Most small businesses can’t afford the multimillion-dollar services of top management consulting firms to aid in making organizational decisions. Although resource constraints can impede the use of outside consultants, all businesses can benefit from embracing a core principle of the world’s leading consulting firms: hypothesis-driven thinking.
Hypothesis-driven thinking involves developing a supposition for the problem early in the process. A hypothesis is your best, educated guess at explaining a problem. It is not merely a conjecture; rather, it should be based on experience or a preliminary data analysis. Management consultants ask many questions before formulating their hypotheses. Internal managers should also gather information from a host of constituents, including those at the operational level.
Keep in mind the following as you embrace this new type of thinking:
It must be an underlying problem, not a symptom. It is common to perceive a problem and immediately start working on a solution, but the root problem must be carefully isolated first. Quickly jumping to an explanatory theory without much thought can be expensive, especially if the wrong solution is pursued and implemented. Be cautious of addressing symptoms instead of the underlying problem.
It starts with strategic thinking. Hypothesis-driven thinking embraces the scientific method and begins with a strategic perspective. Managers must be careful to not get mired in lower-level issues and the minutiae of detail. Rather, view the situation as an outsider or a “fly on the wall” in order to see the issue from a strategic vantage point. From that view, the experienced manager can formulate a theory. Creativity is important in constructing hypotheses, and managers must be willing to explore new ideas that may be considered outside the box. Indeed, managers should treat their organizations as an experimental laboratory, where many possibilities may exist for defining the problem. Then by selecting the most promising proposition, the manager can set out to either confirm or refute that initial belief.
It can be messy. Crafting organizational hypotheses can be a disorderly process. Many different stakeholders, intricate interdependencies and convoluting factors exist. Sometimes, multiple alternatives may be beneficial. There may not be one optimal solution.
It is an iterative process. Use caution when constructing hypotheses. The postulation should be testable and the manager open to being proven wrong. It is through this iterative process of proposing a hypothesis, testing, possibly refuting, and then refining or proposing a new premise that hypothesis-driven thinking can be useful and successful in solving business problems.
It could be wrong. As a faculty member, I have spent significant time conducting research studies and publishing articles on behavioral issues in organizations. Using the scientific method, I would define a research problem, develop theories I believed depicted actual phenomena, use data to test those hypotheses, and find that my analyses either confirmed or refuted my suspicions. Sometimes my hunches were right, and sometimes they were not. Many times, in a follow-up study, I would redefine the hypothesis and begin the process again. The same method can be used in business—but managers must be willing to be proven wrong. Much research notes that many managers are reluctant to be shown that their hunches or original assumptions are not on point. Consequently, even though the scientific method was initially used, the optimal solution was not tested because the wrong hypotheses were proposed.
Managers, don’t despair if your hypotheses are proven wrong. It is part of the iterative process of getting it right.
Elizabeth Rozell, Ph.D., is a professor of management and associate dean of the College of Business at Missouri State University. Rozell is director of the MBA program. Her specialties include organizational behavior, leadership and emotional intelligence. Email: email@example.com.
This article appeared in the January 21st, 2017 edition of the News-Leader and can be accessed online here.