Hi!
Apparently this myth never dies... *sigh* ;)
I have written this earlier, but let me repeat it:
Claiming that the statement of a hypothesis is a requirement at the start of a case is fundamentally wrong. In fact, stating a hypothesis for the overall problem only makes sense if you really have something to ground your hypothesis on! This is very rarely the case, since case prompts tend to be quite vague at the beginning. Just stating a hypothesis for the sake of it serves no purpose! It would just be a shot from the hip - and this is something you should avoid at all cost during an MBB interview!
If the question is about finding the reasons for an observed phenomenen (e.g., fallen profits), then you can rather say “I would like to first identify the numerical driver of the problem, which can sit either on the revenue or on the cost side (or both). Based on this initial assessment, I would build a hypothesis on the underlying reasons for the detrimental development, then verify the hypothesis, and subsequently derive measures to address these reasons in order to reverse the trend.”
If the question is eseentially a go- or no-go-decision (e.g., "Should we enter the Brazilian market?"), then a MUCH better approach than a blank "Yes/No"-Hypothesis (which feels stupid anyway, right?) is to define the criterion according to which the question can be answered. This implicitly comprises hypothesis-thinking, but in a much cleaner way. All you have to do is to
(1) narrow down the question,
(2) define the criterion according to which the question can be answered with "yes",
(3) outline how you can test whether the criterion is met.
That's it! This is how you address strategic questions without shooting out non-substantiated hypotheses (or rather wild guesses!), while still being super top-down and super efficient.
Hypotheses then are used all along the way of performing the actual analyses! But it is not hypotheses on the overall question, but hypotheses on the various sub-aspects which you need to test in order to eventually answer the overall question.
I hope this helps.
Cheers, Sidi
This is super helpful, thanks Sidi! Reading through your answers on this Q&A is like switching on a light bulp in a dark room. Thanks a lot!