Situation, Complication, Question, Answer (or Hypothesis)

Introduction

Situation, Complication, Question, Hypothesis (SCQH) is a simple and powerful problem-solving tool. It is especially useful for strategy and is part of the standard training in leading strategy consultancies such as McKinsey.

It can be used in a number of ways, from telling stories to structuring research programmes to planning projects.

It is sometimes written as SCQA, for Answer, but it is usually helpful to treat the last component as a Hypothesis, which can then be tested.

It describes a problem (situation, complication), frames a question about what to do, and finally offers a solution in the form of the hypothesis.

The hypothesis is optional. In some cases, you will only have a question at the start of your work and a hypothesis will only come later (once you’ve done work on your question).

An SCQH does two things: provides clarity on the problem (and solution) and aligns the group on that. This second factor is often as important as the first.

An SCQH is best created in a small group of people, say maximum 7-8 (but you can do more). Once you have the SCQH you can share with wider and wider groups as needed.

Allow between 2h and several days to create an SCQH depending the scale of the issue and the size of the group. The process will be faster the smaller the group and the more experience people have with the process.

Structure of an SCQH

A SCQH has four parts:

• Situation: where are we now, what’s the context.
• Complication: what’s the problem, what’s not working.
• Question: what do we need to work out, what can we do?
• Hypothesis: what we propose to do to solve the question.

Strictly each SCQH item gets one sentence though this can be relaxed to being a short paragraph. This succinctness forces one to keep things simple and really distill things down.

Example

• Situation: we’re a company making baths and we have been losing money (100k per year) the last two years.
• Complication: if we keep losing money at this rate we’ll be bankrupt in 2 years time and we don’t have any new products ready that will change the situation.
• Question: what new product can we develop and market in the next two years that will generate at least 1m in revenues and at least 100k in profit per year?
• Hypothesis: in the next 18 months we will develop and launch a new enamel bath targeted at the high-end market.

Situation

Start by telling your audience something they already know. This helps establishes relevance. As soon as they are asking themselves “I know this – why are you telling me?” you have them hooked. You now have an opening for the Complication.

Typical situations are “we have a task to perform”, “we have a problem” and “we took an action”.

Example situation: we’re a company making baths and we have been losing money (100k per year) the last two years.

Complication

“Recently the situation has changed…”

What happened next? And specifically, what’s the problem with the situation. The Complication creates tension in the story you’re telling. This triggers the Question you will ask.

Typical complications: “something is stopping us performing the task”, “we [don’t] know the solution to the problem”, “a solution to the problem has been suggested but we don't know if it will work” and “the action we took did not work”.

Often at the start you won’t be clear what is situation and what is complication. That’s fine, just put whatever comes up down

Example complication: if we keep losing money at this rate we’ll be bankrupt in 2 years time and we don’t have any new products ready that will change the situation.

Question

“So what should we do?”

The Question arises logically from the Complication and leads into the Answer.

Typical questions: “what should we do?”, “how do we implement the solution?”, “is it the right solution?” and “why didn’t the action work?”

Example question: what new product can we develop and market in the next two years that will generate at least 1m in revenues and at least 100k in profit per year?

Hypothesis

“We need to…”

The Answer to the Question is the substance of your main point. Summarise it first – completing your introduction – then break it down into details and write the main body of your presentations.’

NB: The answer is better thought of as a hypothesis in research-based scenarios.

Example hypothesis: we will develop and launch within the next 18 months a new enamel bath targeted at the high-end market

Examples

Example 1: Butcher

Situation: we’re a small family butchers in a medium-sized UK market town and we've lost so many customers (and with them, revenue) over the past few years that we've been considering closing down.

Complication: a major supermarket chain has just announced it is going to build a new store (complete with a butchers counter) on the outskirts of town.

Question: should we keep going and if not what's the best way to close down and make best use of our remaining assets?

Hypothesis: we will sell our 150-year old sausage recipe (our bestseller) to a new local farm shop and organise local press coverage, in which we will also mention that our last stock items will be selling at a discount on Saturday.

Example 2: iMed

This is a real-life SCQH for iMed. Note that this SCQH took a group of 4 people around 2 days to produce with another 2 days spent on the issue and hypothesis tree.

Situation: Medicines are expensive to research and cheap to make and millions of people need them; meanwhile funding mechanisms are not directly linked to health impact, profits are based on prices, and the existence of monopoly patents supports prices well above the cost of manufacture.

Complication: Monopoly patents fund innovation through high prices, creating an inevitable tension between access and innovation; and currently denying access to medicines for millions of people through inflated prices and lack of innovation in non-profitable areas, and failing to incentivise for health impact or efficiency of research and manufacture.

Question: What funding mechanisms can replace the tension between innovation and access inherent in the current [patent] system; incentivising innovation based on cost effective health impact, providing incentives for innovation as high as today, and providing access at close to the cost of manufacture.

Hypothesis: The best resolution to the tension between access and innovation is a remuneration rights model that removes the dilemma and offers incentives for both innovation and access; it provides a free market, state-independent mechanism resourced by the state and philanthropists that incentivises innovations via remuneration based on health impact, on condition that the innovations are free to use and unrestricted, allowing for competition in manufacturing and therefore lower prices for medicines whilst providing incentives for innovators at a similar level to today.

Next: Issue and Hypothesis Trees

The SCQA/H alone is very powerful. But you can take the SCQA a step further and turn it into a complete planning and implementation tool using issue and hypothesis trees which you can read about in the next section.