In Seven Steps to a Sound Strategy we outlined the phases of strategy development. This is the point at which the rubber meets the road. You’ve developed a problem statement, collected information, developed a research plan, carried out the research, and now you have to decide what it all means.
The goal of this phase is simply to build a logical argument that connects your problem statement to a comprehensible explanation of the market and the opportunities available to you, via the research data you have collected along the way. In other words, a good hypothesis takes your audience on a journey that begins with the problem statement and situation analysis, and proceeds to a clear view of actionable alternatives that will help your business and address the problem statement. Perhaps this seems obvious. It’s not. It’s difficult to simplify all the materials without losing the subtlety of different customer insights. If’t difficult to make tradeoffs, and more difficult to sell them internally to your stake-holders.
The two key concepts are understanding your audience, and organization.
- Your audience means the people to whom you have to deliver the strategy recommendations. They have prejudices, certain levels of experience, specific responsibilities, and so on. Your hypothesis is actually a test vehicle for a final strategy that you will use to gain the support of your audience. Hypo is Greek for “under”, and so a hypothesis is really an early-stage, slightly unrespectable thesis, or set of assertions. It’s tentative by definition, but it’s also based on your thorough examination of the market, so it’s of high value. Think about the needs and responsibilities of your audience, and try to organize your ideas in ways that those people can support or challenge based on what they already know, coupled with the new data you provide.
- Organization is about frameworks and what you choose to focus on. Most marketers are familiar with frameworks—systems like the SWOT analysis, or the Boston Consulting Group 2×2 product matrix. These are simply organizational ideas that help position or explain what’s going on in a market. I am a big believer in using existing frameworks and making up new ones to help create clarity. Good frameworks are simple, and don’t require a lot of explanation. Their purpose is to allow your audience to focus on the salient points in your analysis. By building a good framework or two, you can quickly communicate quite complex analyses and suggest specific action plans.
One good book about frameworks that I’ve used is The Marketer’s Visual Toolkit – it explains a number of ways of presenting ideas visually, from a variety of sources.
Some of the elements of a good hypothesis are:
- A re-iteration of the problem statement—this creates alignment with the audience on the purpose of the hypothesis and strategy project.
- A reminder of the process you went through—to increase credibility of the results.
- A situation analysis that connects your problem to the initial data you gathered.
- An illustration of the opportunity that exists—a clear view of a before and after state for your business.
- A range of prioritized options—the choices that lie in front of you, with the logic that leads to the proposed priorities.
- Initial cost and benefit analysis. In the end it all comes down to spending or divesting, or both.
- Unanswered questions—if there are any significant issues still outstanding.
- Next steps. The next steps are about validation, answering any open questions, and making firm recommentations. These will be covered in up-coming articles. Your audience will be more comfortable if they know how the process proceeds.
- Ask for the order. At this stage you’re really asking the audience to accept your logic, your choice of framework, and your priorities. It’s quite OK if they have additional questions, or if they change your priorities, because that’s why you expose the hypothesis rather than waiting for the final presentation.
There are many ways to present a hypothesis, and the right one will depend on the nature of the problem. I have used timelines, risk/reward graphs, spider charts, break-even analysis, brand perception clustering, perceptual axis modeling, and many more structures. But with a well-organized hypothesis, you’re in the best possible shape to get good feedback, and to proceed to validation and final recommendations.