5 Tactics To Stand Out In Your Profitability Case Interviews

the other day I was talking to candidate who had a question about profitability cases and his question was quite simple he said Bruno I can always finish my profitability cases and I can always get to the right answer but I'm not sure how to stand out in them I see other people going through the same process as I do I see other people get into the same results so how does the interviewer can differentiate one candidate from another and how can I stand out so because I got this question and I thought it was an interesting question that maybe I've used too many of you who are preparing for interviews at McKinsey Bain BCG I decided to put up this video and show you five ways for you to stand out in your profitability cases so let's start with tactic number one and that tactic is to acknowledge the business model of the client company now what most candidates do when they get a profitability case is that they start the ritual or profit equals revenues minus costs revenue equals price times quantity costs equals fixed costs and variable costs do we have data on that well everyone does that it's in the case interview books and here lies an opportunity for you to differentiate yourself to stand out by acknowledging the business model of the clients company whenever your memorizing and parroting out things from the case interview book you can be better by making more specific so one way to do this is to break down profits in another way that makes more sense so let me give an example imagine your client companies a conglomerate and they have four five four or five different businesses you can break down profits of this conglomerate into the profits of each business this is much stronger than just say profits equals revenues minus costs because it's just weird right different businesses have different revenue and oops a second way a second method you can do to acknowledge the business model of the client company is to break down revenues into a way that's more appropriate to the business so let me give an example imagine you have a telecom company that's going through a profitability problem if you just say revenues of this telco equals price times quantity it's just weird right price of what of a megabyte of a minute receiving krauser or ongoing cost it's just a little bit weird in much more intuitive way to break down revenues in this case would be to say that the revenues of a telco equals the number of customers and the monthly revenue per customer or the annual revenue per customer it just makes much more sense to the business now a third way to acknowledge the the business model of the company that we are working with is to get more specific on the costs now a lot of people who say costs are fixed and variable but they're not saying what are the main fixed costs and what are the main variable costs so in our telecom example you can say that the main fixed costs would be infrastructure marketing and probably the retail stores and that the main variable costs would be and I'm saying variable costs per customer would be installation billing and customer service now you don't have to mention all the costs because fixed and variable is missing but you get much more insightful and you get you get much more specific hypotheses about the business model of your client when you mention the specific cost lights so tactic number want to send out an a profitability case is to acknowledge the business model of the company you're working with not just using the generic if to tree that everyone uses which leads us to tactic number two to make a step-by-step plan before your issue tree so even if you have a custom issue tree should you jump into this issue tree so that's what most people do well the telecom company is suffering a profitability problem they want your help how will you help them and then most people just jump into profits equals revenue minus cost now the Perkins it will use the generic issue tree the good candidate as we've mentioned in the last tactic will use a customizes issue tree that takes into consideration the business model of the company but a better candidate will craft a step-by-step plan to solve that profit problem so they'll say something like ok on step number one I'm gonna find out the reason for the profit decrease and to do that I'm gonna use this issue tree revenues and costs revenues is number of clients and the revenue per client these are the main fixed costs these are the main variable costs now in step number two I'm gonna get to the root cause of the problem and understand why it happened and on step number three I'm gonna think of solutions to that problem and then think of ways to implement them so you're basically giving a step by step plan for your clients to solve their problem and this is much more similar to what consultants do in real life I mean imagine you were real consultant you have an executive from a telco even the CEO of a telco come into your office and asking for help they say their profits are decreasing they don't know what to do can you imagine in real life you coming up and say well revenues profits equals revenues minus costs and then you have fixed variable costs they're like okay dude I know that I'm a I'm the CEO of a company I know that it's not very realistic now a much more realistic thing is okay so the way we can structure this project is to first find out the root cause of the problem what's causing it what's causing your profit decrease then we're gonna find solutions and third we're gonna pick the two or three best solutions that are easy to implement and we'll bring you the best results now that leads us to tactic number three you've done your step by step process you've built your customized issue tree tactic number three is to get to the root cause now you should be doing that already right getting to the root cause is essential to solving any problem but a lot of candidates are not doing it so if you do it you're gonna stand out from the other candidates now getting to the root cause requires two things and most people just do one of them the first one is to get into the numerical cause so for example you have a profit decrease that's caused by either a revenue or a cost problem let's say it's revenues now that's because either the number of customers has gone down or the revenue per customer let's say it's number of customers and that's either because your customers are leaving or you're unable to bring in more customers to compensate for the natural customer attrition let's say that's because your customers are leaving you now that's the numerical cause of the profit problem more customers are leaving but then there's a second step which most candidates just ignore or just go through it really quickly half as earlier which is to find the real reason why the qualitative reason why and the key here is of course to ask why why are your customers leaving let's say they're leaving you because they're going to the competitors they're not canceling their plans are just switching providers why are they switching providers is it because the competitor is offering something that you can't or that you're not offering or is it because they don't like you let's say that's because they don't like you why do they not like you let's say it's because your internet service is pretty bad and they like to check Instagram they like to be connected to their friends and your internet and stable so they have they hate you because of that why is your internet unstable let's say that because your infrastructure is really old you haven't invested in that for a while and your competitors have now here this is the root cause you ask why three four five times and then you find out why your customers are living this is getting to the root cause and it's the third way to stand out in a profitability case most people just don't do that they don't have the patience they don't have the they are not systematic enough to do that they just want to rush over what the problem is in offering solutions but you're not gonna offer a good solution unless you have a really good understanding of what's causing the problem this leads us to tactic number four which is to quantify and by quantifying I don't mean getting numbers you should be doing that in the first place otherwise you can't even start to solve it but let's say you found out that your customers are leaving you because your internet is poor and that's causing the profit drop now how much of the profit drop is that causing you is it causing 50 percent 90 percent a hundred percent these are different scenarios so when you finds the real root cause of the problem you have to quantify you have to tell the interviewer well this is responsible for 90 percent of your problem so I'm just gonna focus on this but even then we have to be aware that your profits are not gonna be at the level they were before probably because there are other things going on and then we can investigate that if you want now you need to do this because in real consulting you find the root causes of the problem the first thing the partner is gonna ask the first thing your clients is going to ask is well will this solve my problem will I be as profitable as I was before if I do what you're recommending me to do so whenever you find a problem when whenever you develop a recommendation to solve the problem you have to have your numbers down and I know most candidates probably you know that you should be doing that most people know that they should be doing this but they're not because it's hard because it's easier to just go and recommend and not take the time to say well how much percent of the problem does this solve so let's say you recommend it you need to invest in infrastructure to get your customers and your profits back you need to quantify how much will they have to invest in infrastructure and how much of the profits will you get back maybe it's 90% maybe a hundred percent maybe even more maybe hundred fifty percent and you'll be more profitable than before now in the first two tactics you've structured the problem better you have a step-by-step plan and you have a customized issue tree that takes into consideration the business model of your client in the third and fourth tactics you've solved the problem better you've got the root cause very pinpointed and you've quantified the problem and the solution and this leads us to tactic number five now tactic number five is to get strategic now this is a little bit of what a regular profitability case is all about a regular profitability case is about you finding the root cause finding the reason why that's happens and then find a solution to it it's pretty straightforward it's not strategic in the sense that you have to analyze all different factors analyze what your competitor will do what your curse how your customers will react and things like that usually it's pretty illogical so your telecom company has a problem with a lack of Internet infrastructure the solution is to invest in Internet infrastructure or I mean there may be other solutions but it's usually pretty straightforward you fix what's wrong and that's not what I mean by strategic what I mean by strategic is to consider everything that's around the business is to consider other possible options even if they may not be the most obvious ones and let me show you what I mean by this what I mean by this is after you've solved the case after you've created your step-by-step approach after you've drawn your issue tree with specific revenues and costs for that specific business after you've gotten to the real root cause and quantified it to know that you've solved the problem and after you've reached a logical solution lack of Internet infrastructure let's invest in Internet infrastructure what you can do to differentiate yourself to other candidates is to bring new strategic elements to the solution of the problem so for example you can say that that's the recommendation but you could also try to partner up with a another mobile provider that has excess capacity in Internet so instead of investing all that money you can partner up with that that's an option another thing is meanwhile you're investing in Internet you can focus your marketing budget on us that doesn't care too much about the internet or you can reposition yourself as the best internet available after you've done the investment in infrastructure so you can bring new strategic elements that the solution to the problem leads to and that's important for two reasons I think the first one is if you're just logical a leads to B build to C therefore a leads to see if you just this is the root cause of the problem here three potential solutions this one is the one that brings most profits this one's the one with pick you're not doing the real job of a consultant now you have to be logical you have to be able to say that a leads to B B leads to C but then you'd need to bring more insights to the table most of the clients of top consulting firms most of the kinds of McKinsey of Bain of BCG they have pretty good people working for them including X consultants so if you're just saying well if you just saying the logical things if you're just giving the logical recommendation and no extra insight at all you're doing the bare minimum I mean you have to do that but that's not what will differentiate your firm from other firms in the marketplace that's not what's gonna differentiate yourself within the consulting firm I mean everyone who's gonna work for these firms is able to be logical like this and because of that this is not what's gonna differentiate you from other candidates now the second reason why be getting strategic is important in a profitability case after you've done the logical steps is because if you just follow the logical steps you may miss important things to the solution and you may reach the wrong solution for just to focus you you you lack awareness to see what surrounding the problem what are the things that may influence that weren't explicit at the beginning of the case so you may reach a right solution by being logical but not the best solution you may even be wrong and you're certainly not going to differentiate yourself by just being logical so these were the five tactics that I had to share with you on how to stand out to profitability cases if you if you can already solve profitability cases and can already get to the right answers these five tactics are really gonna help us stand out I suggest you apply one or two of them at a time in the next profitability cases that you do and if you find any improvements then keep adding the others so this is the best way to do it not try to apply all of them at once but pick one or two that are gonna help you the most apply in the next case and then keep adding as you internalize some of these now if you found this to be useful here's something else that might be useful to you a lot of candidates are just prepared to their case interviews by doing more cases and memorizing frameworks if you do think that this is one approach that is not very useful that is not very helpful and that doesn't really guarantee that you're gonna get an offer we've put up a free course for you it's a course that shows you the fundamentals of how to think like a consultant so that you can stand out in your case interviews if you like the content of this video and other videos in this channel I'd suggest you to go check that free course I put the link here on the screen it has a mix of theory how to's step by step methods to answer different types of cases different types of case interview questions and practice exercises so that you can apply what you've learned without needing to do cases with others and at the of your home in your own time so that you can really internalize how consultants think and be able to apply these thought processes in your case interviews so links on the screen highly suggest you to do this it's free and a lot of candidates are saying great things about it there some some people have told me that it's the best material they found online and I hope you feel the same way links on the screen I'm glad to see you there now if you've liked this video please hit the like button this lets you to know that this video was good for you it will promote this video to other people that may be in need of content about case interviews if you've liked this video also hit subscribe and the alarm bell button so you're notified whenever I put a new video on this channel and I'm gonna be doing this pretty often if you found something that will help you in your next profitability case I'd love to see that in the comments tell me a challenge you had in profitability cases or a challenge that you've had in one profitability case and tell me how you you would have done differently had you watch this video before also if you have any questions about case interviews anything on your minds that you'd like to be better explained let me know in the comments I'm gonna read each one of them and this is gonna help me and Julie who's my partner to define what are the next videos we make I hope you had a good time and I'll see you in the next video

Channel: CraftingCases

Views: 88,769

Rating: 4.9846497 out of 5

Keywords: case interview, case practice, case interview preparation, case interview practice, consulting case practice, management consulting case prep, case interview prep mckinsey, profitability case interview, how to solve profitability cases, consulting interviews, case interview prep, management consulting preparation, management consulting 101, mckinsey, bain, bcg, craftingcases

Id: GTo3N_afZW0

Length: 21min 28sec (1288 seconds)

Published: Fri May 04 2018