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When should I state the hypothesis during a case interview?

Nick asked on Sep 25, 2018 - 3 answers
Oxford uni student looking for partners to practice cases with.

I have a question about hypotheses and issue trees/case structures. Victor Cheng seems to say you should state your hypothesis, and then lay out the structure of your case/draw your issue tree. But surely if you do this and your first couple of hypotheses are disproved, you'll end up with a bunch of wasted effort and having to draw multiple issue trees? Is it not better to draw a structure of all the possible things that could be important in the case, and then take a hypothesis to go down one a

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replied on Sep 26, 2018
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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. So most probably you had some other issues with the case as well and they used it as a standard feedback.

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!

replied on Sep 26, 2018
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Remember, the objective of a case is not really for you to crack it, but for you to display a repeatable method: can you think of a new problem in a logical & MECE way? Can you follow your framework? Are you going to get lost & confused? ... Bottom line, can I trust you with an analysis, and will you hep me when I staff you on my project?

As you build your initial framework and develop an hypothesis, remember to use the 80/20 rule: what seems the most likely option? This is probably the one you will want to analyze first. This is why someone with 'great business sense' will be much faster all else being equal. Projects go by very quickly, you will never have time to just look at every conceivable solution (aka 'boil the ocean')

Oh, and if your first couple of hypotheses are disproved, you just truck along and move to the 3rd hypothesis.

Totally agree. A great read on that is the book "The McKinsey Mind" — Elias on Sep 26, 2018

Anonymous A updated his answer on Sep 25, 2018

I have a problem with the same, for it discounts the fact that in order to develop hypothesis one needs to have a decent understanding. And having a hypothesis without understanding is akin to speaking without thinking, having opinions without facts, more like stereotyping.

That said, drawing a structure of all that is important is too laborious. However, you could abstract them. For example in profitability case you can start with # Understand specific problem stream # Explore Revenue Opportunities # Explore Cost Opportunities.. Consider your framework as more of chevrons you would use to summarize your project approach from mobilisation, analysis/discovery, opportunity identification, roadmap...


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