How to state hypothesis accurately

Question

I've been practising many cases (40+), but realized that I have not been "hypothesis-driven". I usually follow Victor Cheng's method - start with framework, and then state my initial hypothesis. Recently I got feedback that my structure is not directly linked to my hypothesis, and suggested me to start from hypothesis then state a structure that is 100% linked to the hypothesis.

However, I have some confusions here:

(1) How detailed / comprehensive should a hypothesis be in a case? Could it be several hypothesis in different steps? For example, in a new product launch case, can I start from the hypothesis of "the market is attractive", the mention a second hypothesis of "the company could achieve its financial return goal" later on in the case? Or, I have to state all hypothesis altogether at once?

(2) How should I proceed with a typical profit case using a hypothesis-driven approach? Usually, I state a hypothesis of "this is a revenue problem" after sharing the structure. Should I cover all the factors at once instead? (For example, my hypothesis is that this is a revenue problem, quantity has been dropping due to customer preference change.)

(3) Are there any suggested ways to improve the hypothesis-driven case solving?

Appreciate your advice.

Answer 1

Hello,

At the beginning of the case you can not really make a detailed hypothesis, you have just to give your interviewer the idea that you know where to investigate.
I suggest to just make a general hypothesis to justify your next step. Once that you have some findings you will add details to your hypothesis.

Feel free to text me if you want to discuss it more in details

Best,
Luca

Answer 2

Hello,

This is a question that confuses many people, since many of my coachees keep asking me.

In most cases, you need to start with an "exploratory" attitude, more than a "hypothesis driven" one. This would come only after.

Cheers,

Clara

Answer 3

Hi,
your hypothesis can be generic at the beginning of the case resolution. Of course after 10-15 minutes they should become more and more accurate. E.g. for the P&L cases as far as the problem statement is generic (e.g. client want to increase profits) and the clarifying questions do not add too info you can use your hypothesis at the beginning.

Best,
Antonello

Answer 4

Hi Anonymous,

please find below the answers to your questions:

I would recommend to start with one hypothesis on your first bucket first if your structure is sequential, or one general hypothesis if it is not
You should not state a hypothesis on everything initially. Just use it for your first step and then add the others so far you go on
In general if your structure is good, stating a hypothesis would be very simple. If you find challenging to state hypothesis I would recommend to work on the structure of that particular question

Best,

Francesco

Answer 5

Hi,

A hypothesis is what takes your answer from "good" to "excellent".

You should try to formulate hypotheses on multiple levels:

After creating your structure – what's the most important driver out of everything you just named and what would you do next?
While analizing the exhibit – I just named all those are outliers – what are the reasons for them to be the way they are and what can we do about it?
After completing the calculatuon – what does this result mean for your client?

Hope this helps!

Best,
Daniel

Answer 6

Hi,

First of all - it's not mandatorily required. I would say - use the hypothesis if you are really good at solving the cases. If not - use the basic approach

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 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!