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Is hypothesis always needed in case interviews?

Yan asked on Dec 30, 2017 - 5 answers
Looking for solid partners. Currently preparing for BAIN interview

Hi, I read from several books that the case interview should always be hypothesis driven, i.e. state the hypothesis early in the interview. However, I feel that for some cases, hypothesis is not really needed. The examples that I encountered so far include: 1. market sizing; 2. what is the distribution channel for a certain product; 3. optimization of few options. For the 2nd situation, I was not able to come up with a hypothesis before almost doing all analysis, i.e. identified what are the potential distrubution channels. for the 3rd situation, I can hypothesis that "the client need to optimize the options" and come up with few criteria for assessing the options, i.e. the structure. But it is very general hypothesis, which does not help at all to identify the structure. I feel that in all three situations mentioned above, hypothesis doesn't seem necessary. Can anyone please help me to understand if hypothesis is really needed in every case interview, including the situations that I mentioned above? If not, what are the potential type of cases where hypothesis is not needed? Thanks.

(edited)

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Francesco
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replied on Dec 31, 2017
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Hi Yan,

as mentioned by An, hypotheses at the beginning of the case are a way to “force” you to be structured when you have limited options to choose.

In case your structure is strong enough (thus not the Victor Cheng approach which is pretty generic in terms of structure), you would not need to state an hypothesis, as it would be implicit in the structure itself (eg if you list as elements of entering a new market (i) the analysis whether the industry is attractive, (ii) the analysis whether you can meet the specific goal of the company in that market and (iii) the analysis of whether there is a way to enter the market, you are implicitly showing that your hypothesis is to enter if all these elements are positive). You would also not need an explicit hypothesis when you have infinite options, as in a market sizing, since in that case that would make little sense (eg would not be very helpful to state at the beginning that your hypothesis is that the market size is €20M)

In case your structure is not optimized for the case or not particular strong (eg typical Victor Cheng approach for business situations, such as product, customer, competition, company), making a hypothesis could help you to create a better structure identifying the viable options for different results, even when your initial buckets are not particular relevant; thus stating specific initial hypotheses could be useful at the initial stage of preparation when your structures are not particular strong, but will lose value so far that you improve them.

In conclusion, if you have very good, personalize structures or if you have infinite hypothesis within which to choose (eg market sizing) there is no need to mention an explicit hypothesis. In case your structure is generic, hypothesis could help you to deliver a better structure.

Best,

Francesco

Guennael
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replied on Sep 16, 2018
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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

An (Jack)
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updated his answer on Dec 30, 2017
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Hi Yan,

In general, hypothesis driven thinking is a way to limit the amount of analysis you need to do before arriving at the answer - so it is a way of prioritizing areas of investigation and applying 80/20.

In a case interview, it is most needed when you need to arrive at a solution / recommendation for a whole business problem. Hence, it may not seem to apply as strongly to market sizing or questions about listing out distribution channels (although it also depends on the context). However, if the question asks you to go deeper into finding the priority market or channel, that may be an opportunity to lay out your hypothesis and proposed analysis.

(edited)

Vlad
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replied on Sep 17, 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!

Yan replied on Jan 01, 2018
Looking for solid partners. Currently preparing for BAIN interview

Hi Francesco and An,

Thanks for your answers. It is very helpful. In sum, hypothesis is not necessarily needed in every single case. It is needed when I have to limit my analysis to a certain aspects. If the question itself is somehow MECE, like market sizing problem, hypothesis is not needed.

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