# McKinsey PST 02: Premise

This is the second theory session of the Problem Solving Test Course. I introduce premise (“if true”) questions, explain the selection criteria approach, and demonstrate it on a few examples

[TRANSCRIPT]

This is the second theory session of the Problem-Solving Test Course

In this session I will explain the key difference between the premise question group and other question groups

We will also look at algorithm to solve premise questions and also at some examples to test this algorithms in practice

Recall from the previous session that there are four major question types: premise, fact, conclusion and the last 13%

Today we are talking about the first type – premise

Premise questions have two subtypes: root-cause reason – a statement supporting or providing a certain fact and – supporting analysis information, which is an analysis of piece of information supporting, explaining or proving a certain fact

The solution algorithm for both subtypes is the same

A premise does not have to be true or based on the data in text or exhibits, it might be a completely new piece of information

However, if we assume its truth – its allows us to make certain conclusion about fact stated in the text

In comparison, fact question type – is true based on the data, you just need to interpret it

And conclusion question type – has to follow from the data

Let’s have a look at the following example

Take the fact that all my smartphones last 12 months only

We need to find a proper explanation for this fact, and here we’ve got four options:

1. I never break the smartphones in the first 11 months of use
2. I always break smartphones after 12 months of use
3. Smartphone manufacturers build unreliable smartphones to boost their sales
4. The smartphone fairy makes sure my smartphone works exactly for 12 months and breaks them afterwards

What do we need to prove here – the fact that the lifespan of my phones is exactly 12 months, so T equals 12

The first option explains why my smartphones live longer than 11 months, lets write it down

The second option explains why smartphones live no longer than 12 months

The thirds suggest that the lifespan should be small but nothing specific

And the fourth option, if true, will explain, why lifespan is exactly 12 months

The option might sound strange and unrealistic, but we are not looking for a realistic option, we are looking for an option, which if true, would best explain the fact

If we take this leap of faith – D option is a perfect match

The algorithm we will use to solve the questions of this type has three steps:

1. Restate the fact
2. Restate the option
3. Use selection criteria

At the first step, we should ask our self, what do we need to prove, support or explain

We need to establish the link between the hypothetic statements and data in hand

This link very much depends on fact and a good understanding of it – is a good essential for success

The trick is very often the question fact is stated explicitly

The question might say – the trends in exhibit X

Until we can state explicitly, what these trends are – we do not understand them

We have to go back to the exhibits or text and figure out these trends

After skimming the data, we should roughly understand where to look for information

Once we’ve figured that out, for example, the trend is that one region is growing at 10% per anum, while others remain flat – we are good to go

Just make sure we’ve noticed whether the question is a positive or negative one

Circle the appropriate word several types and always check what we are looking for – is indeed being asked

At the second step, we need to get an understanding for an answer options

We need to read the options carefully

Restate the options in simple words

Try to figure out what makes the option different

Notice, that we need to read all the options, rather than stop at the reasonably seaming right one

We are looking a best option, not for good-enough option

Finding the best is only possible under consideration of all options

At the third step, formulate, what makes options different and pick the best one

Now we have a slide with four objects on it:

1. Chair
2. Table
3. Cat
4. Bed

and we need to find out – which one is redundant?

Looking at this slide, you might wonder if I took it by mistake from kinder garden course, but the question is straightforward one and the answer is Cat, right?

But think for a moment, why is it C?

Probably because pictures A, B and D show furniture, while C shows a Cat, or while C is a living creature, when A, B and D are not, or because C is not made of wood and A, B and D are

All these statements are different selection criteria

The technique of finding them – is applicable to PST

The most popular selection criteria in PST are:

1. Subject/Predicate (trend, action)
2. Part of a statement
3. Part of a formula
4. Value chain/funnel

Let’s take a look at them

Selection criteria #1 Subject/Predicate

Fact: Salim is the best performer in his company

Which of the following, if true, would best explain the Fact?

1. Quality of Salim’s work is lower than that of his colleagues
2. Sasha is lazy and is always late for work
3. Salim works harder than anyone at the company
4. The company does not measure performance of its employees

The subject is Salim

The predicate is that he is the best performer

Using the table method be can mark those statements, that supports both subject and predicate

If answer option support subject – we put a tick in the subject column

And if answer option support predicate – we put a tick in the predicate column

A option – subject is right, but the predicate is not

B option ­ the subject is wrong (Sasha) and the predicate is wrong yet (unless Sasha and Salim are the only employees at the company)

C option ­ has a right subject and predicate, so we put double tick in the table

D option ­ is not informative at all and information is useless and somewhat contradictory to the question fact

So, we definitely see, that the C option is the right one

Selection criteria #2 Parts of a statement

Fact: Salim is the best performer in the company, while Sasha is the worst

Which of the following, if true, would best explain the Fact?

1. Quality of Salim’s work is lower than that of his colleagues
2. Sasha is lazy and is always late for work
3. Salim works harder than anyone at the company
4. Salim is the hardest worker in the company, while Sasha is the laziest

Notice, that the subject now consists of two parts

Part one – Salim is the best performer

Part two – Sasha is the worst performer

Using a table method again we putting mark in the table if option is supporting any part of question fact

Let’s look at options now

Option A supports neither the first, neither the second part the statement

Option B supports the second part, but not the first one

Option C supports the first part, but not the second one (unless there are just two people in the company)

Option D supports both parts of the statement and, obviously, its our option

Selection criteria #3 Parts of a Formula

Fact: The distance travelled by a car has increased

Which of the following, if true, would best explain the Fact?

1. The speed of a car has increased, while the time en-route has decreased
2. The speed of a car has decreased, and at the time en-route has decreased
3. The speed of the car has increased, and at the time en-route has increased
4. The speed of the car has decreased, while the time en-route has increased

Let’s use the formula to possible root-cause reason

Recall that the distance equals speed times time, so an increase in one multiplier, not in the set of decrease of two multipliers, will lead to increase

Lets us the table method with Time, Speed and Distance columns

Option A – speed is growing, time is decreasing. The result impact is not clear, because the magnitudes of change are unknown

Option B – speed is decreasing, while time does the same. The result is decrease in the distance traveled

Option C – speed and time are growing. The result is the increase in the distance traveled

Option D – speed is decreasing, time is increasing. The resulting impact is again unknown

So, our answer option is C

Selection criteria #4 Value chain/Funnel

The chain or a funnel presents a process which leads to result or series of steps

If something impacts just one step of the process – it impacts the result

If it does not impact any step – it does not impact the result

For example:

Fact: Total cost of ownership = Price of equipment +Maintenance + Energy consumption

Which of the following, if done alone, will least likely help reduce the total cost of ownership?

1. Get a larger price discount from the supplier
2. Run the equipment at full capacity to reduce cost per unit of output
3. Cut maintenance costs by working with a low-cost maintenance provider
4. Start using inexpensive solar batteries to power the equipment

Notice, that this is a “least likely” question, so we will look for the worst, rather than the best option

Let’s write down the funnel in the shorter form:
TCO = Price + Maintenance +Energy

To make an impact on TCO, we have to impact on price, maintenance or energy consumption (or combination of them)

Let’s use standard table method.

Option A – impact price, but not maintenance or energy consumption

Option B ­ does not impact the energy consumption or price, plus it might lead to increase, rather than decrease in maintenance costs

Option C ­ impacts maintenance, but now impacts price or energy consumption

Option D ­ impacts energy consumption, but not price or maintenance

So according to the options review, we can see that option C is the right answer

Let’s practice what we’ve learned today

Question #1

The marketing manager of Kosher Franks expresses concern about the impact of this price reduction campaign on consumer perception of the brand. He states that price reduction of 5% is pretty significant and may in itself be detrimental to the premium brand image, which drives a lot of sales.

Question: Which of the following statements, if true, would best support the marketing managers assertion?

1. In a recent survey, Kosher Franks consumers quoted “price” as the second most important indicator of quality in a list of ten factors
2. In a recent survey, Kosher Franks consumers quoted “price” as the eighth most important factor out of ten in their decision to buy a product
3. In a recent survey, 78% of Kosher Franks’ consumers said they would still buy Kosher Franks’ hot dogs even with a 10% price increase
4. In a recent survey, 34% of Kosher Franks’ customers said they would never consider buying another brand of hot dog

Step#1 Restate the fact

We need to figure out what did the marketing manager was saying and what assertion was

Manager assertion consists of 3 parts:

1. Price reduction of 5% is pretty significant
2. It may be detrimental to the premium brand image
3. Premium brand drives a lot of sales

Now let’s consider each option one by one

Option A ­ says that price does matter

Option B ­ says that price is not that important

Option C ­ says that 10% increase is ok for 78% of the customers

Option D ­ says about customers loyalty (about 34% of all customers)

In this case the most reasonable selection criteria will be “part of the statement” (1, 2 and 3)

Option A fits second part, but we don’t know anything about other parts of the statement

Option B is a contradiction of what the manager said and we put the crosses in 1 and 3 tables

Option C does not really tell us much, because, we don’t know if they would tolerate a price reduction

Option D doesn’t say about the client’s motivation of their loyalty

So, in this case, only A provide some useful support for marketing manager assertion

Summary

Let’s us synthesize what we have learned today

A premise does not have to be true and it might not be mentioned in the text

If we assume that it is true ­ it supports, proves or explains question fact

There are 3 steps in solving a premise question

#1 Restate the question fact in your own words

#2 Restate the options and read them all

#3 Use selection criteria. Figure out what differentiated the options. Criteria include:

1. Subject/predicate
2. Part of the statement
3. Part of formula
4. Value chain