How necessary is it to explicitly state "my hypothesis is"? If you are logically connecting the dots (eg if you see revenue is decreasing despite high prices, and you say you think it's a volumes issue)..is it fine even if you don't specifically say "my hypothesis is that we may not be selling enough units" ?
Hi there,
I personally am "against" the phrase "my hypothesis is". There should be many hypotheses, at many levels, throughout your framework and the case.
Let's take my "Chinese Chess" case as an example: https://www.preplounge.com/en/management-consulting-cases/candidate-led-usual-style/intermediate/chinese-chess-airline-business-during-covid-19-191
One "hypothesis" should be that Revenues are the main reason for our crashing profits. This makes sense since the proft fall is covid induced. As part of this, we would also venture to guess that volumes are the main culprit as demand has shifted left and gov. regulations have prevented us from operating (hypothesis). There could also be price cuts as we're trying to attract people to flying (Hypothesis). Ultimately though, we need to look at how we can bring volumes back (Hypothesis). Again, we can hypothesis that volumes can be brought back by 1) Making sure we're meeting gov. standards around covid (i.e. do we have legal rights to fly) (hypothesis) and 2) Stoking demand by running promotions, marketing, and ensuring people we're safe to fly with (hypothesis).
Then, we want to say that, while we want to get back existing revenues, we'll probably have to find alternative revenues streams (again, another hypothesis). We can do this by offering other services like cargo shipping (another hypothesis).
Our 3rd bucket would be, if we can't bring back our profits by recovering existing revenues AND we can't bring them fully back by finding new revenue streams, we need to cut costs to make up this difference (hypothesis). We could probably do well by cutting excess capacity in the form of labor and leases (hypothesis). If we're desperate, let's look into government funding, as, I imagine, since we're in China, the government should be eager to prop us us with cheap capital (hypothesis)
Do you see how "hypothesis-led approach" is a ridiculous statement and out of date? How crazy it is to say "My (singular) hypothesis is"?
Rather, you need a hypothesES-driven approach, or rather, and objective-driven approach
Hi there,
A hypothesis is going to help to be structured when you have multiple options on a problem/solution without information on which option is the right one.
In that situation, stating a hypothesis can help, because it will "force" you to check if the option you considered most valid is indeed correct, without making assumptions.
Let’s say the interviewer asks where you want to start in a cost analysis. Then you can:
Bad example (making an assumption)
“Well, costs can be divided into fixed and variable costs. I believe this is a fixed cost problem, so I would like to start there”
Good example (making a hypothesis)
“Well, costs can be divided into fixed and variable costs. Given the initial information I received, my hypothesis is that this could be a fixed cost problem; to verify this, I would like to know how fixed and variable costs changed. Do we have any information on that?”
Hope this helps,
Francesco
It's not necessary to state a hypothesis, but it can be very helpful if you state it correctly and know what you're doing. If this fragments into dozens of sub-hypothesis like Ian explained, you have not understood how to use hypothesis as a helpful tool, and are doing it wrong.
Take a market entry question: Should Tesla move into the Pakistani market? You could start the case with a hypothesis:"Yes, they should, under the conditions that (a) the market is big enough and growing, (b) customers are ready for EVs and willing to switch, (c) the market is not yet crowded by established competitors and (d), Tesla has the supply chain capabilities to deliver a sufficient amount of cars per year."
This is a very powerful hypothesis, as it's high level enough (and not as uselessly fragmented as Ian's approach), and it gives you a specific set of criteria to test against. With that hypothesis you have your framework readily available and can dig into the four blocks and either confirm or disprove them.
This one is quite subjective. My personal view is that it's not necessarily to state it so explicitly but since you are being hypothesis-driven throughout the case, it's important to show how you are prioritising.
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