What is hypothesis driven problem solving? How do I apply hypothesis driven problem solving to business? What are the steps to hypothesis driven problem solving? This blog post explores all of these questions - and then some.
What is hypothesis-driven problem solving?
Hypothesis driven problem solving also known as "top-down problem solving" or "hypothesis driven thinking" is a form of problem-solving that starts with the answer and works backward to prove or disprove that answer. Practiced by the biggest consulting firms around the globe for its effectiveness in getting to the heart of the matter, hypothesis-driven thinking is rooted in the scientific method.
Whereas bottoms-up problem solving (a non-hypothesis-driven approach) analyzes the data/information to arrive at your answer, top-down identifies an answer and looks to data/information to validate it. Comparatively speaking, bottoms-up problem solving can be a never-ending process, whereas top-down is laser-focused - and for that reason, effective.
In business leadership, the typical problem-solving approach practiced tends to be bottoms-up problem solving, however if you take the time to learn and apply it, top-down is often much more effective, particularly when you’re dealing with a problem that’s defined and a tight timeline.
What is a hypothesis driven approach or method?
A hypothesis-driven approach is one where you state your assumptions about what you think the answer is, and then fact-find to validate or refute. This helps focus your data gathering on only the valuable insights you need vs. "boiling the ocean". It also helps to ensure you’ve thought through the entirety of the problem and that there is rigor and structure in your thinking.
How do I apply hypothesis driven thinking?
The four key steps to hypothesis-driven problem solving are simple. In a nutshell:
1) Define the problem
The first step is to define the problem. This may seem like an obvious step, but it's important to be clear about what you're trying to solve. Sometimes people jump right into solving a problem without taking the time to fully understand it. Defining the question you're trying to answer and your problem helps ensure that you're focusing on the right issue and prevents you from wasting time and energy. This may seem easy at first glance but to quote Albert the great “if I had an hour to solve a problem, I’d spend 55 minutes on the problem and 5 on the solution.” Defining your problem takes rumination and time.
2) Develop your initial hypothesis
The second step in hypothesis-driven thinking is to come up with an initial hypothesis. An initial hypothesis is a proposed explanation for an event or phenomenon that can be tested. It's important to note that a good hypothesis doesn't have to be correct – it just has to be plausible.
For example, let's say you're trying to improve customer satisfaction at your company. Your hypothesis could be that providing more customer service training will improve satisfaction, or perhaps hiring more seasoned employees/agents. This answer-driven approach gets you thinking early about the solution early on.
At this stage of the work, it's not uncommon to brainstorm multiple key hypotheses before you narrow the field.
From there, you're going to flesh out your logic taking a decision tree approach. That's thinking through what needs to be true for your hypothesis to be true. Fast forward and you will end up with a decision-tree with the 1st level being your hypothesis, the 2nd level being your supporting assumptions or logic and the 3rd level downward being the fact points that you'll need to uncover. This tree informs your work plan. Notably, there are two different types of logic trees - an issue tree and a solution tree. The various types of logic trees are out of scope for this post but tor more information issue trees, see this blog post.
Want a real world hypothesis tree to work from? Sign up to the right to claim yours here, or sign up for our Strategic Thinking training below.
3) Gather and analyze information to validate or refute your hypothesis
The third step is to gather information to validate or refute your hypothesis. This can be done in a number of ways, including surveys, interviews, focus groups, and data analysis.
It's important to note that you should constantly be gathering new information throughout the problem-solving process. You never want to stop learning – that's how you find the best solutions. In this step, ideally, you're looking for measurable evidence to validate or refute your assumptions. The term "acceptable evidence thresholds" is often used to describe the certainty you're looking to arrive at. Apply the 80/20 rule here - that’s enough evidence to get to 80% certainty. Many analytical approaches and methods can be used in this step.
Once you've gathered all of your information, it's time to analyze it and see if your hypothesis was correct.
4) Pivot your hypothesis and arrive at your solution
If the information you've gathered points to your hypothesis being correct, great! You can move on to step four. If not, don't worry – you can adjust your hypothesis and try again. Pivot to alternative hypotheses as many times as needed. Hypothesis-driven thinking is an iterative process.
With subsequent validation, eventually, you will arrive at your solution, backed by evidence. You've just shifted from many potential solutions to THE solution.
Hypothesis driven problem solving is a great way to solve complex problems. By breaking the problem into smaller parts, it's easier to develop and test hypotheses. And by analyzing the results, you can determine whether your hypothesis was correct.
It's more and more common to see hypothesis-based problem solving used in a variety of fields, including as an approach to software development.
Looking to improve your problem-solving skills? Give hypothesis driven problem solving a try. A hypothesis-driven approach is a great way to systematically solve complex problems using an analytical approach - and gets you to results that are both accurate and timely. That’s why it’s the bread and butter of the biggest consulting companies around the world from McKinsey & Company to Bain & Company to BCG, and many more.
What is hypothesis driven consulting?
Hypothesis-driven consulting is applying a hypothesis-driven approach to complex problems that arise in client engagements. It's commonly used and coveted by top consulting firms, including McKinsey, due to its effectiveness at solving business problems. It's core to the Consulting process and some expect their interviewees to approach case studies and case study interviews by applying a hypothesis approach. Amongst many consulting tools, hypothesis thinking is clutch. Trying to land a role on a top-tier Consulting Team? Prepping for a Consulting Interview? Learn this tool and you will be ahead of the game.
What problems can I apply hypothesis driven thinking to?
You can apply this thinking to a broad array of problems/opportunities. How do I diversify my revenue streams? What kind of business models should I optimize for? What's the market size of China? What's our market share in the US? Why are we seeing an increase in costs? How do we grow our customer base? What's our customer preference when it comes to returns? Why are business class ticket sales down? Why are we seeing a decline in revenue? Why are fuel costs rising? What color should we paint the fence?
A hypothesis-driven approach is a proven problem-solving process that will elevate your strategic thinking, help you craft power business strategies, accelerate your effectiveness, and is an agile practice that serves you well in today's rapidly changing climate.
Does hypothesis-driven problem solving training exist?
Due to an overwhelming need, we've created just that, a virtual training course on hypothesis-driven training that’s nested within our Strategic Thinking training. Student and/or team learning outcomes include improving your effectiveness, thinking and acting with impact, and levelling up your problem-solving skills. We call it problem-based learning at its finest. Click here to enroll. Available for individuals, teams and organizations.
Read more about issues trees, MECE principle, hypothesis driven thinking, strategic thinking, and futures thinking.
FAQ
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It’s training that teaches you to think more strategically about your work, business - and life. In the context of business, it teaches you how to make powerful and effective strategic decisions in the context of your business strategy.
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Yes, it's an experimental approach that closely resembles the scientific method.
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Hypothesis-Driven development is just another way to describe the process of taking a hypothesis-driven approach. Hypothesis-driven development is essentially a synonymous term.
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Yes, resembling components of "agile thinking", hypothesis thinking is used as a common approach to software development. Frequent real-time feedback loops are applied to develop a product.
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It's an easy four-step process - read the article above for more background knowledge.
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Stay tuned for my next blog post - I’ll cover how the method is used in strategy and in strategic decision-making
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Use cases range from macro to micro: identifying market trends, product development, crafting digital products, UX, driving customer demand, statistical analysis, statistical tests, continuous improvement, design sprints, and business development. Leadership teams often use it for solving organizational wide problems/issues and it can be applied to solve almost any typical strategy engagement.
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Yes, it can used to help work through all of these questions/problems.
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Most big firms, including Bain & Company, McKinsey & Company, BCG, etc. apply this tool in real life engagements.
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Yes and it's accompanied by (un)formal discussion, hands-on practice, mini-cases and strategy cases, and inquiry-based learning. We've worked hard to create an engaging learning process designed to be delivered to you anytime, anywhere.
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Learning and development outcomes can be found here
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Any and all working professionals are welcome - we serve business leaders, individual contributors, executives and any team looking to level up their strategic thinking. We also serve those looking to work for a management consulting firm and wanting a leg up on their competition!
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Yes, it includes a module on narrative-driven story-telling, a natural derivative of hypothesis problem-solving methods.
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An issue tree is a specific type of logic tree. See this blog post for issue trees, explained!
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MECE stands for Mutually, Exclusive, Collectively Exhaustive and forms the core of hypothesis driven thinking and logic trees. See this post for an explanation and guide on MECE.
About the Author
Lindsay provides growth and advisory services to purpose-driven brands. Named a global innovation leader and Women to Watch, you will find her at the intersection of strategy, story-telling and innovation. When she’s not collaborating with clients, she’s hitting TEDx and other stages across North America to deliver keynotes on the future of consumerism, strategy and innovation. Prior to advising and providing brand and marketing consulting services, Lindsay spent six years at lululemon crafting their global growth strategy, exploring new marketplace opportunities and growing the company into the number one yoga wear player in the world. Her experiences culminate in what she refers to as her sweet spot - where strategy, innovation and insights intersect, where the rational meets the emotive, where facts meet insights and where logic meets creativity.
