Framework depth - looking for advice

Hi there,

happy to share some thoughts on this: 

1. Standard vs. custom: A simple rule of thumb you can apply is that the top level can be standard (revenue/costs), but the second level must be tailored. If the interviewer cannot tell what industry you are discussing by looking at your framework, it is too generic.

2. Sub-bucket depth:

-  List: Under revenue, I will look at price, competition, marketing, and the website.

- Instead -> Structural breakdown: I will break revenue into average fare and passenger volume. For fare, I want to see if we are losing out to low-cost carriers (competition). For volume, I will check if our route occupancy has dropped due to poor scheduling.

I hope this helps clarify! :) 

Good question and honestly, this is exactly where a lot of candidates get stuck.

A couple of thoughts based on what I typically coach during my mock interviews.

1. Standard vs. custom (top level)
In a profitability case, I wouldn’t overcomplicate the first layer. “Revenues and costs” is perfectly fine and in most cases, actually preferred.

Where candidates go wrong is trying to be clever too early. If you jump straight to something like “revenue per passenger,” you often lose clarity and, more importantly, risk missing parts of the problem.

So as a rule of thumb:

• Keep the first layer clean and MECE
• Then bring the customization in the lower layers

2. How deep to go and how to avoid lists

What I usually suggest in coaching is to think in three layers:

• First layer → very clean, MECE
• Second layer → where you add  analytical structure
• Third layer → hypotheses / things you’d want to test (doesn’t need to be MECE)

Applied to a profitability case:

• Layer 1:
  Revenues | Costs
• Layer 2 (example on revenues):
  Price × Volume × Mix
  And this is already where you start tailoring; e.g., “mix” could be product mix, customer segment, channel, geographies depending on the business.
• Layer 3 (example under volume):
  Here you move away from structure and into thinking:
  • Has competition impacted volumes recently?
  • Any shifts in customer demand?
  • Any internal constraints (e.g., capacity, distribution)?

Hope it helps,
Feel free to DM me if you have further questions
Franco

I am keeping it short knowing that this is a vase field (profitability cases) and that most candidates over- or underemphasize areas.

The core issue behind both of your questions is that you’re trying to structure before you’ve actually understood what you’re structuring. In a MBB interview, the first differentiator is not the framework itself, but the quality of your follow-up questions.

Before laying out any framework, clarify what you are analyzing. What kind of profitability are we talking about—total profit or contribution margin? Just as importantly, how does the business actually make and book money? What are the key economic units? Without this, any structure will inevitably be generic. Feel free to pro-actively ask follow-up questions to the initial case scenario the interviewer provides (make it short, be concise). Make sure you understand what the client's goal is (profit maximization, stopping a "cost leak", achieving a certain threshold, top-line boosting, etc.) - this will have an impact on where you focus your structure on.

This is also where segmentation comes in. Segmentation should be a simplified but meaningful proxy of reality, capturing the key drivers of the business. Depending on the case, that could mean customer segments (e.g., freight vs. business vs. economy in an airline), products, channels, or geographies. The goal is not to list options, but to reflect how the business truly operates.

Only after this clarification should you move into a structured profitability breakdown. “Revenue and costs” is perfectly fine at the top level—but it needs to be tailored underneath (I would personally expect an excellent candidate to give me another 3-5 levels). There is a wide range of possible levers (price, volume, mix, contribution margin, fixed vs. variable costs, etc.), and your job is to select the ones that are most relevant for the specific case and link them to your segmentation. That’s what turns a generic framework into a sharp one.

Crucially, the profitability equation is not there to solve the problem—it only locates and quantifies the symptom. Once you’ve identified where the issue sits, you need to explicitly switch gears.

Root causes are found through qualitative analysis, not through the (simple) equation in the first part of the case. A simple way to approach this is via Customers, Products, Competition, and Company (simple Victor Cheng framework), or by walking through the company's basic value chain (how do materials / value flow from suppliers, through company, to consumers). This is where you explain why the numbers look the way they do.

A strong overall approach is therefore:

• Quantitative: pinpoint and quantify where the issue is
• Qualitative: understand why it is happening (root cause)
• Solution & recommendation: define what to do about it

In short: the framework diagnoses where the problem is, but only qualitative analysis explains why - and that’s what ultimately allows you to solve it. Your initial framework should show / hint / explain the whole process.

Revenue cost is not the only way to break things down, please don't forget this! A profitability framework should not always be Revenue and Cost (in fact, it should almost never be as it's wholly ungeneric and untailored to the problem). Rather, think about other buckets like Customer, Competition, Geography, Product, Internal, External, etc.

GENERAL PROFITABILITY APPROACH
 

You need to understand the industry + company context from the prompt itself to figure this out...cases and case types cannot be memorized...you have to adjust every single time!

Example: LOOKING FIRST at Economy/Industry

In my Hot Wheels case, you're a Korean OEM with falling profits. You operate in the US and Japan. The FIRST thing you have to look at here is the general market AND how competitors are doing. Otherwise, you will never learn that US OEMs are doing well in the US while Korean OEMs are NOT doing well in the US. Then, you'll never solve the crux of the case which is that transport times+costs are prohibitively like (Just in Time delivery is the #1 product characteristic).

If you don't look at economy/industry first here, you will not solve the case in a time effective manner.

https://www.preplounge.com/en/management-consulting-cases/candidate-led-usual-style/intermediate/hot-wheels-186

Example NOT looking at Economy/Industry

Take my "Chinese Airline During Covid" case example. We know that the airline is in trouble due to covid. We can make the deduction that this is caused by a reduction in demand. As such, we don't really need to look into rest of market/industry

So, we want to "repair" existing revenue streams as much as possible. So, first let's see what we can do. Then, whatever "gap" is remaining, we want to fill it with alternative revenue streams. Finally, whatever we can't make up for, we have to fix through cost cutting (ideally cutting unused capacity). See the logic here?

And it'll change every time based on the case itself...think critically!

https://www.preplounge.com/en/management-consulting-cases/candidate-led-usual-style/intermediate/chinese-chess-airline-business-during-covid-19-191

GENERAL PROFIT DRIVERS

Volume Down: Competition reduced prices or improved their product (outcompeting you), competition just launched effective marketing, regulation has slowed you down, economic decline, environmental disaster, tarrifs, suppliers disrupting your production, your product no longer applies to the customer (i.e. decline has been happening for a while)...and so on and so forth...

Price Down: We're in a price war, costs have gone down so we're realising this, regulation has created a price cap, we ran a discount program

Variable Costs Up: Raw materials costing more, inefficient contracts, ageing workforce, deteriorating workforce, regulations, quality control

Fixed Costs Up: Recent large investments

================================================

REVENUE ISSUES/IMPROVEMENTS
 

Remember, you need to apply your revenue improvement ideas to the specific case at hand. You cannot be generic.

That said, some major ways companies boost sales include:

• SAAS (software as a service)
• (Relatedly) Subscription revenue
  • Get people onot subscription plans (i.e. Netflix)
• Behavior-changing "memberships" - i.e. Amazon Prime
  • When people enter Prime membership, they actually actively spend more than they did before
• Bundling
  • I.e. sell a few things together
• Radiation
  • Sell products similar to the current one
• Low-price entry
  • Get someone in with a super cheap/good deal, then, now that you have them as a customer, sell additional, higher-margin products (insurance companies do this, for example)

==================================================

COST ISSUES
 

In general, for determining cost issues, you need to break down the problem into a tree/root-cause analysis and ask the highest level (but specific) questions first! In this way, you essentially move down the tree.

How do you identify where to look? Well, you need to look into whichever of the following 5 make the most sense based on where you are:

1. What's the biggest? (i.e. largest piece of the pie...most likely to change the end result)
2. What's changing the most? (I.e. could be driving the most and most likely to be fixable)
3. What's the easiest to answer/eliminate? (i.e. quick win. Yes/No type of question that eliminates a lot of other things)
4. What's the most different? (differences between companies, business units, products, geographies etc....difference = oopportunity)
5. What's the most likely? (self-explanatory)

https://www.preplounge.com/en/consulting-forum/structure-breakdown-for-costs-7963

https://www.preplounge.com/en/consulting-forum/inventory-costs-how-to-segment-6861

https://www.preplounge.com/en/consulting-forum/direct-and-indirect-instead-of-fixed-and-variable-6272

https://www.preplounge.com/en/consulting-forum/when-should-i-break-down-costs-as-fixed-and-variable-as-opposed-to-over-the-value-chain-5990

Major Costs - Areas to Cut

FC

• Rent
• Labour (salaried employees)
• Transport (if we own the trucks, etc.)
• Capex
• Utilities (for the office, warehouse, etc.)
• Cbsolescence (wrong word...this is amortization/depreciation)
• Stolen objects (but shocked you heard this in a case)

VC

• Labour (hourly employees)
• Transport (if we pay a company per load)
• Fuel/truckers (if we own our own trucks etc. for transport)
• Utilities (if you need more energy to make more widgets)
• Raw Materials (why wasn't this included? Big one to miss)

This is a big big topic and profitability especially requires a mindset shift... not just swapping one formula for another. I cover this properly in my case interview course: Ace the Case Interview

And for the broader mindset behind all of this, search The Consulting Offer Blueprint on Spotify or Apple Podcasts.

This is a really common point of struggle for McKinsey interviews, and the feedback you're getting is very specific to what they look for. It's not about throwing out "revenue and costs," which is a foundational MECE split, but rather how you immediately adapt it.

For McKinsey, customization starts at the very top. While "revenue and costs" is always valid, simply stating it without tailoring shows a lack of immediate synthesis. If it's an airline profitability case, your initial framework should ideally already point to drivers specific to that industry, even at the highest level (e.g., "Yield & Load Factor for Revenue" or "Fuel & Maintenance for Costs" as sub-categories, or even framing the overall problem around optimizing routes or capacity). They want to see you hypothesize from the jump, not just apply a template.

Your sub-buckets should absolutely lean into specific drivers and hypotheses, not generic components. "Price x Volume" is a good underlying thought, but your framework should be about why price is changing or how to influence volume for this specific client. Is pricing under pressure due to commoditization? Is volume declining because of new market entrants? Your framework should be a logical tree of potential causes or levers for the client's problem, designed to be tested. This means moving beyond generic lists to a structured, MECE breakdown of the actual issues at hand.

The best way to practice this is to force yourself to build a hypothesis-driven framework from the start. What's your best guess as to why profitability is down for this specific airline? Then, build your framework as a series of branches to test or explore that hypothesis and its related drivers.

Hope this helps clear things up and gets you on track. All the best!

Hi, this is a very common issue, especially for McKinsey. The feedback you’re getting is actually a good sign.

On your first question:
“Revenue and costs” is totally fine at the top level. You don’t need to force creativity there. What matters is what you do right after.

A good approach is to start simple and then tailor one level down. For example, say revenue and costs, and then quickly break revenue into price × volume and adapt it to the context (airline, retail, etc.). That already shows you can structure and think.

The problem is usually not the top level — it’s staying too generic after that.

On your second question:
This is where you’re probably going wrong.

Start with structure, not ideas.

So instead of jumping into things like “pricing pressure, competition, customer segments,” first anchor yourself in something clean like price × volume. Then inside each, you can bring in those more tailored points.

For example:

• Price → competition, willingness to pay, product mix
• Volume → number of customers, frequency, capacity

If you start directly with the tailored points, it becomes a list. That’s exactly the feedback you’re getting.

A simple way to check yourself: if your buckets don’t have a clear logic (like a formula or a process), it’s probably a list.

One practical tip: before you speak, take a few seconds and ask yourself “what’s the logic here?” If you can’t answer that, simplify.

So overall, don’t overcomplicate it.
Start clean, then add depth. That’s what McKinsey is looking for.

Hi! To answer your questions:

1) For profitability cases, revenue and costs as first level drivers makes perfect sense. Usually, first level drivers need to capture high level MECE factors that need to be assessed in order to solve the problem 

2) Within the sub-bucket, taking an example of airlines, you would want to break down revenues in a way that is specific to airlines. Just price x volume won't do. 

Now, you could develop the formula from a demand or supply perspective. 

Think about the bottleneck for airlines? It is the number of seats i.e. capacity so a supply-side breakdown of revenue is more relevant. 

Therefore, something like: avg. no. of flights per day * avg. no. of seats per flight * avg. utilisation * avg. price * no. of active days in a year makes sense to give you a very quick idea. However, this only focuses on passenger revenue and makes certain simplistic assumptions that must be clearly called out and aligned on with the interviewer. In a real case, you will want to check with the interviewer about including cargo revenue and ancillary revenue for airlines (F&B, entertainment, etc.).

After you have broken down revenue and costs in a MECE way specific to airlines, your next step will be calling out hypothesis related to a few of your second level drivers. For e.g., perhaps avg. ticket price has declined due to commoditisation.

Good luck and feel free to reach out to help develop your structuring skillset! 

Echoing others above, your first level should still be governed by a clean profitability tree (revenue and costs) to demonstrate completeness and clear thinking.

From there, let the prompt and your clarifying questions guide how you tailor and prioritize the rest. Most cases implicitly lean toward either a revenue or cost issue, and your structure—and the order you present it—should reflect that.

In practice: anchor in a complete structure first, then adapt and lean into the side most relevant to the case.

Best of luck!
Mike 

Both questions point to the same issue. You are thinking in categories instead of hypotheses.

On standard vs custom: "revenue and costs" is not wrong but it tells the interviewer nothing about this specific business. For an airline case, saying "revenue per passenger and cost per seat" immediately signals you understand how airlines make money. Customization should happen at the top level, not just deeper down.

On sub-bucket depth: a list of ideas is not a structure. A structure has a governing logic where each branch answers a specific question. Instead of listing "price, volume, mix," ask yourself what is actually causing the revenue problem for this client. "Is the issue price pressure from competitors or are we losing volume in a specific segment" is a structure. "Price, volume, mix" is just labels.

Simple fix: before building any branch, ask yourself what question does this branch answer. If you cannot say it in one sentence, it is not sharp enough.

One reframe that helps: stop thinking of frameworks as containers to fill. Think of them as bets about where the problem most likely lives.

That shift alone will change how your structures land.

hey there :)

you’re very close already, this is a super common “last mile” issue.

on 1, “revenue and costs” is totally fine as a clean top level, but the tailoring should come immediately after. so yes, for an airline you’d quickly move to something like revenue per passenger and load factor instead of staying generic.

on 2, always prioritize structure over ideas. start with something like price × volume, because it gives you a clear logic. then you can layer in tailored drivers underneath, but only where it fits logically. the mistake is jumping straight to ideas without that backbone.

so think “structure first, then smart tailoring” instead of mixing both at the same level.

if you want, happy to run through one example together :)

best,
Alessa :)

To actually help you I would need to see you in a session. 

Based on what you describe, it sounds like you lean too heavily into predefined frameworks instead of applying first principles thinking to the client situation. 

I typically run a targeted session on this with my candidates.

If you need help, reach out and I'll explain how it works. 

Best,
Cristian