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Anonymous A
on Jul 02, 2021
Global
I want to receive updates regarding this question via email.

Necessary to state ‘my hypothesis is’?

How necessary is it to explicitly state "my hypothesis is"? If you are logically connecting the dots (eg if you see revenue is decreasing despite high prices, and you say you think it's a volumes issue)..is it fine even if you don't specifically say "my hypothesis is that we may not be selling enough units" ? 

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Top answer
Ian
Coach
edited on Jul 02, 2021
Top US BCG / MBB Coach - 5,000 sessions |Tech, Platinion, Big 4 | 9/9 personal interviews passed | 95% candidate success

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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Francesco
Coach
on Jul 03, 2021
#1 Coach for Sessions (4.500+) | 1.500+ 5-Star Reviews | Proven Success: ➡ interviewoffers.com | Ex BCG | 10Y+ Coaching

Hi there,

A hypothesis is going to help to be structured when you have multiple options on a problem/solution without information on which option is the right one.

In that situation, stating a hypothesis can help, because it will "force" you to check if the option you considered most valid is indeed correct, without making assumptions.

Let’s say the interviewer asks where you want to start in a cost analysis. Then you can:

  1. Present a structure,
  2. State a hypothesis on the main area of analysis
  3. Ask for data to verify the hypothesis

Bad example (making an assumption)

“Well, costs can be divided into fixed and variable costs. I believe this is a fixed cost problem, so I would like to start there”

Good example (making a hypothesis)

“Well, costs can be divided into fixed and variable costs. Given the initial information I received, my hypothesis is that this could be a fixed cost problem; to verify this, I would like to know how fixed and variable costs changed. Do we have any information on that?”

Hope this helps,

Francesco

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Deleted user
on Jul 03, 2021

It's not necessary to state a hypothesis, but it can be very helpful if you state it correctly and know what you're doing. If this fragments into dozens of sub-hypothesis like Ian explained, you have not understood how to use hypothesis as a helpful tool, and are doing it wrong. 

Take a market entry question: Should Tesla move into the Pakistani market? You could start the case with a hypothesis:"Yes, they should, under the conditions that (a) the market is big enough and growing, (b) customers are ready for EVs and willing to switch, (c) the market is not yet crowded by established competitors and (d), Tesla has the supply chain capabilities to deliver a sufficient amount of cars per year."

This is a very powerful hypothesis, as it's high level enough (and not as uselessly fragmented as Ian's approach), and it gives you a specific set of criteria to test against. With that hypothesis you have your framework readily available and can dig into the four blocks and either confirm or disprove them.

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Ken
Coach
on Jul 02, 2021
Ex-McKinsey final round interviewer | Executive Coach

This one is quite subjective. My personal view is that it's not necessarily to state it so explicitly but since you are being hypothesis-driven throughout the case, it's important to show how you are prioritising.

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The Role of the Hypothesis in Consulting
In the field of consulting, the hypothesis plays a central role in the analysis of problems, the development of solutions and the derivation of strategic recommendations. A hypothesis is a preliminary assumption or conjecture made on the basis of existing information and data. It serves as a starting point for investigations to gain empirically verifiable knowledge. This article explores the meaning, purpose, and application of hypotheses in the consulting context. The Importance of a Hypothesis in ConsultingIn the world of consulting, where complex business issues must be solved, the hypothesis is a fundamental component in developing structured approaches to solving them. A hypothesis allows consultants to sort through their thoughts and focus specifically on certain aspects of an issue. It also serves as a guideline to direct and guide the research process as data are collected and analyzed.The hypothesis also functions as an "educated guess" or informed conjecture based on existing knowledge, experience, and market insights. It helps structure the advisory process and guide efforts in the right direction. Components of a HypothesisA well-formulated hypothesis consists of several essential components:Independent and Dependent Variables: The hypothesis defines the relationship between an independent (manipulated) variable and a dependent (measured) variable. The independent variable is the one that is purposefully changed in an experiment, while the dependent variable is the response that is measured.Prediction: The hypothesis contains a clear prediction about how the change in the independent variable will affect the dependent variable. This prediction is what is tested in the experiment.Testability: A hypothesis must be testable, meaning that it can be tested by experimental investigation. It should be formulated in such a way that its correctness or incorrectness can be determined from observations and data.Clear Formulation: the hypothesis should be precise and clearly formulated to avoid misunderstandings. Clear wording also facilitates communication of the results. The Purpose of a Hypothesis in ConsultingFormulating a hypothesis serves several important purposes in consulting:Directional Thinking: A hypothesis forces consultants to think about possible causes and relationships that may have led to a problem. It promotes structured thinking and prevents aimless poking around in problem-solving.Focused Analysis: Hypotheses help focus the investigation on relevant data and information. This prevents an overload of unimportant details and allows for an in-depth analysis of the aspects that are most likely to have an impact.Measurable Results: A clear hypothesis makes it possible to establish concrete criteria for the success or failure of an investigation. This creates a basis for evaluating the effectiveness of proposed solutions.Structured Communication: A precisely formulated hypothesis facilitates communication between consultants and clients. It enables the planned steps, methods and expected results to be communicated in an understandable way. The Application of Hypotheses in ConsultingThe use of hypotheses in consulting spans several key phases of the consulting process and contributes significantly to structuring and finding solutions. In the problem identification phase, hypotheses help identify potential causes and influencing factors of a business problem by serving as a starting point for in-depth investigations.During data collection and analysis, hypotheses act as a guide to extract targeted relevant information, enabling more precise and focused data analysis.In the solution development phase, hypotheses play an important role in the evaluation and selection of different solution approaches. By serving as criteria to assess the probability of success of different options, they contribute to the development of the most promising solutions. Finally, hypotheses enable strategic recommendations to be derived. They provide a sound basis for formulating persuasive arguments in favor of particular strategies and for convincing clients of the soundness of proposed actions.Overall, the application of hypotheses functions as a systematic approach in consulting to bring structure to complex issues, perform targeted analyses, and ultimately derive informed decisions. This approach promotes the efficiency and effectiveness of the consulting process and ensures that the solutions developed are based on sound and validated assumptions. ConclusionThe hypothesis is an essential tool in consulting that helps structure complex problems, conduct targeted analyses, and derive informed solutions. It promotes a structured and focused approach and plays a crucial role in communicating ideas and recommendations to clients. In an industry based on informed decision-making, hypothesis is a powerful tool to influence the success of consulting projects.
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