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PRICE Framework: Hypothesis Generation

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Forming a coherent hypothesis is an instrumental tool when analyzing and addressing any business problem. It is a common approach used by management consultants. When evaluating any new, abstract business problem, it is wise to begin by forming an hypothesis related to the problem.
A popular consulting framework for forming a hypothesis is PRICE. PRICE is used by strategy consulting firms like McKinsey, Bain, and BCG. It can be used to test a hypothesis, determine if the hypothesis is valid, and answer questions, like, Does the hypothesis make sense? Should it be discarded? Should it be reworded?
This purpose of this document is to explain how to use the PRICE framework.

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  • 1. Crowdsourced Business Presentation Design Service PRICE Framework Hypothesis Generation August 31, 2013 Forming a coherent hypothesis is an instrumental tool when analyzing and addressing any business problem. It is a popular technique used by management consulting firms. The PRICE framework helps us develop a proper hypothesis. This document explains the methodology and provides template slides to be used in your own presentations. ORIGINAL PROJECT DETAILS http://pptlab.com/ppt/Management-Consulting-Basics-PRICE-Hypothesis-Generation-40
  • 2. PPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 2 PPT Lab (www.pptlab.com) is the only crowdsourced presentation design service. Get consulting-quality presentations at a fraction of the cost! Each month, we will create well over 50 slides of for our members. As a member, you will drive what business slides we create by submitting your own presentation projects to our team. All presentations will be created by a team of management consultants and follow the Consulting Presentation Framework. www.PPTLab.com support@pptlab.com
  • 3. PPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 3 The PRICE framework is a tool used for formulating and testing a hypothesis Introduction Forming a coherent hypothesis is an instrumental tool when analyzing and addressing any business problem. It is a common approach used by management consultants. When evaluating any new, abstract business problem, it is wise to begin by forming an hypothesis related to the problem. A popular consulting framework for forming a hypothesis is PRICE. PRICE is used by strategy consulting firms like McKinsey, Bain, and BCG. It can be used to test a hypothesis, determine if the hypothesis is valid, and answer questions, like, Does the hypothesis make sense? Should it be discarded? Should it be reworded? This purpose of this document is to explain how to use the PRICE framework. Problems to be solved Restrictions on scope and hurdles Individual decision makers Criteria for success Environment context P R I C E
  • 4. PPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 4 First, let’s formally define the term “hypothesis” Hypothesis Definition Note, that, by definition, a hypothesis must have 2 components—oftentimes, people provide a hypothesis that only contains the “observable phenomenon” portion. A hypothesis is a proposed explanation for an observable phenomenon The above pictured is the Andreas Cellarius hypothesis, demonstrating the planetary motions in eccentric and epicyclical orbits THIS IS A PARTIAL PREVIEW You can download the full document at http://PPTLab.com. PPT Lab is a crowdsourced presentation design service.
  • 5. PPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 5 The PRICE framework dissects the hypothesis into 5 components, as defined below PRICE Framework P Problems E Environment R Restrictions C Criteria I Individual Hypothesis PROBLEMS to be solved • The first step is to identify the problem(s) to be solved • Push hard to find 1-3 very high level questions that will efficiently guide the rest of the work • Example: How can we capture channel advantages relative to competitors A and B? RESTRICTIONS on scope and hurdles • Try to keep these restrictions at a high- level, related to the original problem statement • Example: Attributable product ROCE must exceed 20% INDIVIDUAL decision maker(s) • Identify the decision makers • Note that different decision makers require different levels of detail (e.g. Board-level vs. C-level vs. Director vs. Manager all need different levels of info to perform their jobs) CRITERIA for success • In defining criteria, be as specific as possible • Criteria can be changed down the road ENVIRONMENT context • Give a brief summary of the client/industry situation to put the problem in context THIS IS A PARTIAL PREVIEW You can download the full document at http://PPTLab.com. PPT Lab is a crowdsourced presentation design service.
  • 6. PPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 6 By setting up the context, we can formulate the proper hypothesis that addresses the right questions and discussions PRICE Framework P Problems E Environment R Restrictions C Criteria I Individual Hypothesis By setting up the context for our hypothesis, we can use the PRICE methodology to: • Frame the problem • Bring out the right questions • Draw out the right discussions THIS IS A PARTIAL PREVIEW You can download the full document at http://PPTLab.com. PPT Lab is a crowdsourced presentation design service.
  • 7. PPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 7 … that can be answered, if we frame our hypothesis in the format “Due to… We can… Resulting…” Hypothesis Structure – Example (2 of 2) What is creating the phenomenon? What is the observable phenomenon? What is the outcome of the phenomenon? DUE TO securing exclusive distribution rights with Channel Partners A and B WE CAN reach a wider audience and dominate the top 5 distributors RESULTING IN A ROCE of 30% for the Emerging Markets. … … The hypothesis must state the desired outcome of the phenomenon (e.g. ROCE of 30% in Emerging Markets). THIS IS A PARTIAL PREVIEW You can download the full document at http://PPTLab.com. PPT Lab is a crowdsourced presentation design service.
  • 8. PPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 8 Insert headline PRICE Framework TEMPLATE P Problems E Environment R Restrictions C Criteria I Individual Hypothesis PROBLEMS to be solved • Filler text, filler text, filler text • Filler text RESTRICTIONS on scope and hurdles • Filler text, filler text, filler text • Filler text INDIVIDUAL decision maker(s) • Filler text, filler text, filler text • Filler text CRITERIA for success • Filler text, filler text, filler text • Filler text ENVIRONMENT context • Filler text, filler text, filler text • Filler text
  • 9. PPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 9 Insert headline PRICE Framework TEMPLATE Problems to be solved Restrictions on scope and hurdles Individual decision makers Criteria for success Environment context P R I C E • Filler text, filler text, filler text • Filler text, filler text, filler text • Filler text, filler text, filler text • Filler text, filler text, filler text • Filler text, filler text, filler text • Filler text, filler text, filler text • Filler text, filler text, filler text • Filler text, filler text, filler text • Filler text, filler text, filler text • Filler text, filler text, filler text Insert bumper.
  • 10. PPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 10 Insert headline PRICE Framework TEMPLATE Hypothesis Definition PROBLEMS RESTRICTIONS INDIVIDUALSCRITERIA ENVIRONMENT Insert bumper.
  • 11. PPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 11 Insert headline PRICE Framework TEMPLATE Insert bumper. What is creating the phenomenon? What is the observable phenomenon? What is the outcome of the phenomenon? DUE TO filler text filler text filler text filler text WE CAN filler text filler text filler text filler text RESULTING IN filler text filler text filler text filler text. … …
  • 12. PPT Lab (www.PPTLab.com) – Crowdsourced Business Presentation Design Service 12 PPT Lab (www.pptlab.com) is the only crowdsourced presentation design service. Get consulting-quality presentations at a fraction of the cost! Each month, we will create well over 50 slides of for our members. As a member, you will drive what business slides we create by submitting your own presentation projects to our team. All presentations will be created by a team of management consultants and follow the Consulting Presentation Framework. www.PPTLab.com support@pptlab.com