Summary of HOW TO SOLVE PROBLEMS - How do consulting firms work (hypothesis-based problem solving explained)

Main Ideas and Concepts

• Hypothesis-Driven Problem Solving:
  • This methodology is widely used in management consulting, including firms like BCG and Bain.
  • It is applicable beyond consulting, useful for anyone solving business problems.
• Key Characteristics:
  • Starts with a business problem and involves defining the project scope and outcome.
  • Focuses on data collection and analysis to address complex issues.
  • Encourages forming hypotheses early in the problem-solving process rather than waiting until all data is collected.
• Process Overview:
  • Identify the business problem (e.g., declining profits).
  • Formulate hypotheses based on existing knowledge.
  • Test and refine these hypotheses through data collection and analysis.
• Practical Application:
  • Example of a mobile payment service entering the Brazilian market:
    • Hypotheses might include market growth, affinity for mobile payments, product attractiveness, and competition levels.
    • Initial hypotheses guide the data collection process and help structure the analysis.
• Iterative Approach:
  • The process is iterative; hypotheses can be verified or falsified, leading to adjustments in conclusions and recommendations.
• Project Structuring:
  • Break down the project into key drivers or components.
  • Apply the MECE (Mutually Exclusive, Collectively Exhaustive) principle to ensure thorough coverage without overlap.

Methodology Steps

• Define the Business Problem:
  • Understand the challenge faced by the management.
• Establish Initial Hypotheses:
  • Ask what you already know and what potential solutions could be.
• Conduct Data Analysis:
  • Collect data relevant to the hypotheses.
  • Focus on verifying or falsifying the initial hypotheses.
• Iterate and Refine:
  • Adjust hypotheses based on findings from data analysis.
  • Ensure conclusions remain valid even if some hypotheses are rejected.
• Structure the Project:
  • Translate management objectives into project objectives.
  • Break down the project into modules or workstreams.
• Communicate Findings:
  • Be prepared to present initial hypotheses and findings to stakeholders.

Speakers and Sources

• Heinrich: The main speaker, sharing insights from his experience in consulting and providing practical advice on Hypothesis-Driven Problem Solving.
• Firm Learning: The channel where this video is featured, aimed at helping individuals succeed in their early careers.

Notable Quotes

— 03:00 — « This is more of an academic approach. You need to look into everything you do all your research and then maybe in the very end you can come up with a solution. »

— 03:22 — « The key to being successful in business is always already having some kind of goal, some key message, some key result already in your head. »

— 06:24 — « This hypothesis driven approach is very helpful because on day one you are asking yourself, okay what would it mean for a country to be an attractive target for market entry. »

— 09:09 — « If you mess this up, then like your whole and end of the structure will be messed up and you will not get to the right results. »

— 09:48 — « Whenever you falsify an hypothesis, you need to ask yourself whether the conclusions that you hypothesized now are still valid. »

Category

Educational

Video