Should I state my hypothesis explicitely at the begining of the case?

Question

Should I state my hypothesis explicitely at the begining of the case? So basically after the structure, should I say something like "my hypothesis here is...because...so I would like to start with analyzing xyz..."

Answer 1

Hi,

First of all - it's not mandatory. I would say - use the hypothesis if you are really good at solving the cases. If not - use the basic approach

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!

Answer 2

Hello!

I would say that not necessarely, but it won´t hurt either -if you phrase it as you described it in the promp.

However, I would change the order and say that only after you have drafted your Isuee Tree, so you (1) are not biased when doing it and (2) have a clear next step to continue the conversation.

Hope it helps!

Cheers,

Clara

Answer 3

Hello,

It's not important to state a specific hypothesis at the beginning, since most of the times you don't have enough data to do an educated guess. On the other hand, it's really important to justify every choice that you do and your analysis, stating why you are gonna to analyse the following part.

Hope it helps,
Luca

Answer 4

You don't need to state it explicitly, but remember that 1) You need to always be thinking about one and 2) You need to be demonstrating your drive towards one.

Also, remember that a hypothesis isn't necessarily "I believe x is the cause". Be better hypothesis is "If we can see what's happening with A, and A is going up, and then we look into B and B is big, then x is likely the case".

A hypothesis is much more about what questions do I need to ask/answer and how, in order to see what's happening.

Answer 5

Hi Anonymous,

yes, your approach would be fine. As a general approach I would recommend the following:

Define a structure to answer the question of the interviewer
Define a hypothesis on one of the areas
Explain how you want to verify the hypothesis and ask information to the interviewer to proceed in such way

If the interviewer for example asks where you want to start in a cost analysis, you could answer:

“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

Answer 6

Yes, when you present your structure it's important to state your hypothesis on why it is important to start from that particular block of the issue tree.

Best,
Antonello

Answer 7

Yes - a strong candidate would have a hypothesis in the begining when they are explaining their structure