Case Study Interviews - Part 4
What was the manager tools. Case, study interviews, Hartford. Here we go. Chris cast answers these questions. What does the case study interview? What kinds of questions are there in case study interviews? How can I prepare for case study interview? Well, if we want to answer these questions and more, keep listening. If he's not already, we'd encourage you to register for an account and the manager tools website. It's completely free and we'll give us the ability to speak to you directly, but what matters most to you, you'll be signing up for our weekly newsletters and by weekly conference announcements and will be on the list to receive notifications about upcoming events in your area. We don't want overwhelm you with tons of uninteresting information, so help us target our reach out to what matters most to you. Okay. Mark. So last week we talked about case interviews and what they are and kind of basic ideas round that, and today we're gonna talk about what is the base way of what's a phased approach of going through a case interview, right lucky for us just like behavioral and everything. There's a basic approach to handling all case interview questions. What you do step one is you form an initial idea hypothesis away to approach it. I think. Problem is going to be here and not there. Okay. Then you apply a logical argument to that. Basically, a structure or a framework which will talk about then you combine the idea and the are the argument or the framework, and you do an analysis of what the framework suggests about your idea to determine whether or not your idea is right, and it's completely okay if your ideas not right by the way, because you're framework shows you, it's not right, but you go through some iterations to find out which would be supported by the data. You have that that the data is what you're analyzing within the argument. You do some analysis and then you make a presentation. I recommend byu keep this product line and cut costs here. And here's why a data point a or a supporting point a supporting point and be supporting port cease porting de again, I recommend you invest in this product line and make it profitable, don't sell it. Okay. That's the four steps. So what you do, you create that initial idea. And again, it's one that may be right. It's good to get it correct guys. And in many cases, I'll give you an example of one. It's we can increase your chances of being correct because it's simple. But frankly, it's okay if your initial idea is wrong. Because your analysis will show you that it's wrong and you won't get dinged for having the wrong initial idea. You would get dinged for having the right initial idea and then cherry picking data's support that that would be bad. So it's not, as I said before, it's not about getting the right answer as much as it is proving that you have the skills to get that right answer over and over and over again. And the skills are primarily in the analysis and in the framework you choose, and by the way, if I idea is wrong and you've drilling down, you're gonna be able to show that you have disproven what your first idea was, which is important. If you're gonna meeting in the guy says, I don't think you're right about that. I think this is true. So actually, no, I looked at that and here are the things that support the idea that that initial thoughts this, which by the way, Bob is totally reasonable. I completely. I mean, that was one of the things I consider. But if you look at this data here, all of these data's suggests that that is. Not in fact true. And now suddenly have one more convert in the room when you're making your presentation, and if your first idea is wrong, your second idea is that much more likely to be right because there's one less wrong answer to choose from and guys you can absolutely survive just fine in a candidate lead case interview. If your first idea is shown not to be the right lever that you need for a solution you're you're, you're shooting for is you do more and more cases you're going to get better and better at forming your initial idea. So look, let's give you some confidence here. Here's the question. We're losing a hundred million dollars annually in this product line. Why? And what should we do. You probably can already figure out. That this problem been nalysts of this has to possible initial ideas. Again, I'm going to say it again. We're losing a hundred million dollars annually and this particular product line. Why? And what should we do? Yeah. So stop the tape. And of course, I'm old. That's why say stop the table. Okay. So there's, there's two, there's there's two somewhat obvious things you could think about here just at those. See, see whether you're right or not. I will tell you one of the lessons I learned in my life and I see it on people's faces all the time. Is this sense that as managing particularly, which is it's sad and that's why there's manager tools, but it's this feeling that other people know something. I don't know. There's some secret knowledge out there that that guy. She knows she's good and I don't know. Nobody taught me that, but she went to the right school or she has the right background or her mom was the entrepreneur, and she sadder Nian learned all that stuff. Whatever. I mean, one of the biggest detriments to the kinds of decision making you'll do for the rest of your life is the idea that there is a right answer. And then second to that that somebody else has it that feeling you have of not knowing everyone has that everyone does now. Look if you've been a consultant for ten years, you know how to approach this, but they don't know what the right answer is. They don't. So even if you're not a consultant, if you trust yourself and you stop worrying right now, I know what you're doing OEM. Gee, what what should I tell them do? That's that's a pretty big citizen. You'll soon figure out if you just trust yourself. It's like that movie willow. I quote it all this love that movie starring Val Kilmer you're soon gonna figure out the initial idea is pretty straightforward. If you're losing money in anything, either your revenue isn't high enough for your costs are too high. That's it. It's either a revenue problem or cost problem now you might think, no, it can't be that easy, but it is. And in fact, we don't have time to go through them in this cast. We're just giving you a high level overview, but there are a number of analytical frameworks for different business problems that we're going to share with you in the years to come. I know somebody just said years. I'm like, Nope. Sorry, guys, we we have a long lead time, and that's part of the reason why the casts are free. There are a number of frameworks. There's a profitability frame. Homework. There's an acquisition framework as well. And yeah, you don't know that stuff, but once you learn it, it's in your back pocket. And then there are people guys who know the framework and can't apply as well as some of you can because they're not smart enough or they can't communicate about it or they get bogged down in details and so on. So in this particular example, guys, you either have a cost problem or a revenue problem. And if that sounds overly simple to you, it's an important lesson for you because many case studies boiled down to cost or revenues and guys a little more help on the way trust yourself here assume you're a superstar at this. You're thinking costs or revenues carrying ask yourself, just trust yourself for a minute, which one of the two is it more likely to be all things being equal, which they never are? If you took a thousand cases and you did an analysis, is it a question of revenue or is it a question of costs. And hopefully you're came up with cost. It's not always right, but it's more likely to be right in this case that if you have a profitability problem, you have a cost problem only go back in, let's say something else. The interviewer is not terribly concerned that you chose the wrong initial idea as long as you're in the ballpark and no. And that particularly in this particular question, you don't know it's its revenues or costs. Right? I mean, even some people in ice cool. No. Well, I don't know. I got revenues and costs. She knows the interviewer knows that you're issue tree your your framework and analysis won't bear out. We have a cost problem here. If the data that she's going to give you, if you ask for the right data to analyze it doesn't bear that out. So it doesn't matter. You could flip a coin and say, every other case interview that's profitability based, you could say cost and one Reverend another pretty soon you'll figure it out. And again, if you're Nelson. Good and your initial hypothesis reasonable and you don't have time to get to the final answer. First of all case interviews are notorious for being open ended on time. So if it takes you four hours where it took somebody else three hours because they guessed the right one doesn't matter doesn't matter at all. They may get a low score. You may get a high score because you're so smooth about how you do it and you present it so. But going back to the point I made threes in why slightly more likely you have a cost problem is the market gives you assuming there's competition, which generally speaking. That's true. The market gives you pricing guidance. If you're pricing, seems reasonable. And again, it may not be then costs are probably the issue and the profitability case. And the other thing is costs are completely controlled by you. And again, this is only a probably I'm giving you a rule of thumb that you can use to say all things being equal more often than not if I'm presented with the profitability problem. The framework. Could suggest that it's a little bit more likely to be cost. So I'll pick that one. I, it just increases my chances a little bit. On the other hand, I don't mind if I'm wrong because if the cost analysis doesn't bear that, I'll just I'll go all the way back up to the top branch of my little tree that I created is okay. It's not God, it's gotta be revenue. That's it. Okay. So we've established initial idea. In this case, we're gonna soom it's costs, right? You're going to test it using a framework by the way, these are often called issue trees, because if you, if you were to take one, if I put a hypothesis, let's say, take a piece of paper, a four, eight Naff by Levin Ternate landscape mode, not portrait and over on the left side, put down profitability and then put two branches going to the right, but not very far in one says revenue one, Cisco. And then analyze each one of those what kind of revenues we talk about. You got price per unit, and we've got number of units sold, which is overly simplified because there may be a number of products within the product line. And then on the cost side, you've got cost per unit and number of units sold and cost per unit. Just off the top of my head guys and has fixed cost variable costs. Don't be worried if you don't know that if you're twenty five years old and you've never had a business class, you're an engineer, fine. You're a developer, you don't know that you will, but they call him issue trees. Because if you were to take that landscape piece of paper that is getting that has branches on it more and more branches as you move further, right. If you rotate at ninety degrees counterclockwise it looks like a tree. That's why they call it issue Trie. There's an awful lot of terms of art in business that essentially allow those people in that area of business to send a message that you're not one of us, but really, it's just a framework or a logical. Argument to analyze is it costs or as revenue? That's all it is color whenever you like it does look like a tree, but when people say issue like, oh God, I don't know what that is. Probably if you were given this problem in a in a classroom and weren't told you were doing consulting problem, you could say, well, one of these things and here the things that go into those things. So I need analyze these five things. So the logical argument basically says, okay, got a profitably problem. I needed side, which the two it's in. I've got some sub areas and each of those two, I gotta look at each of the areas that support the issue of cost or the issue of revenue and see whether or not have got a problem there, and it may be that your first layer of analysis doesn't show you anything that it appears Copacetic because the averages that you're getting from the interviewer and I'll come back to how you get those in a minute up here, fine. But you know, if you have five product lines and three of them are making a lot of money and two are losing a lot of money. It appears the product line is losing the product lines that all form together in this aggregation of products that we call TV's maybe. It appears that it's losing money, but that doesn't mean every product line is losing a lot of money. Maybe only the initial, the brand new est. TV is losing a lot of money because you have a price war going on or whatever else. So you may have to drill down further into individual product lines to see it. And there might be two or three or four or five nodes at one level and three to four sub knows at each one of those. And you might start thinking, wow, Mark, there might be twenty nodes I'd need to look at. Yes, there might be, but analyzing each node is basically the same. You get the data. We'll talk about that again in the second and you look at it and it's a fairly straightforward analysis. They're not gonna give you a hundred pages of spreadsheets. They're not okay. The whole point of a candidate lead interview. Can't it lead case is your going to analyze it? And then you're going to ask about various things in order to avoid bullying the ocean, saying, give them all the cost and revenue data. I'll stack it up here on the desk. And I'll work on it for a month. You're not gonna have that much time. Now, let's continue the example. We mentioned the profitability problem. So it actually does have a framework called the profitability framework. And for the record guy's licensees we'll be able to look at their show notes here and see a profitability framework really simply profit is at the left of the of the logical argument, the only two branches to the right or revenue and cost revenue branches. As I mentioned, price per unit and unit number of units sold cost branches into cost per unit. Number of units sold costs, further branches, as I said, fixed and variable kind. What happens next in our high level example, here is critical to understanding candidate lead cases. Let's say you've got up profitability problem. You suggested your initial idea is you have a cost problem. You don't know it yet and you're not worried about being wrong. Hey, guys, high seas. I love you. You guys who are perfectionist. This is where you struggle. You. Don't want to come up with the wrong hypothesis. You guys who were high seas and engineers, and perfectionist, and analysts, and so on and like dot in your eyes and cross your t.'s. Another way to think about this is this is an experiment. You're not worried about getting the wrong answer. Scientists love getting proof that their hypothesis wrong. It's one less thing they have to check provided. They did it rigorous analysis and and have hived off the things that aren't impacted by this particular ipod SIS. Okay. So don't worry about being wrong. I just guessed I said, okay, we'll do cost again, flip a coin. That means according to the framework that we mentioned, you either have a unit sold problem or have a cost per unit problem. But again, you don't have any data to know which it is, but the interviewer does. This is when you have to decide what to ask for, you'll say something like this could be a cost per unit problem. Do we have any information on cost per unit? And you'll get one or two answers? Actually, we do here you go, and that's a good sign actually because they don't have all the data for every branch. Every node of your framework, the only have data for the things that are relevant because again, they don't want you learning how to boil the ocean. If in fact you had decided you were going to do a revenue analysis. And again, this is just one of many different frameworks that you would learn about and we'll teach you more in the years ahead. If you had said, I think we have a revenue problem. Do we have any data on revenue on types of units and prices? Actually, we don't. Okay. All I just eliminated fifty percent of the potential problems here. That's not say it's not going to be thorny when you get down to the details going after know how to look at price data and cost data, and so on. But again, if costs are units are not the problem, the interviewer will say something like, I don't have any data about that guys. This doesn't mean your initial idea and analysis thus far is wrong. It means that you're appropriately drilling down into your logical arguments, eliminating potential causes. Remember what I said earlier, if you get the right answer only because you cherry pick three data points and you have an analyzed all the other areas that it could or could not be because you didn't ask for data on that. That is the kiss of death. You will not get another interview from a company even though you got the answer right? Because it proves that you can't reproduce that kind of work. Nobody has that level of business insight. If this were actual work, you may have to look at twenty different ways to segment a particular product to maybe for unit sold. You may have to look at geography and the type of product and the distribution channel discounts that may be being offered. So on the interviewers, attempting to simulate what you'll do for a client, not make you do all the work you would do over a six week client engagement. And by the way, if you're wondering five of those weeks out of the six on that engagement might very well. Well, be spent collecting data on all the ways you could segment unit costs and then analyzing that data. You might think that any halfway decently run company would have that data readily available and guys you'd be wrong because available means I can look at it and analyze it. Now, do they have cost data? Do they have pricing? Yes. J.. Jay. Is it an unusual form? No, that's why there's such a cool thing among CEOs. I needed dashboard. I need. I need the dashboard on my desktop that if I click on any of the metrics, I can drill down and find all the things and doing analysis from a computer in typically, that is a great idea in theory, but see, he, oh, should be doing that and what's more. It's not possible in a billion dollar company. You couldn't drill down enough to find a ha. Here's our problem right here. This sales rep is not pulling his weight until sir. So if they had the data available in a usable form, they have looked at it and knowing the problem with, say, an increase in one component, part price, doodle. Let's just say it's a land war in Asia who knows what causes things. So your job would be to do that, and the interviewer has taken what amounts to the truly relevant pieces of data to help. If you find out when you've hit on something, that's interesting. So you don't ask about revenue and they don't give you every bit of revenue data they could possibly have. So then again, it would take four or five hours and if you spent four or five hours analyzing revenue, you wouldn't be wrong. And when you discovered that it wasn't a revenue problem, you could eliminate that as a problem and then you'd know it was a cost problem. That's often why consultants keep ungodly hours. Because knowing the right question means, then we have to gather all the data and we have to collate the data and we have to look at it and we have to parse it and so on and for the record guys. If you don't like case interviews, if you don't get excited about drilling down and figuring out you won't like being a consultant anyway. Okay. In a belated effort to make long story. Short, the analysis portion of the process after your initial hypothesis or idea, whatever is the process of this drilling down through every branch of your. Tree framework, whatever attempting to either prove that a branch isn't relevant, it's not the cause of our profitability problem or that it is relevant and it's driving the unwanted results or the issue we need to solve you get through each part of the argument again by asking for data or information from the interviewer. Now, look, you are expected to be familiar enough with the form of business reports, financials, valuations cash flow statements, those kinds of things, and many of you listening full disclosure, no offense. This is true of me and Mike as well. Don't know how to read a balance sheet. Don't know how to read a PL and maybe even don't have no don't know how to do a pivot table and that's okay. But those are opportunities for you to learn. Okay. In basically all that stuff tells you, okay, you're analysis tells you which areas indicate problems in which one say, no, this is pretty Copacetic over here. Once you're now is done and maybe you've proven your hypothesis or in the first part of your analysis, you disapprove your initial idea and now you're going back up and now you're going down the other branch. And now you've found where the problem is you within present. K. typically what that means is in a case interview or therefore an strategic consulting role or for that matter, any person presenting to a senior group of executives, a recommendation or the inverse salt of some analysis. It starts with a recommendation. We do not do analysis just so we can educate people on the analysis. You have to synthesize, synthesize that analysis into a recommendation. Okay. So you have a recommendation followed by some supporting arguments and then a restatement. Of your recommendation for the record guys. You do not in a case interview or in speaking to senior executives go through all the steps you went through in your analysis. I mean, when I say that, I'm sure Mike is like, oh here. No, you couldn't do that to me. Okay. You certainly don't tell a story about each step. I've told the I've told people this before the worst Email. I think I ever got. I answered it. I helped the person post Mark. I want to tell you a story. Yeah, joke and I say, yeah, I want to shoot myself in the face and please don't tell me the answer to the very end. I want to experience the whole process of listening to an hour and a half story just guessing every step of the way what the bottom line is because that's dramatic. And that will make you really be leaning forward. Somebody told me once the total dollars that are spent in an hour long meeting at corporate headquarters of CEO of billion dollar and three or four or five of her staff. You know how much that is if you count it in terms of revenue to the firm is probably six figures. So yeah, we don't want sit. We're not paying you to give us a dramatic story a of you if you don't like admonishing you about this kind of stuff, just just imagine what it must be like to be my mother because my mother is Martin knows tends to still tell stories, and she absolutely knows bluff bottom line up front. But just generally in our conversations, I say, mom, after about thirty seconds of the stories, mom doing the bottom line up front then tell me the stories, so funny. Yeah, so look guys, they're probably high dis. They don't want to be told about the storms at sea that ship went through. They wanted to win the ship came in. So you make a recommendation, you support it with the key points from your now, and then you restate your. Manasian people love it. I mean, that's what I want. Don't tell me how long it took the long. If you impress me with how long it took that costs me more money. If the client or interviewer wanted you to expedite a particular supporting point, urinalysis major ready to do so and you address it. Now, guys, we'll have more guidance on making recommendations to senior executives in different guidance which you can safely assume applies to consulting jobs, and therefore, to case interviews because case interviews, Arbeid real interviews for consulting jobs and senior analytical jobs, strategic decision making jobs for businesses. And again, we'll have more in the years ahead about case interviews with examples. We've really like it, and I've been wanting to do this for a long time, and I'm glad we're able to do it to be clear. There are a lot of frameworks that you learn to think about how to analyze business, even if you never become a consultant, even if you never get a case interview, which if you're interviewing internally and your. Company, you probably wouldn't get knowing those frameworks knowing, for instance, the rule of seventy two. As an example. Those things are good skills to have and his party of professional development and insofar as podcasting allows us to do it over the years will help you do it excellent folks. If you feel like there's more there is and we're doing our best. I don't know. We've gotta be at three or four parts of this show right now, so yeah, exactly. So let me just summarize if I can't guys case interviews are a critical part of the interviewing world, even throw us for very small portion of jobs. If you're going to go into an MBA program, knowing how to handle cases, we'll give you a leg up on your fellow students or if you're smart, you won't worry about the leg up. You'll want to help them and you'll win points as a team player, which is a good thing. Excellent. Thanks befriend. Rashid my pleasure Parker. Right everyone. We'll see you next week. So.