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How to Open, Analyze, and Close a Case Interview (Part 3 of 12) | caseinterview — Transcript

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0:00oh good right on track here okay uh
0:03let's talk about how to uh open uh
0:06analyze and close a case so it's a
0:07three-step
0:10process I'm going to go through the
0:11process mechanically and then I'm going
0:13to demonstrate it one thing too is um I
0:16mentioned earlier there's sort of more
0:19well um I'll I'll say that for
0:23later actually what I wanted to mention
0:25was when you go when you practice cases
0:28I found for myself that was very
0:30mechanical early on in the process of
0:32practicing okay so step one step two
0:36step three every single time um very
0:38rigidly until I sort of mastered that
0:41process and then later what I do is I
0:43would be sort of more creative and more
0:45flexible and I don't know if that's sort
0:46of how everyone does it but I thought I
0:48just point that out that for me it was
0:50very regimented early on until I could
0:52do it in my sleep sort of this the first
0:54part of a case uh and then I started
0:57getting very flexible so an example is
0:58you heard of framework which is sort of
1:00standardized approaches for solving
1:01certain kinds of problems um you often
1:03times find that in reality you'll use
1:05multiple Frameworks within a case okay
1:07we'll talk about I call I call that a
1:08compound framework problem and
1:12um and it's very hard for um someone
1:15who's just practicing to do a compound
1:17case problem because they're thinking
1:19which problem is it and which framework
1:20do I fit it in but as you get
1:21information through the case you realize
1:24ah I thought it was a you know cost
1:27problem but it's actually like a
1:28marketing problem different problem
1:31different framework and sometimes people
1:32can't make that transition okay so
1:35here's how I open a case there a lot of
1:36ways to be right um first thing I do is
1:39I stall okay they say client says you
1:43know should I go acquire my biggest
1:45competitor okay and I always say no joke
1:48H that's an interesting question bought
1:51myself 10 seconds okay five seconds
1:53before I speak because you get past six
1:55study show if you pause for more than 5
1:57Seconds people think something's wrong 5
1:59Seconds say the work another 5 seconds
2:01I'm thinking like how the heck do I
2:02solve this problem I have no freaking
2:04idea okay um and I've had I've had out
2:06of my 60 cases I did I probably I've
2:09said that probably at least 20 30 times
2:11and about 15 of them I literally had no
2:12idea because it was sort of really out
2:14of left field okay and I had to stop and
2:16think for a second um so it's good to
2:19have a phrase don't all use that phrase
2:21but if you if it all come back to
2:24me okay the first thing you want to do
2:26is you want to verify your understanding
2:28of facts and terminology very important
2:30because in different Industries they use
2:32different words to mean different things
2:34uh so for example if I I had a client
2:36who was in reinsurance and so I might
2:39give a case that would say uh the CEO of
2:41a reinsurance company uh is concerned
2:44that premiums are down 15% what do you
2:46tell the client to do okay and and if I
2:50were on the receiving end of that my
2:52first thought is hm that's an industry
2:54question what the hell is reinsurance
2:56right and so I would say can I ask some
2:58background questions before I get
2:59started sure what's reinsurance it's the
3:02insurance company for insurance
3:04companies oh okay so for example if
3:07you're in a hurricane insurance
3:08companies have insurance policies on
3:10their homeowners policies so if they
3:11lose more than $2 billion in Florida for
3:13example the reinsurance company pays ah
3:15okay so the insurance company I get that
3:18um next question what's a premium is
3:21that like profits no that's like
3:23revenues that's what people pay on their
3:25policy they call it premiums ah okay so
3:27basically you're saying that the client
3:29is asking me that uh revenues are down
3:3120% what should he do is that right yes
3:35I got it okay so almost all the time I
3:37would ask I'll ask clarifying questions
3:40um for a couple reasons because you
3:41don't want to like just because of a a
3:44difference in vocabulary words like blow
3:46a case because you misunderstood the
3:48information so if you don't get it
3:50explain it and sometimes what happens is
3:52a lot of interviews they will use um
3:54their actual clients cases they'll just
3:56change the names so they have like
3:58they've done lots of data analysis and
3:59they know everything
4:00and and so some of these clients are
4:02really esoteric businesses like I had
4:04one I had one case that was um in a
4:07really bizarre Health Care insurance
4:11client was the client situation and it
4:12took me 10 minutes just to even figure
4:14out what what business are they in like
4:17and like and there's like there's not a
4:18customer but there's like a customer and
4:20an affiliate it was a very complicated
4:22relationship and I couldn't even
4:23understand the basic facts of the case
4:25let alone the problem they were asking I
4:26had a very hard time understanding is
4:28there one customer do they pay no they
4:30don't pay somebody else pays oh so the
4:32person paying the money is not the
4:33person receiving the service correct but
4:34there's a fourth party involved that's
4:35the government oh how does that work and
4:37I couldn't understand that and so I
4:39spent I devoted time to figuring out
4:41just what the heck are they talking
4:42about so if you don't understand what
4:44they're talking about take the time to
4:45make sure you understand it because if
4:47you're solving the wrong problem you
4:48can't get it right
4:50okay second thing to verify is making
4:53sure that the that your understanding of
4:55what problem this client want solved is
4:58in fact right okay so pay attention to
5:01the specific words and literally the
5:03grammar what's the subject what's the
5:05object right and think about what it is
5:07they're asking and and I would spit it
5:09back out paraphrase it's like a good
5:11listing skill in general spit it back
5:13out so do you mean the client wants to
5:15know whether or not they should merge
5:17with their biggest partner correct got
5:19it okay
5:22um so that's important and and the last
5:25one is when you open a case the third
5:27step in opening a case is you structure
5:29the case for
5:30analysis which is a a putting a a
5:33framework basic picking the right
5:34framework essentially and saying to
5:36solve this case we need to understand
5:38four core
5:43ideas so to open a case stall verify
5:49structure I'll move it up there you
5:58go
6:05yes struct the case do
6:07you next slide what do I mean by
6:10structuring case
6:12um I love when people do
6:15that it's a four-step process to
6:17structure a case means first identify
6:20the type of problem or situation that
6:23we're trying to solve for the client
6:25like it's a profit problem it's a very
6:26common one profits are down what do you
6:27do oh okay it's a profit problem
6:30or uh they're thinking of launching a
6:32new product Oh that's a new product
6:33problem okay or they're thinking of
6:35entering the China Market oh that's a
6:36market entry problem okay so there's
6:38sort of categories of problems and and
6:40I'll show you for what kinds of problems
6:43which Frameworks I found useful to solve
6:45those kinds of problems so it's like a
6:46matching thing so the first thing you're
6:48doing when you're opening a case is
6:49figureing out what the heck are they
6:50talking about okay what kind of problem
6:52is it and sometimes it's confusing so
6:55that's why you have to verify your
6:56understanding make sure you understand
6:57that uh find the type and then pick the
7:01right framework for that kind of problem
7:04okay because if you sort of pick the
7:05wrong framework you start Gathering data
7:08in the wrong places right and it sort of
7:10waste time more than anything
7:12else once you have a framework chosen
7:15you want to pick the key components
7:17identify the key components of that
7:18framework so as an example I'll show you
7:20in a second if it's a pro problem the
7:22framework is you know revenues Minus
7:24cost equals profits right so to
7:26understand profits are down by 20% we
7:27need to look at revenues and we need to
7:29look look at costs and that'll help us
7:31understand that's sort of like a
7:32standard opening for a profit problem
7:33I'll walk through all the standard
7:35verbiage you don't want to mention the
7:37actual framework by name so don't say
7:40you know oh that's emergers and
7:42acquisition framework problem or that's
7:43a Portis 5 forces problem um just use
7:45the framework it makes you look smarter
7:47and you know they know they know you're
7:49sort of know this stuff and but it's
7:50just like pretend right that sort of
7:52came out of your head um and then
7:54finally draw the framework
7:56out it's important so I'll give you an
8:00example that right
8:03now so let's say um the example is the
8:08case interview is um uh the CEO of ABC
8:12company comes to you and say profits are
8:13down by 20% what do you do okay and and
8:17I would say I would verify that's
8:19interesting let me think about that for
8:20a second verify my understanding what
8:22they what they're asking
8:23for and um and then say okay that's a
8:27profitability problem I know that I've
8:28seen those before
8:30and what I would say great to understand
8:32uh how to address this client situation
8:34we need to look at their company's
8:35profits and why it's decreasing by 20%
8:38once we understand that we can figure
8:39out what we can do about it to
8:41understand profitability we need to look
8:42at two key things revenue and costs and
8:45I would literally I'll literally
8:47literally draw this as I'm talking
8:51okay and just from a dynamic standpoint
8:54um sometimes I'll actually move my chair
8:56closer to them so rather than being sort
8:58of adversarial
9:00I will do it this way let me show you to
9:02understand profits we got to look at
9:03revenues first okay and then costs right
9:06um and that's more collaborative and
9:08it's a client skill too right if you're
9:09meeting an average saleor clients
9:11there's a reason for behind all if
9:13you're meeting an average saleor client
9:15when you when a police officer
9:16interrogates a criminal what do they
9:18do right across from one another if
9:21you're being collaborative you do it
9:23together you see and so it has a
9:24different body language so I'll do that
9:25too little things um and but but also
9:28the other reason is that way you don't
9:30have to like write upside
9:31down because they can't if you do it
9:33this way they can't read it like I can't
9:35draw it upside down so I got to come
9:37around and say come on over here let me
9:39show you first we got look at profits
9:40revenues and costs or I'll draw it my
9:42way and then I'll turn it around and
9:44show it to them like a lot of little
9:47little things um but you want to figure
9:48out how you're comfortable sort of
9:49presenting information visually I told
9:52you visual is client friendly right so
9:54you can't just say Obviously
9:56profitability you got to look at
9:57revenues and costs right within costs
9:59there sort of fixed cost varable cost
10:00this that and that kind of cost unit
10:01cost and you got look at the trend line
10:02and this they can't follow right so you
10:04got to draw it
10:08out so it's very important to draw that
10:10out and so for for all the major types
10:12of case problems I will give you the
10:14list of my four favorite Frameworks and
10:16I'll give you the standard opening that
10:17I've used on those four Frameworks okay
10:20so like I mentioned earlier opening a
10:22case is very mechanical and then as you
10:25get information that's where sort of
10:27creative problem solving and analytics
10:28sort of comes into play okay but up at
10:30this point it's really about sort of
10:31opening it
10:33correctly that's how to structure a case
10:40um the next step in the process is once
10:42you sort of opened it up you've sort of
10:44laid out how you're going to approach
10:45this case all the major categories of
10:47issues next thing is to analyze the
10:54case I Googled the word analyze last
10:56night turns out the definition which is
10:58actually kind of nice
11:00is uh the separation of any material or
11:02abstract entity into its constituent
11:05Elements which basically means to
11:07analyze means to break apart into pieces
11:09okay so if you have a business it's a
11:11bunch of Lego blocks analysis means you
11:13pull apart the Lego blocks look at each
11:15one individually okay by the way that's
11:18the what I call the backup
11:19framework if you ever get a case where
11:22you don't know what's going on and it
11:24doesn't match any of the ones I've
11:25mentioned and I had a couple of those
11:26you get the wacko you get weird ones
11:28once in a while um if you got enough in
11:30it's not a matter of you know if you'll
11:31get them you definitely it's a matter of
11:33when when and doubt pull apart the
11:36pieces you know so for for example uh
11:39well that's a bad example so so that's
11:40sort of the the main idea to analyze
11:42means to break out into its component
11:44parts and this is what you do all day
11:48long as a consultant you're breaking
11:51things into Parts you're breaking the
11:53parts into more parts you're breaking
11:54those parts into more parts and and
11:56we'll talk about why you do that and you
11:59have to do this in a case interview have
12:01to impossible to pass without doing this
12:04very important okay so when they say
12:06analyze a case it means breaking it
12:07apart and I'll give you some ways of how
12:09to standard ways of breaking things
12:11apart but even if you forget everything
12:13I said and then you get a question if
12:15the first thing is out of your mouth is
12:16well that's interesting I'm not sure how
12:17to solve that let's break it apart okay
12:20that's a good way to
12:22start let's
12:25see okay step by step how do you analyze
12:28a case sort of generically and then
12:30we'll go into specific
12:34cases first thing I do is I ask them if
12:37there's any information about the
12:38situation that would suggest where I
12:40ought to start in my framework okay so I
12:43would say um to uh to understand why ABC
12:47companies's profits are down 20% and how
12:48to respond to that we got to look at the
12:50revenues and the costs because those two
12:51combined form profits okay do we have
12:54any information from the client that
12:56indicate whether this is a revenue
12:57problem or a cost problem okay 80% of
13:00the time they'll say no okay or they'll
13:03smile and smirk and still say no okay um
13:06sometimes they'll say sure you know why
13:08don't we start with costs first and they
13:11deliberately lead you down a wrong end
13:13like it's Del it's they know it's a
13:14revenue problem but they're telling you
13:16why don't you start with cost first just
13:17to see if you can figure out that he
13:19threw you down the wrong direction and
13:20see if you can kind of come back up okay
13:23about 20% of the time they actually tell
13:24you particularly if you have like a big
13:25framework there's a lot of things you
13:27need to analyze um
13:29they can save you time and if sometimes
13:31they don't have sometimes they don't
13:32have data on parts of it so like if they
13:34know it's a revenue problem and they and
13:37because it's a real life case they they
13:38were working on they didn't do any of
13:40the cost analysis so they have no data
13:43so they don't want you to go there
13:44sometimes so if you ask them they'll
13:45sort of steer to steer you sort of in
13:47that direction about 20% of the time so
13:49that's what I usually do again this is
13:50my process um you can certainly succeed
13:52without without doing this step the next
13:54thing is you state a
13:56hypothesis okay and um hypothesis
13:59interesting enough I I actually never
14:00did this explicitly when I was
14:02interviewing I sort of did it implicitly
14:05they could tell I I had a hypothesis I
14:07never use the words but it's actually
14:08not a bad idea to use the word
14:10hypothesis you know it comes from you
14:13know science and the scientific method
14:16uh of you you have an experiment and you
14:19think that you know the key to curing
14:21cancer is in like Gene number 24 okay
14:24what do we got to new what do we got to
14:25do to sort of isolate and prove whether
14:26or not that assertion is that hypothesis
14:28is correct well we got you need
14:30structure an experiment to figure that
14:31out same process to solving business
14:33problems again this is a Consulting
14:35process it's not the only process you
14:37can solve them business problems in
14:38creative ways lots of other ways but in
14:40Consulting it has to be this sort of
14:41scientific method
14:43approach so I'll give you an example of
14:45hypothesis
14:47um company ABC's profits are down 20% we
14:50need to look at revenues and costs uh
14:52I'm going to hypothesize that it's
14:53probably a revenue problem so I'm going
14:55to gather some data on to see whether
14:56that's true or not okay um and then also
14:59not continue have revenues declined stay
15:01the same or increased okay oh revenues
15:03have increased oh okay hypothesis is
15:05wrong profits are down but revenues are
15:08up what does that mean interpretation
15:10it's a cost problem right okay so my
15:13hypothesis was incorrect new hypothesis
15:16I'll say ah obviously it's not a revenue
15:18problem the revenue is not causing the
15:20loss and profitability it must be cost
15:22okay so that's an example of how that
15:24the dialogue would
15:26work uh the third step which I sort of
15:28already demonstrated is you once you st
15:30your hypothesis you want to pick a
15:31branch of the framework to start okay so
15:34I said my hypothesis is it's a revenue
15:36problem let's look and analyze revenues
15:38first has Revenue changed if so in which
15:41direction
15:48right next step is to identify the key
15:51issues within that branch of logic
15:54you'll see in a second that there are a
15:55lot of branches to these sort of
15:57Frameworks that are sort of very logical
16:00um so I will say uh to to understand
16:04whether or not revenue is causing the
16:06profitability problem we need to know if
16:08Revenue has changed and in which
16:10direction so has Revenue increased stay
16:13the same or decreased it's it's only one
16:15of those three things and those are the
16:17three issues do you have any data that
16:19will indicate which one of the three is
16:20correct okay um and so I'm very
16:23deliberate about that so stating the
16:24things I want to know and consider and
16:26then ask for data okay it's very
16:28important to do that by the way um it
16:30seems like a a little obvious but
16:33obviously Revenue you can only go up
16:35down or say the same right um but you
16:37again we're trying to be client friendly
16:38so we're laying out all the issues um
16:41and on that one in particular I probably
16:42wouldn't draw it out because it's sort
16:43of simple you know um but in general
16:46when you have when you're starting to
16:47work down a branch you want to break out
16:49what are the key issues within that
16:50Branch State all the major issues and
16:52then dive in if you just dive in without
16:56stating all of them they will assume you
16:58missed them
17:00okay they will assume you missed them
17:02and I'll give you an example a little
17:03bit later
17:05on then what
17:27I
17:43for

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