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".
Answering your second question - It really depends on whether you have anything else to explore, that is more important than risks. The typical structure is the following:
- What was the objective
- Your recommendation
- Arguments why the recommendation is valid (2-4 arguments) with the supporting numbers
- Additional things you would like to explore. In the order of priority:
- Things you still need to explore / data you need to get in order to provide a valid recommendation (Very typical for McKinsey cases where the interviewer guides you and interrupts in the middle of the case to provide a conclusion
- Things you've slightly covered during the case but have not come to a particular measurable solution or were not the part of the original objective (e.g. alternative growth options or some questions on creativity)
- Next steps
In my view, the last part (4th) of your recommendation should not be bigger than the rest of the recommendation (1-3), thus I will talk about risks if I have perfectly covered everything else in the case.
- Our objectives were to understand why the profit is declining by X and how to bring the profit back within one year (Don't forget that your objective should be measurable in terms of money / other metric and time)
- According to the analysis we've done so far, my recommendation is to shut down the division A and to concentrate on the divisions b/c if we want to increase the profit, and there is a number of reasons for that.. (Remember that your arguments should include numbers).
- You provide the arguments a) First of all, problems in Division A are the major driver of the decline in profits - 90% of the decline in profits refer to Division A. b) Secondly, the decline is driven by the contracting market size that is shrinking at xx percent and is not expected to improve in the near future. c) Finally....
- Additionally, I would like to check the option of seeling the division A products abroad. We have discussed several potential markets to enter but still have to check whether it will be feasible for us financially