Hypothesis Driven Case Interview
Hypotheses come from the scientific method, which a scientist uses to test an idea she has about what might be true in our world. Consulting firms have come to favor the scientific method approach when they need to prove a point. And, as noted, this approach starts with the hypothesis.
Because this is the preferred approach consulting firms take when working with clients, it also should be a preferred approach in the case interview.
Here is an example of how this might look in a case interview:
Interviewer: XYZ Company’s profits are down 25%.
Candidate: I am going to hypothesize (based on some background information) that the client’s industry is in a price war that has caused the client’s sales and profits to decline. To test this hypothesis, I need to know how the components of the profits have changed since last year. Particularly, have sales or expenses changed since last year?
Interviewer: Sales have remained unchanged and costs have increased by 25%.
Candidate: My conclusion is that my initial hypothesis is incorrect. It looks like the client is facing a cost problem, not a revenue problem. My next hypothesis is… Note how the entire process repeats itself. This is essentially how the case interview would work. The first step is to state the hypothesis. The second step is to decide how you will test that hypothesis (using an issue tree or framework, which will be discussed in the following sections of this guidebook)