Approach to Diagnostic Questions without a Numerical KPI

Hi!

All your examples can be easily translated into a numerical metric! It is your duty to align with the interviewer, what the EXACT definition of your focus metric is!

For example:

• Churn rate could be defined as the number of customers who churn (let's say in a year) divided by the total customer base
• Customer payment time can simply be measured in terms of days until payment. You can then segment into different customer types and identify the problem segment where the number of days is very high
• Customer experience could, e.g., be measured by number of people who recommend your product/service divided by number of people who would not recommend. 

All these are just examples. You can brainstorm a couple of options and discuss with the interviewer, how your objective should be measured. This is your duty as interviewee! And this is how strategy consultants work! Making things measurable is a core element of the job!

Cheers, Sidi

P.S.: There are endless further examples, also in the non-profit space (e.g., "How to improve the education system in country XYZ?" --> you HAVE to define, what improvement means! Otherwise structuring is IMPOSSIBLE. It could, e.g., be number of children entering the school system, or number of graduates generated by the school system, or quality of these graduates, etc. Then you disaggregate this definition into its logical drivers in order to perform the analysis how to influence each dirver).

Hi,

MECE is not a requirement and it can not always be applied.

You should build a structure using your previous experience, based on:

• Objective (Should have a metric and time-frame)
• Context
• Type of the case

E.g market entry cases can have completely different objectives:

• Should we enter the market?
• Which top 3 markets out of 10 we should enter?
• Can we get xx% market share on the new market?
• Can we get xx ROI if we enter this market?
• etc

Depending on the Objective and the Context you should come up with a proper structure to address the problem. Of course, you may use the patterns that you've learned while solving the other cases.

There is a number of ways how you can approach the structure:

1. Mathematical issue tree (e.g. Total time spent on cleaning operation = # of people x Frequency x Hours per cleaning per person) or formula (e.g. output rate = total number of people being served / time to serve one person) or common industry drivers (e.g. revenues = # of customers x av. check) (e.g Passengers on the plane = capacity x Load Factor) or the industry revenue streams (Fuel revenues / non-fuel revenues for the gas station)
2. Drivers (e.g. drivers influencing the birth rate in a country)
3. Buckets structures (e.g. for the problems in sales : Sales strategy / sales people and allocation / motivation / sales process). Very often it's a real framework used by the consultants (e.g. the famous Bain Cap framework for PE due dills: Market / Competitors / Company / Feasibility of exit)
4. Frameworks (e.g. People / Process / Technology) (e.g. The famous McKinsey framework - People don't want to do smth / they can't do smth / smth prevents them from doing that). Even academical frameworks in the rare cases (e.g. Product / Distribution / Price / Marketing (Also known as 4P))
5. Value chains / Customer Journey / Process steps
6. Consecutive Steps of the project (Analyzing cost structure / Benchmarking to calculate the cost savings potential / Analyzing the processes to reach the potential / Calculating costs and benefits)
7. Etc

There is no magic pill to learn building the MECE issue trees. It comes with a lot of Practice and reflection and building proper industry and functional knowledge.

Best!