How to structure broad cases asking for root causes and improvement levers at the same time?

This is actually a very common type of case and your instinct is directionally right. the main issue is that your structure became too deep and complex to communicate effectively

My first point: going to a 4th layer is usually overkill. In an interview setting that level of detail is hard to deliver clearly without losing the interviewer. In most cases,a solid 2-layer structure plus a 3rd layer of supporting hypotheses is more than enough

Coming to your questions:

1) Integrating root causes and improvement levers

You have two clean options:

• Category-based approach (classic):
  Structure by revenues (price, volume, mix) and costs (fixed vs variable) For each bucket explain that you will first diagnose what is happening, and then identify improvement actions based on the findings. This keeps diagnosis and solutions logically linked without overcomplicating the structure
• Process-based approach (often easier to communicate):
  1. Diagnose the current situation (revenues and costs)
  2. Identify improvement levers (based on the diagnosis)
  3. Define an implementation roadmap (prioritization, impact vs effort)
  4. Assess risks and required capabilities

This second approach is often more intuitive especially in broad cases like this one, becaus it mirrors how a real project would be executed.

2) How exhaustive should you be?

Levels 3 and 4 (which, again, I would compress into one hypothesis layer) should not be fully MECE. If you try to be exhaustive there, your structure will become unmanageable and hardto communicate.

Instead:

• Keep levels 1 and 2 MECE
• Use level 3 for a few high-probability, well-chosen hypotheses

Think of hypotheses as examples you want to test not an exhaustive list The goal of the framework is to simplify complexity, not to show that you can list every possible issue.

A common trap is trying to “boil the ocean”; strong candidates prioritize and focus on the most likely drivers rather than covering everything.

If you want to discuss further feel free to DM me
Best,
Franco

Hi there,

Please get coaching. You need a fundamental mindset shift in frameworking/profitability

Imagine I'm a financial advisor. Your wife/husband loses their job. You ask me to find a solution to your family finances.

Are you happy if I say "Let me break things down into internal and external" OR if I say "Let me look at your root causes".

Please. Re-read the above.

Would you hire me?

Nope.

And NO FIRM WOULD HIRE BCG/MCKINSEY/BAIN if they say "let's look at your root causes".

Solve. The. Problem.

Framework

1. Get income for your spouse back up
2. Increase your income
3. Cut household expenses/spending.

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 high (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, tariffs, 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)
• Subscription revenue — get people onto 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 — 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 = opportunity)
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

Two things here and both point at the same underlying issue.

On combining root causes and levers: do not try to do both at the same time in one giant tree. That is exactly what made yours explode. Keep it as two stages. First, diagnose where the problem is. Second, once you know that, develop the levers. You say both stages upfront but only go deep on solutions once the diagnosis points somewhere. You do not need to list every possible lever before you even know the root cause.

On being exhaustive at every level: you do not need to be. MECE matters at the top of the tree. Below that, be hypothesis-driven, not exhaustive. Pick the two or three most likely root causes, state them as your starting hypotheses, and say you will revisit others if the data does not support them. The interviewer wants to see you prioritise, not list everything.

In your case: lead with the competitor hypothesis. New entrants compressing both volume and price hits revenue on two drivers at once. Test that first. If it holds, the levers follow naturally.

And if you feel uncomfortable leaving things out, just say it out loud: I am focusing on the highest-probability hypotheses first and will explore others if needed. That is not incomplete thinking. That is exactly how a consultant thinks.

Hi, good question — but honestly, you’re overcomplicating it a bit.

Your logic is fine, but you’re trying to do too much at once. That’s why it feels messy.

First point: even if the prompt asks for both root causes and solutions, don’t try to put everything in one structure. Just say upfront:
“I’d first like to understand what’s driving the profitability decline, and then look at how to fix it.”

Then do a clean diagnostic:

• Revenue
• Costs

That’s enough to start.

Second: you’re going too deep too early. You don’t need level 3 and 4 from the beginning. First figure out where the problem is. Only then go deeper.

If you don’t have data yet, don’t list 10 hypotheses. Just say something like:
“Given new competitors, I’d first look at volume and potential share loss.”

That’s already strong.

Third: you don’t need to be exhaustive at lower levels. Top level should be clean, but below that it’s about prioritizing, not listing everything you can think of. Long lists usually hurt you more than help.

Finally, on solutions: only bring them in once you’ve identified the issue. Otherwise it becomes theoretical. If you find that volume is down because of competition, then you talk about pricing, routes, differentiation, etc.

So overall:

• keep the structure simple
• don’t try to cover everything
• focus on one direction and go deeper there

That’s what interviewers are looking for.

Hi there,

This is a very common struggle — and the issue isn’t your thinking, it’s that you’re trying to do too much upfront.

The key point: you should not try to fully integrate root causes and solutions into one exhaustive structure from the start. That’s what’s making it feel messy.

A cleaner way to approach these cases is to separate diagnosis and action, but connect them logically:

First, structure for diagnosis only
Keep it simple and sharp:

• Profit = Revenue – Cost
• Break down to identify where the issue is (volume vs price, fixed vs variable cost, etc.)

Then explicitly say something like:
“Once we identify the key driver, I’ll focus on targeted improvement levers.”

That already shows you understand the link — you don’t need to build it into the structure itself.

Second, don’t aim for exhaustiveness at lower levels
This is where you’re overcomplicating it. Interviewers are not checking if you listed every possible cause. They care about:

• Are you prioritizing likely drivers?
• Are you forming a clear hypothesis early?

In your case, you already had a strong lead: new competitors. You could lean into that and say:
“I’d first prioritize understanding whether this is a revenue issue driven by increased competition.”

That’s much stronger than listing 10 possibilities.

Third, only bring in solutions once you’ve found the problem
Don’t pre-build solution trees. Instead:

• Diagnose → identify key issue
• Then pivot: “Given this is driven by X, I’d focus on Y levers”

This keeps your thinking clean and feels much more “consultant-like.”

Finally, on tailoring
You don’t need a perfectly tailored structure at the start for broad cases. The tailoring comes from:

• Your prioritization
• Your hypotheses
• How you steer the analysis

That’s what differentiates strong candidates — not having a hyper-custom 4-layer tree.

In short:

• Separate diagnosis and solutions
• Prioritize instead of being exhaustive
• Use hypotheses early
• Adapt as you go, don’t overbuild upfront

What you’re doing now is solid — you just need to simplify and be more decisive. That’s usually the turning point.

Happy to help you practice this live if useful

Best
Evelina

A lot of great insights from my colleagues: I loved Franco's distinction between the category-based approach and the process-based approach, or Ashwin's point on focusing on the highest-probability hypotheses. Let me add my two cents. 

A general note about profitability/improvement cases
These cases are rarely solved (or aced) with a good structure, because at the beginning of the conversation you have very little information to structure your hypothesis.

You need to add two small tools that will guide you towards a solution:

1. When you hear about worsening performance, always find benchmarks.

   The typical lenses an MBB consultant would use are:

   1. Time: today's performance vs. yesterday's performance, or vs. our best season/year in the current business cycle

   2. Market: our performance vs. industry average, our performance vs. the industry leader

      Having a clear benchmark will help you define clear objectives and understand what is realistic/unrealistic. These benchmarks will also help you find improvement levers, e.g., "I would like to understand what is the raw material sourcing strategy of the industry leader, to get new ideas and see whether we have some improvement margins there"

2. Communicate like a scientist to show you have a systematic, open-minded approach -- and to keep many "solution doors" open. E.g.,
   1. Root-cause focus: "I have three hypothesis for the profitability decline: (a) a general market decline, (b) an increase in OPEX, (c) a change in the product-price mix lead. I will start with ..."

   2. Improvement focus: "I would like to run three analyses to see whether we can reach XY% profitability: (a) Creating product premiumization, (b) ..., (c) ... . To see whether (a) is strategically sound, I would have to check data about demand from high-spending customer segments and understand potential risks with price elasticity harming our opportunities with other customers" 

       

A combined structure approach

The typical structure I suggest my coachees should use is a combination of the two lenses you were using -- financial and more strategic/conceptual

1. Financial Analysis – taking stock
   1. Revenues
      1. P: Pricing Strategy and product mix
      2. Q: Volume, both as aggregate and by segment
   2. Costs
      1. Variable costs
      2. Fixed Costs
   3. Profitability, as a combination a&b
2. Product Offering – looking for the root cause of the problem (and for improvement levers) in my offering
   1. Product types and differentiation
   2. Operations and supply dynamics (e.g., buyer vs. seller power)
3. Market – looking for the root cause of the problem (and for improvement levers) in the market dynamics
   1. Size, profitability, growth rate
   2. Customer Segments
   3. Competition dynamics (e.g., consolidation vs. fragmentation happening)

This is exactly how I would structure my project workstreams: an Analyst on financials to better understand the nature/size of the issue, an Associate on product offering and operations strategy, an Analyst on the market and demand dynamics

hey there :)

very common issue and you’re overcomplicating it a bit, for cases like this don’t try to fully integrate causes and solutions in one tree, instead structure cleanly as profit = revenue and cost, say you’ll first diagnose where the issue sits, and only then derive targeted levers based on findings, that already shows top tier thinking; at deeper levels you don’t need to be fully exhaustive, it’s much better to focus on 2–3 high probability drivers (e.g. competitor entry → price pressure or load factor drop) and explicitly say “I’d prioritize these first”, that feels structured and practical rather than scattered, and then link levers only to what you actually find instead of listing everything upfront

happy to practice this with you, it’s a big unlock once it clicks :)

best,
Alessa :)

Honestly, to give you a proper answer would require a much longer discussion than is appropriate for a Q&A section. So if you'd like to discuss it in more depth, reach out. 

In short, however,

Think of the interviewer as the client and you are working together with them on this problem. 

While it's important to be structured, comprehensive, exhaustive and insightful, don't let all of this get in the way.

You can simply say that you want to divide the analysis into two areas. And that for now you'll dive deeper into the first one only. Ask them if they agree. If they don't, then work from there. 

As long as you approach the interview as a conversation, and you show that you can work with a prospective client, that is absolutely amazing. That is exactly what the interviewers are looking for. 

Best,
Cristian