DISCOVERY

Hypothesis Generation
Gemini University 2000
Our analysis approach must be driven from hypotheses
From Hypotheses to Benefits Calculate
Calculate and
and
Validate benefits
Validate benefits

Quantify
Quantify
Opportunity
Opportunity

Generate
Generate Findings
Findings
From Data
From Data

Analyse
Analyse Data
Data From
From
Diagnostic
Diagnostic

Complete
Complete
Diagnostic
Diagnostic

Develop
Develop Diagnostic
Diagnostic

Create
Create Hypothesis
Hypothesis
to
to Guide Analysis
Guide Analysis
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A&D Hypothesis Generation 2000
The A&D process is based on proving hypotheses through
sound data
The A&D Diagnostic Process
Decide
Decide what
whatyou
you Hypothesis Generation
think
think is goingon
is going on

Agree the story

Decide
Decide how how you
you Storyboarding with the lead
will
will tell thestory
tell the story

Provide Diagnostics Agree the data

Provide the
the
evidence - data collection with the client
evidence
- analysis

Findings
Tell - sound auditable data Tell the findings
Tellthe
thestory
story
- financial impact to the senior
- shock/AHA value clients
- would someone pay
to find this out?
Quantify
Quantify the
the
opportunities Opportunity Charting
opportunities
Tell the senior
clients how to fix
Decide it
Decide actions
actions Programme Design
required
requiredtotorealise
realise
the
the benefits
benefits - common themes
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A&D Hypothesis Generation 2000
Unsound data and poor planning can jeopardise the
process and the go-ahead
The A&D Diagnostic Process
Decide
Decidewhat
what you
you Hypothesis Generation
think
think is goingon
is going on What do you
mean, it’s the
Agree the story worst you’ve ever
Decide
Decide how howyou
you Storyboarding with the lead seen???
will
will tell the story
tell the story

Provide Diagnostics Agree the data

Providethe
the
evidence - data collection with the client
evidence
- analysis

Findings
Tell - sound auditable data Tell the findings
Tellthe
thestory
story
- financial impact to the senior
- shock/AHA value clients
- would someone pay
to find this out?
Quantify
Quantify the
the
opportunities Opportunity Charting
opportunities
Tell the senior
clients how to fix
Decide it
Decideactions
actions Programme Design
required
required to
torealise
realise
the
the benefits
benefits - common themes
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A&D Hypothesis Generation 2000
Every hypothesis should identify not only the issue but the
cause and the impact as well

Think through these three stages as you create a hypothesis to help you plan
out how you will test it:

• What is the issue? “x is sub-optimal...”

– What is not working?
– Where is the process broken?

• What do you think is causing the problem? “…due to…”

– What are the key drivers of the process?

• What is the impact of the issue? “…resulting in…”

– How can we tell there is a problem?
– Why do we care?

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A&D Hypothesis Generation 2000
 Make testing hypotheses easy for yourself
1. Hypothesis A: We are not getting the most from ??
our IT systems

–This would difficult to go out and test as it is too vague -

?
exactly what type of probe could you do?

Over
Overhalf
halfof
ofour
oursites
sitesdodonot
notuse
usethe
thefull
fullfunctionality
functionality
of the SAP system
of the SAP system
IT Focus on
2. Hypothesis B: We are not getting the best out of % IT Spend on
Training
training means
full
our IT systems because a lack of training budgets functionality

% Functionality used
for recent IT implementation has prevented full
functionality of systems being used across our
sites. A B C D E

–This would be much easier to go out and test: Site

Site Use
Use Cost
Cost

• % IT spent on training (compare to previous years) A

A
Scheduling
Scheduling
deliveries
deliveries
Manual
Manual
Invoicing/QC
Invoicing/QC

• Diagnostic on what % full functionality is being used: B

B
Scheduling
Scheduling
deliveries
deliveries and
and QC
QC
Manual
Manual invoicing
invoicing
1994 1995 1996
– Costs of non-use (e.g. manual data entry) C
C
Deleveries/QC
Deleveries/QC
and
and invoicing
invoicing
Full
Full use
use

– Compare across sites

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A&D Hypothesis Generation 2000
Hypothesis driven storyboards

PURPOSE APPROACH STRENGTHS SUMMARY FINDINGS

STUDY TITLE

• Why this issue is • What we did, who we • What we can build • Key messages from
important talked to upon this panel set
• What is the working
hypothesis

FINDINGS
THE PANELS CONCLUSIONS OPPORTUNITIES NEXT STEPS
THE
THE
THE

• What we found • So whats • What has to be done • What follow up work

and what benefit is needs to be done
likely to be (financial,
non-financial)

• Project oriented

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A&D Hypothesis Generation 2000
The storyboarding process translates hypotheses into a
compelling story

• Base the story board on the hypotheses

• Sketch it on paper
– 6 panels per A4 sheet
– Do it quickly!
– Sketch graphs to prompt analytic design

• Agree it with the lead and team manager

• DO NOT GO OUT INTO THE CLIENT ORGANISATION TO CARRY OUT

STUDIES WITHOUT HAVING DEVELOPED AND AGREED YOUR
STORYBOARD!

Storyboarding
Storyboardingalso
alsominimises
minimisesthe
therisk
riskof
oflast
lastminute
minuterework
reworkon
onthe
thenight
night
before the update...
before the update...

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A&D Hypothesis Generation 2000
Breakout 1 - Hypothesis Generation
Breakout 1 - hypothesis generation briefing

• For your stream, create 6 hypotheses and idea(s) on how you would test
each one

• Write them up on the acetate provided and be ready to present back to the
client team for their builds

• Remember to think through issue, cause and impact.

• Back in the team room by 13.00 (remember to get some lunch!)

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A&D Hypothesis Generation 2000
Breakout 1 - Hypothesis Generation deliverable
Stream …………………..

Issue Cause Impact H2 Test

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A&D Hypothesis Generation 2000
Tesco hypotheses
THE A&D BRIEF

Hypothesis 1: The delivery process to stores and the stock

management within the stores can be improved, Cont’d
• In-store Stock Efficeincy.
– Availability needs to be improved.
• There is a deterioration of availability throughout the day and peak trading period.
• Replenishment stock can often not be found easily in the back-store.
• There is a need to improve night-fill efficiencies in order to increase day time responsiveness.
• Re-packing of roll cages after night fill needs to be logical.
• Wastage could be reduced through better management of outcodes.
• There are major opportunities in promotions stock-out.
• Missing and inaccurate SELs account for much of the availability and checking problems.
– Back store organisation needs to be improved.
• Access to roll cages and hence stock visibility needs to be improved.
– Back Office systems could be improved to support stock management better.
• There is unnecessary daily scanning of out of stocks known to be unavailable.
• There are time-consuming manual processes ie. on SEL changes.
• There is weekly price checking on 50% of stock.
• Complication of procedures exaggerate human error.
• Promotional changeover is a nightmare.
• Range changes are time consuming.
• Daily stock counting should be unnecessary.

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A&D Hypothesis Generation 2000
THE A&D BRIEF

Hypothesis 2: Productivity can be improved

– There are inefficiencies in the staff planning and scheduling process for stores.
• Current store level staff planning often ignores central systems and standard models.
• Stores seem to have their own ways of managing their staff and the staffing structure.
• Alignment to meet customer demand can be optimised and checkout, shelf-filling and night fill all
have major opportunities.
• Better tracking of customer movements and basket size can help optimum staff planning.
• There is room for improvement in the planning of overall staff numbers and recruitment for new
stores.
• There is room for improvement in multi-skilling levels.
• Current productivity measures are neither used well or understood.
– Staff activities need to be refocused towards value-added activities.
• Changes in operational processes should be reflected in staff activities.

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A&D Hypothesis Generation 2000
THE A&D BRIEF

Hypothesis 3: Behavioural change is needed

– Being Number One risks complacency.
• Many store staff have no perception of the need to change.
• There is lack of questioning of current processes.
• More rigorous customer satisfaction measures could motivate change.
– Measurement criteria are sub-optimal.
• There is a focus on turnover not profit.
• True profit and loss accountability will increase entrepreneurialism and produce cost efficiencies.
– Decentralisation is working well in the stores but means disconnects with Head Office.
• There is some mismatch between store and head office processes.
• There is evidence of local overrides of head office instructions.
• There is a perception that relations with Head Office have deteriorated.
• There is a need to re-evaluate the communication flows in order to facilitate management decision
making.
• There is evidence of strong informal networks of influence.
• Systems implementation depends on local interpretation.

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A&D Hypothesis Generation 2000