Hypothesis Testing

Bain BCG hypothesis hypothesis testing McKinsey
New answer on Jul 23, 2021
2 Answers
Anonymous A asked on Jul 23, 2021


I have been practicing cases for a while. However, I still need to improve my  hyphothesis testing ability. Any tips/resources on how to practice hypothesis testing ? Grazie


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Content Creator
replied on Jul 23, 2021
MBB | 100% personal interview success rate (8/8) and 95% candidate success rate | Personalized interview prep

Hi there,

I personally am "against" the phrase "my hypothesis is". There should be many hypotheses, at many levels, throughout your framework and the case. 

Let's take my "Chinese Chess" case as an example: https://www.preplounge.com/en/management-consulting-cases/candidate-led-usual-style/intermediate/chinese-chess-airline-business-during-covid-19-191

One "hypothesis" should be that Revenues are the main reason for our crashing profits. This makes sense since the proft fall is covid induced. As part of this, we would also venture to guess that volumes are the main culprit as demand has shifted left and gov. regulations have prevented us from operating (hypothesis). There could also be price cuts as we're trying to attract people to flying (Hypothesis). Ultimately though, we need to look at how we can bring volumes back (Hypothesis). Again, we can hypothesis that volumes can be brought back by 1) Making sure we're meeting gov. standards around covid (i.e. do we have legal rights to fly) (hypothesis) and 2) Stoking demand by running promotions, marketing, and ensuring people we're safe to fly with (hypothesis).

Then, we want to say that, while we want to get back existing revenues, we'll probably have to find alternative revenues streams (again, another hypothesis). We can do this by offering other services like cargo shipping (another hypothesis).

Our 3rd bucket would be, if we can't bring back our profits by recovering existing revenues AND we can't bring them fully back by finding new revenue streams, we need to cut costs to make up this difference (hypothesis). We could probably do well by cutting excess capacity in the form of labor and leases (hypothesis). If we're desperate, let's look into government funding, as, I imagine, since we're in China, the government should be eager to prop us us with cheap capital (hypothesis)

Do you see how "hypothesis-led approach" is a ridiculous statement and out of date? How crazy it is to say "My (singular) hypothesis is"?

Rather, you need a hypothesES-driven approach, or rather, and objective-driven approach

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Anonymous B replied on Jul 23, 2021

Never heard of a hypothesis testing question... a case interview in its entirety is about developing hypotheses...

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