained by any number of reasons) remember that generating a calibrated judgment is only half the challenge. The other is being decisive.
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The way I try to remind myself of this is to say to myself 'if there is an action A that has low downside risk and will generate more valuable information than is currently available, the right move is nearly always to stop judging and to do A instead'.
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This is abductive reasoning because very often action A will assume a reason P for observation X. And P may be shitty.
The trick is to not get too caught up over analysis. You don't want to spend too much time arguing P vs Q vs R as reasons. Just go do A and re-eval later.
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