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What is some example of opening hypothesis?
Anonymous B
on Jun 24, 2018
Global
I want to receive updates regarding this question via email.

Should we be explicit about our hypothesis during the case interview?

I heard that one of the key qualities of a good candidate is to always be hypothesis driven when approaching a case. My question is how explicit do you have to be when doing it in the actual interview? One way to do it is to be very explicit by saying "My hypothesis is that the profit decreases due to the market problem, and I am going to test if my hypothesis is correct" but sometimes this could sound too textbook and even for some people jumping to conclusion. the second way is to indicate that you have a hypothesis in your head and indicate it to the interviewer, something like "Well, I see that profitability has gone down and this could be the result of the market failure" or something like that. Would this be enough? Which way is better?

Thanks!

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Top answer
Francesco
Coach
on Jun 25, 2018
#1 Coach for Sessions (4.500+) | 1.500+ 5-Star Reviews | Proven Success: ➡ interviewoffers.com | Ex BCG | 10Y+ Coaching

Hi Anonymous,

the first option would be better in this case, as the way you presented the second option would appear unstructured for an interviewer, almost like you are guessing the solution. Key thing related to this is that you should first present the structure and then make an hypothesis on the area to investigate, this will make easier for the interviewer to follow your reasoning. The thread below contains some more details on this and some examples of how to do it:

https://www.preplounge.com/en/consulting-forum/what-is-some-example-of-opening-hypothesis-1880

Best,

Francesco

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Vlad
Coach
on Jun 24, 2018
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

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 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!

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Guennael
Coach
on Jun 24, 2018
Ex-MBB, Experienced Hire; I will teach you not only the how, but also the why of case interviews

Yes, absolutely yes. "My hypothesis is" should be part of your vocabulary. I have seen a Principal think long and hard in front of our Partner, before saying these 3 words at the beginning of a thought. Consultants say it, show us you can be one of us and speak like us.

Now, you dont necessarily have to start the initial framework by stating a hypothesis - but it should be implied. And be ready at al times to state your hypothesis if you haven't. Again - I was asked for mine on my first few projects.

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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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