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Hypothesis Driven Structure

Case Case Interview hypothesis
Recent activity on Mar 19, 2018
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Ghali
Proficient
asked on Mar 19, 2018

Hi,

I would like to hear your input/take on the following:

I personally find the hypothesis driven structure is a smoother, more intuititve way to structure the approach. When you have the hypothesis as your cornerstone, it transforms the buckets of analysis into sub answers to the entire case. Hence, it goes smoother and you crack it.

But I'm facing the following issue: I currently think of the buckets as "areas of investigation"; I investigate with no clear direction or specific metrics, but looking for indications and "AHA" moments. Partially because I want to avoid going too specific in my investigations, to leave area for different types of data the interviewer migth have.

Is this perception a right approach ? Should I leave it open upon discussion? (I would like to investigate revenues)? Or is it crucial for me to demonstrate that I'm tackling the right data points to drive the analysis ? ( I would like to investigate revenues; in specific I'll be looking at 1-Size, 2-shares, 3-segments, 4-growth of each segment)

Because I keep getting conflicting messages about it, and Ive been trying to shift to hypothesis driven, but I don't want to mess up my approaches at this stage.

Your input is highly appreciated.

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Vlad
Expert
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replied on Mar 19, 2018
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

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!

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Ghali on Mar 19, 2018

So, if I understood you correctly. We are talking here about "How to put hypothesis into action" ? So you would NOT recommend having an "opened" area for investigation ?

Vlad on Mar 19, 2018

You need to state what you exactly would like to check in each of the areas (2nd level of your structure). It may be 2-5 specific things (e.g. Market size, growth rates, segmentation, regulation, etc). In real life when you start a consulting project you know in advance which areas and topics you would like to check first.

(edited)

Vlad gave the best answer

Vlad

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