# Analytical Problem Solving- Types of Reasoning

To solve any problem we need to have some way of breaking down the problem. There are two main ways of reasoning to that effect-

• Deductive Reasoning–  This is also called as “Top Down” approach or “Formal Logic” approach. The key here is to form hypotheses to explain a certain phenomenon and then go to reject or accept related hypotheses. The conclusions and recommendation coming out from this sort of reasoning are more certain and factual in nature.
• For example, let’s say you are trying to explain why a certain car gives lower miles per gallon. Because you know the business and have more context on this problem, you can start with potential hypotheses-
• Weight of the car is high
• Car has higher number or cylinders
• Car has higher horse power
•  and so on…

You will check each of the above hypotheses and reach to a definite conclusion.

• Inductive Reasoning– On the other hand, this is a “Bottom Up” approach or “Informal Logic” approach. This sort of reasoning is more exploratory in nature. The end goal is to form some hypotheses to give possible reasons to explain certain phenomenon.
• For example, let’s say you are trying to explain why sales of an eCommerce company has gone down in a particular quarter. You may begin by an exploratory analysis where you can begin with potential driver factors such as-
• Marketing spend of the company
• Pricing
• Competitive landscape
•  Macro economic factors

You will do data analysis to correlate each of the above factors to the sales and find potential reasons or build potential hypotheses to be tested further.

Cheers!