We started the session with two problems in mind. First, how do we cover all the aspects of a business? For that, the solution that you will use is frameworks. But what happens after you have applied the frameworks?

After the interviews, you will have possible reasons or causes for the problem that your company or the client was facing. The main focus point is that it is still a "possible" cause. Therefore, we use the term 'hypothesis'. In this session, you will learn the process of formulating the hypotheses using multiple frameworks.

As a part of the course, we have included multiple frameworks that have been taught using different case problems. This practice aims to help you understand how to reach to the final hypothesis using the different frameworks. Let's start with the issue tree framework.

Issue Tree Framework

Issue tree framework is one of the most effective methods to approach a problem. The way it works is by disintegrating the problem into components, and then drill down to multiple hypotheses at the end of each branch.

Here, Soudhakar tries to explain the issue tree with the help of a business case. First, you will learn about the framework, and in the next segment, you will come across the business case. Let's proceed to the video.

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In the framework, the big complex problem is continuously decomposed into simpler issues. At last, you will end up with a bunch of hypotheses. This will be clearer with the image below.

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To elaborate more on the example discussed in the video, suppose you are working over the falling profits in the company. The basic formula of the profits earned is 'Total revenue - Total cost'. Therefore, it will be a good decision to branch the problem of profits into two components: Revenue and Cost. The next step would be to explore these branches further. You can ask for the past trend over both the cost and the revenue of the company. In the case discussed above, the revenues are increasing. Therefore, you could prioritise the cost branch and then drill deeper into it. You have structurally divided the problem and are asking questions which will help you to move closer to the problem.

One thing that you should note is every hypothesis can't be tested. As you proceed ahead, you should always prioritise the hypotheses based on the impact they have on the problem. One rule that can help you with this is the "Pareto rule" or the "80:20 rule". According to this rule, roughly 80% of the effects come from 20% of the causes. Hence, you should try and identify these hypotheses and prioritise them in the solving order.

It can be really difficult to build a tree on a sheet of paper as you don't know how many branches will be there at the end. The same issue will also occur with MS Excel or MS Powerpoint. Therefore, to build an issue tree in an efficient and easy way, you can use the tool, Coggle. Let's see how you can make issue trees in Coggle.

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Now you know an easy way to form an issue tree. Before you start with the case and implement the framework, there are certain rules that you should be aware of. They will be very handy when you are working an actual case with your company or the client.

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When using the issue tree framework:

You should always ask the question: "How did this problem occur?"
The answer will be: "This may be caused either by this or by this." You can see that the question 'How?' has helped you break the problem into simpler components.
You proceed from the main problem to the lower branches based on the response of the question 'How?'. You need to analyse the response at each level and keep drilling down into the problem.
The best issue trees are mutually exclusive and collectively exhaustive (MECE). Mutually exclusive means there is no overlap between the different branches you have broken the problem in. Collectively exhaustive means that the sub-components of your issue tree cover all the potential causes of the problem. For example, in the profitability problem mentioned above, you can break the issue into either a cost problem or a revenue problem. They are mutually exclusive and given that "Profits = Revenue - Cost", the problem can come from either revenues or costs. This shows that they are collectively exhaustive.
You should always try to reach a logical hypothesis at the end of the branch. Hence, every time you want to break the problem into multiple components, there must be a reason behind it. You should not use any arbitrary assumptions during the entire process and analyse the interviewee's response to proceed ahead.
Always follow the practice of prioritising the hypothesis that you have at the end of the branch. It helps you to identify the root causes that need to be dealt with first to reduce the problem. This has been discussed above as the "Pareto Rule".

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In the next segment, you will apply your learning on the negative profitability case discussed before.