How to identify and solve growth case disguised within a profitability case?

Question

In my personal definition, I usually think profitability cases as a situation of specific factors “trigger” a profit drop and we need to turnaround the situation, while a growth case is a situation which a business has not been performing well for a while and we need to take some initiative to grow the business.

I have encountered a few times “growth” type of case hidden with in a profitability case. As the way I solve these two type of cases are different, I easily get confused by these type of cases, especially when there is more than one client objective.

For instance, in Kellogg 2020 Case Book, Mustard Clinic's prompt: “In the last few years, the hospital’s profitability has fallen, and they are facing bankruptcy. The CEO asks you: “Why has profitability gone down and how can we turn it around?” The whole case then focus solely on how to grow the profit, and does not touch on ”why has profit gone down", and no information about historical profit change and related historical numbers are given. Since there were 2 key questions (i.e. why did profit go down and how to grow profit), I was quite confused that the whole case omitted the first question. Are there any advice on how to solve these type of cases? Thanks for your advice!

Answer 1

Hi there,

You can have indeed different evolutions for a case given the initial question, but this should not change your approach for the very initial question; you should always structure the question asked according to what is requested by the interviewer.

So if the initial question is “Why profits decreased and how to increase profits?” you should structure that particular question (thus presenting a structure for both parts).

The case may then evolve as a growth strategy case without the need for an analysis of the decline of profits or costs. That is up to the interviewer. If the following question is about revenue growth, you should then structure that new particular question.

Best,

Francesco

Answer 2

There doesn't have to be a trigger. People like profits and growth even when they don't have had problems :)

Regarding your a profitability case becomeing a growth case… it really depends on the prompt. I have cases where the objective is growth regardless of margin (i.e., as long as its profitable) and others where you look for growth but you have to consider how to maximize margins. Both are growth, but not exactly the same thing.

The takeaway here is that you cannot use the same approach regardless of the specifics of the question being given. In high value add consulting we always customize the approach to the specific problem. So we expect candidates to do the same.

Answer 3

Hi there,

This truly depends on the case!

Just remember that all profitability can be about fixing a revenue/cost problem and/or finding a revenue/cost opportunity.

There does not have to be a problem for improvements to be made.

Always be prepared for “growth” in profitability cases, in the sense that there may always be a situation to grow revenues/profits in new business streams.