Hypotheses for interviewer-led cases

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

Hi,

First, the hypothesis are not officially required for a McKinsey interview. That's smth Victor Cheng proposed to market his books. However, now there is a whole generation of interviewers who were prepared on his books and they might be looking for the hypothesis:)

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 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"

Both can be used in interviewer and interviewee led cases

Good luck!

Hi Anonymous,

the short answer is yes, you can use a hypothesis-driven approach in an interviewer-led case and this can be beneficial to be more structured. Specifically you can:

• Define a structure to answer the question of the interviewer
• Define a hypothesis on one of the areas
• Explain how you want to verify the hypothesis and ask information to the interviewer to proceed in such way

If the interviewer for example asks you where you want to start in a cost analysis, you could answer:

“Well, costs can be divided in fixed and variable costs. Given the initial information I received so far, my hypothesis is that this could be a fix cost problem; to verify this hypothesis, I would like to know how fix and variable costs changed. Do we have any information on that?”

Hope this helps,

Francesco