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What are the key steps in formulating a clear hypothesis?

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Crafting a hypothesis is a foundational step in Business Intelligence (BI), which involves the analysis of data to inform business decisions. A clear hypothesis provides direction for data analysis and helps to focus on specific outcomes or relationships. It's essential to understand that a hypothesis is a testable statement that predicts a possible explanation to a problem or a relationship between variables. As you embark on formulating a hypothesis, you must be precise and ensure that it can be tested through data analysis.

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Akande Sekinat

Freelancing Data Analyst | Tableau Developer | Helping Businesses Make Data-Driven Decisions with Tableau, SQL, Excel…
Atul Anand

Senior Data Scientist L2 @ Publicis.Sapient

1 Define Problem

The first step in hypothesis formulation is to clearly define the problem you're addressing. This involves understanding the business context and identifying the specific issue that requires investigation. Your problem statement should be concise and focused, as it sets the stage for developing a hypothesis. Consider the implications of the problem on business operations and what insights would be valuable in addressing it. A well-defined problem guides the direction of your research and the formulation of a hypothesis that is relevant and actionable.

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Akande Sekinat

Freelancing Data Analyst | Tableau Developer | Helping Businesses Make Data-Driven Decisions with Tableau, SQL, Excel & Python
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To clear a hypothesis question, start by formulating a clear hypothesis. This involves stating both the null hypothesis (H?), which suggests there is no effect or difference, and the alternative hypothesis (H?), which suggests there is an effect or difference. Next, choose the appropriate statistical test based on your data type and distribution, such as a t-test, chi-square test, or ANOVA. Set the significance level, typically at 0.05, representing a 5% risk of concluding that an effect exists when there is none. Collect and prepare your data through experiments, surveys, or observations, ensuring it is clean and ready for analysis.

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Atul Anand

Senior Data Scientist L2 @ Publicis.Sapient
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It helps to write down the problem in words, this should always be the first step. One can then refine the problem by segregating or identifying the claim from the problem statement.

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2 Gather Data

Before you can formulate a hypothesis, you need to gather relevant data. This step is crucial because the quality and relevance of your data directly impact the validity of your hypothesis. Start by identifying the data sources that can provide insights into the problem at hand. Ensure that the data is accurate, reliable, and sufficient to support a thorough analysis. Remember, the goal is to collect data that will help you establish patterns or relationships that can be tested through your hypothesis.

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Atul Anand

Senior Data Scientist L2 @ Publicis.Sapient
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While gathering the data: 1. your data should be diversified and free from biases. 2. Try not to put your own bias in the dataset. 3. Try to gather with as large sample as possible. 4. Repeat your experiment as you gather more data. 5. The data should ideally be representative of the real world distribution.

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3 Analyze Trends

With your data in hand, it's time to analyze trends and patterns that could inform your hypothesis. Look for correlations, sequences, or any anomalies that stand out. This analysis will help you identify potential causes or effects related to your problem statement. It's important to approach this step with an open mind, as preconceived notions can lead to biased hypotheses. The insights you gain here will be instrumental in crafting a hypothesis that is both testable and meaningful.

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4 Formulate Hypothesis

Now, based on your understanding of the problem and the data analysis, you can formulate your hypothesis. This should be a clear, concise statement that expresses a predicted relationship between variables or an anticipated outcome. Ensure that your hypothesis is specific and testable within the scope of your BI tools and capabilities. It should also be relevant to the problem you're trying to solve, providing a clear path for investigation and analysis.

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Atul Anand

Senior Data Scientist L2 @ Publicis.Sapient
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Formulating hypothesis in simple terms is formulating a claim. A claim with usually have a form in the terms of average or mean. for example - at an average the defect in a product is less than x. Remember that you want to accept of falsify your hypothesis/claim based on data you gather and how much rare that average is. It helps to specifically write the hypothesis explicitly in terms of averages first.

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5 Test Rigorously

Once you've formulated your hypothesis, it's essential to test it rigorously. This involves setting up experiments or models that can validate or refute your hypothesis. Use your BI tools to analyze the data in the context of your hypothesis, looking for evidence that supports or contradicts it. Be thorough in your testing, as this will determine the strength and reliability of your conclusions. A well-tested hypothesis becomes a valuable asset in making informed business decisions.

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6 Refine Insights

After testing your hypothesis, you may need to refine it based on the insights gained. This could involve tweaking the hypothesis itself or rethinking the approach to data analysis. Refinement is a natural part of the hypothesis-driven inquiry, as it helps to sharpen the focus and improve the accuracy of your findings. Take the feedback from your tests and use it to enhance your hypothesis, ensuring that it is as clear and actionable as possible.

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7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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What are the key steps in formulating a clear hypothesis?

1

2

3

4

5

6

7

1 Define Problem

2 Gather Data

3 Analyze Trends

4 Formulate Hypothesis

5 Test Rigorously

6 Refine Insights

7 Here’s what else to consider

Business Intelligence

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What are the key steps in formulating a clear hypothesis?

1

2

3

4

5

6

7

1 Define Problem

2 Gather Data

3 Analyze Trends

4 Formulate Hypothesis

5 Test Rigorously

6 Refine Insights

7 Here’s what else to consider

Business Intelligence

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