Deductive reasoning is the traditional form of reasoning you’ll be familiar with from pure maths or physics. You start with a general hypothesis, then use evidence to prove (or disprove) its validity. In business, this type of thinking is probably how your finance department plans its budget i.e. to generate this much profit we need to invest this much in staff, this much in raw materials and this much in buying attention.
Inductive reasoning is the opposite of deductive reasoning, using experimentation to derive a hypothesis from a set of general observations. In business, inductive reasoning is often the preserve of the customer insight and marketing team i.e. we believe our customers will behave this way, based on a survey sample of x number of people.
By comparison, abductive reasoning is a form of reasoning where you make inferences (or educated guesses) based on an incomplete set of information in order to come up with the most likely solution. This is how doctors come up with their diagnoses, how many well-known scientists formed their hypotheses, and how most designers work. Interestingly it’s also the method fictional detective Sherlock Holmes used, despite being misattributed as deductive reasoning by Sir Arthur Conan Doyle.
Abductive reasoning is a skill, and one that can be developed and finessed over time. It’s a skill many traditional businesses fail to understand, preferring the logical certainty of deductive reasoning or the statistical comfort of inductive reasoning. Fortunately that’s starting to change, as more and more companies start to embrace the “design thinking” movement.