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Henning

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6

At what point in the case does the interviewee state hypothesis?

At what point in the case does the interviewee state hypothesis? From using Victor Cheng, and Managment Consulted material, I get the feeling that the answer is ASAP. However, I feel more comfortable stating a hypothesis after doing some analysis of the numbers. Are VC and MC essentially saying if the economic environment and current/future state of the industry work in the favour of the client, declare a 'positive' hypothesis, and then test if this is right with numbers gotten from futher analysis of the company? Please share thoughts. Thanks! :)

At what point in the case does the interviewee state hypothesis? From using Victor Cheng, and Managment Consulted material, I get the feeling that the answer is ASAP. However, I feel more comfortable stating a hypothesis after doing some analysis of the numbers. Are VC and MC essentially saying if the economic environment and current/future state of the industry work in the favour of the client, declare a 'positive' hypothesis, and then test if this is right with numbers gotten from futher analysis of the company? Please share thoughts. Thanks! :)

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I agree with VC, MC here. The reason is that the hypothesis is a great starting point to develop a strong case framework. And it does not matter if the initial hypothesis is correct or not. Take a market entry case as example:

State a hypothesis before building a framework that builds on several assertions:

The client should enter the market, because

  • the market is sizeable and growing
  • none of the major competitors has entered the market yet
  • customer demand has been slowly building and is expected to continue doing so because of global trends
  • the client has the production capacity and supply chain capabilities to execute the market entry quick and effectively.

And before you know it, you have built a strong framework with four buckets that you can check off like a check list. At the end of the case you take account and see how many of the boxes have been checked. If one of the assertions has not been confirmed, you can brainstorm how material that is and if there are any mitigation strategies and make your final recommendation.

I agree with VC, MC here. The reason is that the hypothesis is a great starting point to develop a strong case framework. And it does not matter if the initial hypothesis is correct or not. Take a market entry case as example:

State a hypothesis before building a framework that builds on several assertions:

The client should enter the market, because

  • the market is sizeable and growing
  • none of the major competitors has entered the market yet
  • customer demand has been slowly building and is expected to continue doing so because of global trends
  • the client has the production capacity and supply chain capabilities to execute the market entry quick and effectively.

And before you know it, you have built a strong framework with four buckets that you can check off like a check list. At the end of the case you take account and see how many of the boxes have been checked. If one of the assertions has not been confirmed, you can brainstorm how material that is and if there are any mitigation strategies and make your final recommendation.

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Hi there,

Victor Cheng is wrong :) His method was great in the past but is outdated.

Your instinct to wait until you get further informaiton is correct. However, remember that your framework is essentially a set of hypotheses. That's why I prefer to call this "hypotheses-drive approach" or "objective-driven approach"

You don't need to state it explicitly, but remember that 1) You need to always be thinking about one and 2) You need to be demonstrating your drive towards one.

Also, remember that a hypothesis isn't necessarily "I believe x is the cause". Be better hypothesis is "If we can see what's happening with A, and A is going up, and then we look into B and B is big, then x is likely the case".

A hypothesis is much more about what questions do I need to ask/answer and how, in order to see what's happening.

Another way of viewing it:

Your framework is your structure for approaching the problem. It consits of a few main areas you'd like to look at. Inherent in your framework is a view that "If I answer A, B, and C, then we have an answer"

So, for market entry:

1) If the market is big, and it's growing, then we still want to considering entering

2) If #1 = yes, then let's see if it's attractive...can we win there? Is our product good/better than our competition's? Etc. If yes, let's definitely consider entering.

3) If #1 and #2 = yes, then, when we do enter, are we sure we can win? I.e. do we have the right plans. Will implementation actually pan out? Do we have the expertise, capital, etc.? In other words, if #2 is the thearectical, #3 is the reality.

Then, your summary becomes "I believe we should enter the market, if we can prove it's a good market, the it's attractive to us specifically, and that we will win it".

^Now this is a hypothesis :)

Read these 2 Q&As for some great context + discussion:

https://www.preplounge.com/en/consulting-forum/interviewer-led-case-interview-hyposthesis-and-ideas-7390

https://www.preplounge.com/en/consulting-forum/forming-a-hypothesis-case-in-point-vs-victor-cheng-7311

Hope this helps! This is a tricky topic that's difficult to properly answer in writting...if you want a more thorough explanation, and training in the mindset shift required here, don't hesitate to reach out!

Hi there,

Victor Cheng is wrong :) His method was great in the past but is outdated.

Your instinct to wait until you get further informaiton is correct. However, remember that your framework is essentially a set of hypotheses. That's why I prefer to call this "hypotheses-drive approach" or "objective-driven approach"

You don't need to state it explicitly, but remember that 1) You need to always be thinking about one and 2) You need to be demonstrating your drive towards one.

Also, remember that a hypothesis isn't necessarily "I believe x is the cause". Be better hypothesis is "If we can see what's happening with A, and A is going up, and then we look into B and B is big, then x is likely the case".

A hypothesis is much more about what questions do I need to ask/answer and how, in order to see what's happening.

Another way of viewing it:

Your framework is your structure for approaching the problem. It consits of a few main areas you'd like to look at. Inherent in your framework is a view that "If I answer A, B, and C, then we have an answer"

So, for market entry:

1) If the market is big, and it's growing, then we still want to considering entering

2) If #1 = yes, then let's see if it's attractive...can we win there? Is our product good/better than our competition's? Etc. If yes, let's definitely consider entering.

3) If #1 and #2 = yes, then, when we do enter, are we sure we can win? I.e. do we have the right plans. Will implementation actually pan out? Do we have the expertise, capital, etc.? In other words, if #2 is the thearectical, #3 is the reality.

Then, your summary becomes "I believe we should enter the market, if we can prove it's a good market, the it's attractive to us specifically, and that we will win it".

^Now this is a hypothesis :)

Read these 2 Q&As for some great context + discussion:

https://www.preplounge.com/en/consulting-forum/interviewer-led-case-interview-hyposthesis-and-ideas-7390

https://www.preplounge.com/en/consulting-forum/forming-a-hypothesis-case-in-point-vs-victor-cheng-7311

Hope this helps! This is a tricky topic that's difficult to properly answer in writting...if you want a more thorough explanation, and training in the mindset shift required here, don't hesitate to reach out!

(edited)

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I encourage candidates to be in a habit of being hypothesis-driven throughout the case, especially in the structuring.

Take a standard profitability case, you want to have an 'informed' in-going hypothesis around whether it is a revenue vs. cost problem so that you can priortiise your initial structure. If you deem it to be a cost problem, you develop a hypothesis around what may be the largest cost buckets that may be causing the profitability issue. For each of the cost buckets you identify, you can develop individual hypotheses around what the key drivers might be. For example, fuel cost is a large cost for an airline, is the increase in fuel cost driven externally by fuel prices increasing, or increased fuel consupmtion due to poor air traffic management/airport operations, as well as internally due to poor procurement practices in terms of negotiating/hedging on fuel price, or bad fuel management practices by pilots, etc. etc.

You don't need to be as explicit in always saying "my hypothesis is x due to a, b and c" as an experienced interviewer will understand how you are being hypothesis driven to break down the problem and dig deeper to understand the key issues.

I encourage candidates to be in a habit of being hypothesis-driven throughout the case, especially in the structuring.

Take a standard profitability case, you want to have an 'informed' in-going hypothesis around whether it is a revenue vs. cost problem so that you can priortiise your initial structure. If you deem it to be a cost problem, you develop a hypothesis around what may be the largest cost buckets that may be causing the profitability issue. For each of the cost buckets you identify, you can develop individual hypotheses around what the key drivers might be. For example, fuel cost is a large cost for an airline, is the increase in fuel cost driven externally by fuel prices increasing, or increased fuel consupmtion due to poor air traffic management/airport operations, as well as internally due to poor procurement practices in terms of negotiating/hedging on fuel price, or bad fuel management practices by pilots, etc. etc.

You don't need to be as explicit in always saying "my hypothesis is x due to a, b and c" as an experienced interviewer will understand how you are being hypothesis driven to break down the problem and dig deeper to understand the key issues.

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Hello!

I wouldn´t dare to say that Cheng´s method is wrong -at the end, he has been a guru-, but for sure is not the most up-to-date one you can find.

I don´t encourage to make state hypothesis and make the trees to proof them, but rather to think of hypothesis as triggers for the issue tree

Hope it helps!

Cheers,

Clara

Hello!

I wouldn´t dare to say that Cheng´s method is wrong -at the end, he has been a guru-, but for sure is not the most up-to-date one you can find.

I don´t encourage to make state hypothesis and make the trees to proof them, but rather to think of hypothesis as triggers for the issue tree

Hope it helps!

Cheers,

Clara

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Hello,

I get your point, I do not completely agree with Cheng on this point. I prefer my candidates to write down a structure and tell me clearly how they are gonna to analyse the case in order to identify the issue. Sometimes you can do some high level educated guess ( e.g. in some P&L cases you could have elements to suggest to focus on variable costs instead of revenues) but other times state an hypothesis is like flipping a coin and I don't get what is the benefit of doing that.

My final suggestion is to state an hypothesis when you have elements that support your hypothesis but to be structured since the beginning, making clear why you want to do a specific analysis (this is why Cheng suggests to always have an hypoteshis in your mind).

Feel free to contact me if you want to discuss more on this.

Best,
Luca

Hello,

I get your point, I do not completely agree with Cheng on this point. I prefer my candidates to write down a structure and tell me clearly how they are gonna to analyse the case in order to identify the issue. Sometimes you can do some high level educated guess ( e.g. in some P&L cases you could have elements to suggest to focus on variable costs instead of revenues) but other times state an hypothesis is like flipping a coin and I don't get what is the benefit of doing that.

My final suggestion is to state an hypothesis when you have elements that support your hypothesis but to be structured since the beginning, making clear why you want to do a specific analysis (this is why Cheng suggests to always have an hypoteshis in your mind).

Feel free to contact me if you want to discuss more on this.

Best,
Luca

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Hey there,

The hypotheses are your guiding anchors throughout the case. They should inform

  • your structure
  • the insights you take out of a chart
  • you calculation logic and what you make of the results
  • recommendation

That being said, the most elegant way is to come up with a hypothesis at the end of each element of the case.

E.g. You deliver a clear structure with several elements, then dive deeper to conduct your analysis and prioritize (The prioritization is the hypothesis,...).

Cheers,

Florian

Hey there,

The hypotheses are your guiding anchors throughout the case. They should inform

  • your structure
  • the insights you take out of a chart
  • you calculation logic and what you make of the results
  • recommendation

That being said, the most elegant way is to come up with a hypothesis at the end of each element of the case.

E.g. You deliver a clear structure with several elements, then dive deeper to conduct your analysis and prioritize (The prioritization is the hypothesis,...).

Cheers,

Florian

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