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How important is to state hypothesis for interviewer-led case?

Anonymous A asked on Aug 13, 2018 - 3 answers

Hi,

I know that it is very important to have a clear hypothesis when doing a candidate-led case, however, I wonder whether it is absolutely necessary to state hypothesis when laying out structure for interviewer-led cases?

Thanks.

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Vlad
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updated his answer on Aug 13, 2018
McKinsey / Accenture / Got all BIG3 offers / More than 300 real MBB cases / Harvard Business School
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Hi,

The major mistake of the candidates is that they start using the hypothesis and neglect having a proper structure. Moreover, if you perfectly solve the case without ever stating a hypothesis - you'll pass the interview.

There are two ways to use the hypothesis:

First - presenting a structure using the hypothesis. For example, if you are having a PE (private equity) case, you should do the following:

1) Make classic structure (market, company, competitors, feasibility of exit)

2) Make subpoints (e.g. in market: size, growth rates, profitability, segmentation, etc)

3) Present your 1st level Hypothesis:

  • - "In order to understand whether we should invest in Company A, I would like to check a number of the hypotheses - that the Market is Attractive, the Company is Attractive, the competition is favorable and we have good opportunities for of exit"

4) Present the main 2nd level Hypothesis:

  • "In the market, I would like to make sure that the market is big enough and growing;
  • In the company I would like to find additional opportunities for growth;
  • In competition I would like to check that the market is fragmented enough;
  • Finally, I would like to check if we have potential buyers and can achieve desired exit multiples"

Another way to use hypothesis is using the hypothesis to prioritize your analysis:

1) Make a structure: "Problem in sales may be related to Sales Motivation, Sales Strategy, Sales Coverage, and Sales Process:

2) Prioritize a part of the structure based on your knowledge / common sense / available data: "Taking into account that motivation is the core problem of the sales organization, I would like to prioritize this part of the analysis"

Good luck!

(edited)

Sidi
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replied on Aug 13, 2018
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Hi,

I believe it is a very common misconception among candidates that they need to explicitly state a hypothesis before laying out their structure. But a much better advice is the following:

Delay the explicit statement of a hypothesis until you have something to ground your hypothesis on! Just stating a hypothesis for the sake of it serves no purpose, since it is nothing more than guessing!

For example, if you are structuring a profitability case, where profits have decreased and you are asked for a diagnostic. Unless the interviewer has given you a hint in the case prompt, it does not make any sense to hypothesisze on the concrete reason before laying out your analysis/diagnostic structure! Instead, you can 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.”

Cheers, Sidi

Anonymous B replied on Aug 13, 2018

When you probably find a possible solution for the question given by the interviewer, you lay out the hypothesis and find the drivers/assumption to show that your answer is true.

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