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Growth/Profitability cases root cause or not?

Anonymous A asked on Sep 19, 2019 - 3 answers

Hello,

Thje prompt in some cases tells you that profits/revenue have been declining or that CEO is not happy with revenue or performance and you are staffed to turnaround the situation (either improve profitability or grow revenue). In cases like that when you are not explicitly asked for root cause, are you supposed to look at root cause or dive directly into driving growth by improving revenue/cutting cost?

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Deniz
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replied on Sep 19, 2019
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Hi,

You are supposed to look at the root cause, so that you can devise appropriate actions to turn the situation around. Thus, in your structure, you can have a three-step approach:

  • Context: understand the client context, key market dynamics qualitatively
  • Diagnosis of financials: understand why the problem is happening (with a standard issue tree)
  • Next steps: layout which actions are feasible and can turn the situation around

Best,

Deniz

Vlad
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replied on Sep 19, 2019
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Hi,

The part of every consulting engagement in real life is diagnostics. Same with the cases. You should always find the root causes of the existing problems first before jumping into conclusions

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Francesco
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replied on Sep 19, 2019
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Hi Anonymous,

I agree with Deniz, in a case with a profitability problem or revenue you should first identify the reason for the problem, then look for potential ways to improve the situation. This because the easier way to improve the performance in terms of revenues or profitability is normally to fix the revenue or cost problem of the company.

The only case involving revenues where you don’t have to look at the problem is when you have a pure growth strategy case, where the company is doing fine and the CEO wants to improve performance even more, since in this case you simply don’t have an issue to investigate.

Best,

Francesco

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