Lets say my first structure was profitability, then we found a problem in revenue , now i have to make business situation structure.
should i draw it seperately or continue making structure within structure (within profitability)
How to make 2+ structures?
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Hi Alex,
you first need to isolate what numerical driver causes your profit decline. Revenue is too high level, you need to find out whether it is an issue with pricing, or the product mix, or the quantities. If, e.g., lower quantity is the problem, then you drill deeper to understand the concrete numerical driver (e.g., the average number of items per purchase has not changed, but the number of purchases has gone down --> then you drill deeper to understand what is driving this --> e.g., the number of customers has not changed, but their average frequency of purchasing has gone down --> this is the numerical problem driver! You isolated it just by means of a driver tree).
Once you have isolated the problem driver (WHAT is the problem?), then you check on the qualitative reasons that might have caused this very problem driver to develop negatively (WHY does the problem exist?). You exclude all other areas of the tree because they are not relevant. This is how you run effective and efficient diagnostics. This second step of qualitative analysis might indeed require some extra structuring once you reach it!
Cheers, Sidi
(edited)
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Hello Alex,
It's not important. The only thing you should care about is to have clear and structured notes that are easy to read.
Best,
Luca
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Hi,
It doesn't matter whether you draw separately or you draw within/along your original structure.
What matters is that before you switch the structure/framework, make sure you have already exhausted your first structure (at least for the revenue branch). In this case, this means before you move to a business situation structure, make sure that you have probed and get all the key info out of profitability structure, you already nail down "what" is (are) wrong in profitability. Only then you move on to business situation structure to understand the "why" and "how".
If you exhausted the revenue branch but not the cost branch, you can still switch to drill more on revenue, but you need to remember to come back to cost branch again later.
Best,
Emily
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Hi Alex, it is totally fine to draw a new one. Ask for another minute and go for it.
Best,
Antonello
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Hi,
It doesn't really matter how you draw it. If it fits on paper - you can continue. If not - you can draw a new one. One thing that is important - you should be always structuring through the interview
Best
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Hello!
Normal process would encompass:
- Going from profitability to revenue > once you have identified indeed that the issue is not in the cost part.
- Narrowing down what precisely is affecting revenues. You could, for instance:
- Ask for the revenue breakdow
- Ask for the evolution of those sub-segments historically, to see which ones has particularly increased/dropped
- Once the sub-segment in revenue has been identified, you need to understand what are the drivers causing this
Hope it helps!
Cheers,
Clara
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