Structured Problem Solving &
Hypothesis Generation
Goals of this module
 Lay out a systematic approach to solving business
problems –“Structured Problem Solving ”
 Establish a common “modus operandus” for
Consulting teams
 Practice the suggested process on a real-life example
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Consulting Skills Workshop
Defining the issue is the first step in the
journey to final recommendations
Define the
Issues
Form
Hypotheses
Gather Data
Analyse
Data
Find Insights
Develop
Conclusions and
Make
Recommendations
to Implement
What are the
questions
keeping you
awake at night?
Statements that
provide
direction and
structure for the
analysis
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Factual
information
gathered to
prove or
disprove
hypotheses
Analyse what
the data tells us
So what? —aha,
new thought
What you should
do… and how
Consulting Skills Workshop
Hypothesis formation ensures that our
analysis is focused on our client’s problem
Define the
Issues
Form
Hypotheses
Gather Data
Analyse Data
Find Insights
Develop
Conclusions and
Make
Recommendations
to Implement
What are the
questions
keeping you
awake at night?
Statements that
provide
direction and
structure for the
analysis
© 2004 Capgemini - All rights reserved
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Factual
information
gathered to
prove or
disprove
hypotheses
Analyse what
the data tells us
So what? —aha,
new thought
What you should
do… and how
Consulting Skills Workshop
Hypotheses are developed in three steps
1
• What are the real strategic issues?
Define the
question
2Review and
Describe
Multiple
Assertions
3
• What is the impact on the organisation?
• What are the priorities?
Is there a market for white
label insurance products?
• We believe this to be true . . .
• A series of statements, not yet backed
by data
• Based on initial data search or expert
opinions
• Direct channels are
growing
• Retailers have a strong
channel and brand
• There are existing
products
• We think . . .
Form the
hypothesis
• It looks like . . .
• The right answer may be . . .
• The options could be . . .
Chubb Insurance can
access new business by
using the brand strength of
Tesco resulting Is low cost
of acquisition and profitable
business
A number of assertions need to be true for a hypothesis to be valid.
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Consulting Skills Workshop
A hypothesis should identify not only the
issue but also the cause and the impact
Think through these three stages as you create a
hypothesis to help you plan out how you will test it:
 What is the issue?
 What is the underlying opportunity?
 Where is the advantage?
“x is an
opportunity
...”
 What do you think causes the issue?
 What are the key drivers of the process?
“…due to...”
 What is the impact of the issue?
 How can we tell there is an opportunity?
“…resulting
in...”
 Why do we care?
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Consulting Skills Workshop
Our problem solving approach produces results
through answering a simple series of questions
 Is there a problem or opportunity?
 If so where does it lie?
DEFINE THE
PROBLEM
STRUCTURE
THE ANALYSIS
 Why does it exist?
 What could we do about it?
FIND THE
SOLUTION
 What should we do about it?
Fine, but IWIK H2 do this...
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Consulting Skills Workshop
Why problem definition matters
“If you don’t know where
you are going,
any road will take you there.”
-Anonymous
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Consulting Skills Workshop
In structuring a problem, break it into smaller,
easier-to-handle components AND start with
the right definitions
US Car Market
Light
Trucks
Mini Vans
Passenger
Cars
Sport
Utility
Vehicles
Big 3
Ford
GM
Chrysler
But be careful — why does this not work?
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Consulting Skills Workshop
The most important rule for any structure
you impose
"Mutually Exclusive and Comprehensively
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Exhaustive"
Consulting Skills Workshop
DEVELOP A HYPOTHESIS
What differentiates a good hypothesis from
a bad one?
Good Hypotheses Are
 On target:

Answers the core question on the
clients’ mind
 Accurate:

Embraces the entire range of
competitive or profit drivers
 Minimal:

“Occam’s razor”
Bad Hypotheses
 Cannot be refuted
 Cannot possibly be quantified
 Require you to “Boil the Ocean”
 Are so obvious that nobody can
intelligently disagree with it
 Or look like an abstract model of a
process consisting of boxes,
arrows and clouds
 Actionable:

Can be quantified and tested
 On time
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Consulting Skills Workshop
DEVELOP A HYPOTHESIS
How to find a good hypothesis
 There are proven processes to generate hypotheses:
 Talk to lots of people about the core problem
 Have a brainstorming case team meeting
 Taguchi method — ask “5 Why’s”
 Start with general validity checks for your hypotheses:
 Assume perfect rationality — how ought the business system
to behave?
 Look for analogies (other industries or problems)
 Imagine that you had perfect information — what would the
ideal analysis look like?
 Try Lateral Thinking:
 Think about the problem from a different angle
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Consulting Skills Workshop
DEVELOP A HYPOTHESIS
What if your hypothesis is proven wrong?
 You Win!
 Hypothesis-driven thinking requires frequent reviews
of the prevailing and current hypotheses:
 Do we still think they are right?
 Are we making progress towards disproving them?
 Are they at the right level of generality/predictiveness?
 Having proven a hypothesis wrong means you have
made a big step towards answering your question!
“A wise man sometimes changes his mind, but a fool never.”
-Arabic Proverb
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Consulting Skills Workshop
Summary
 To be developed – thank you!!
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Consulting Skills Workshop