Interviewers, is stating a hypothesis explicitly really important?

Question

I generally like Victor Cheng’s advice on most things but cannot make stating a hypothesis sound organic and uncontrived. Would you really write off a candidate who didn’t explicitly say “my hypothesis is...”? Is it acceptable to state your intention differently, e.g. “to determine whether the client should enter the market, I would look at four buckets to explore the favourability of the market.”

Answer 1

Stating a hypothesis is useful but not mandatory. Consultants speak like this (I still remember a senior principal doing this during a brain storming session with our partner), so you are encouraged to. Stating a hypothesis also helps you be structured and always remember what you are currently working to prove.

Also - stating your intention (presenting your initial framework) is not a hypothesis, but merely a plan of action. A hypothesis is what you want to prove; a structure is how you plan to prove it.

To your question: no it is not mandatory, no I would not write someone off, yes I would still encourage you to do it

Answer 2

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!