Hello all,
I would like to learn your opinions regarding the profitability framework. Should I start with analyzing the market, competitors and customers etc in the first bucket and dive into the analyzing current revenue and cost numbers in the second bucket or vice versa?
Thanks.
Oh boy. We need to take a step back!
Make sure you're not just saying words. Frameworks can't be memorized. You have to apply them to the case!
I'm going to take a step back and answer the question you're really asking: How do I use frameworks in a case?
If there's anything to remember in this process, is that cases don't exist just because. They have come about because of a real need to simulate the world you will be in when you are hopefully hired. As such, remember that they are a simplified version of what we do, and they test you in those areas.
As such, remember that a framework is a guide, not a mandate. In the real-world, we do not go into a client and say "right, we have a framework that says we need to look at x, y, and z and that's exactly what we're going to do". Rather, we come in with a view, a hypothesis, a plan of attack. The moment this view is created, it's wrong! Same with your framework. The point is that it gives us and you a starting point. We can say "right, part 1 of framework is around this. Let's dig around and see if it helps us get to the answer". If it does, great, we go further (but specific elements of it will certainly be wrong). If it doesn't, we move on.
So, in summary, learn your frameworks, use the ones you like, add/remove to them if the specific case calls for it, and always be prepared to be wrong. Focus rather on having a view, referring back to the initial view to see what is still there and where you need to dive into next to solve the problem.
Hello!
I agree with Moritz here! As we say in Spanish, you are building the house starting with the roof!
The first and most important step is to understand our target, what our client needs help with. This totally determines what follows, in terms of framework and order.
Here I leave you the link of cases that I have published here in the library that include similar problems, with an issue tree analysis regarding profitability, among other stuff. Another great thing is that, if you have any questions, you can reach out directly to the author!
Telco startup: https://www.preplounge.com/en/management-consulting-cases/interviewer-led-mckinsey-style/intermediate/supermovil-telco-startup-market-expansion-184
Railway market entry: https://www.preplounge.com/en/management-consulting-cases/interviewer-led-mckinsey-style/intermediate/market-entry-disrupting-the-new-york-boston-railway-industry-258
Swiss manufacturer market assessment, profitability and scenarios:
Hope it helps!
Cheers,
Clara
Hello,
A framework should be specific to the case it is applied to! Both of the approaches you outlined are fine (at a very very general level I think that figuring out if the issue is revenues or costs usually makes more sense as a first step, but this is by no means true for all cases!), it really depends on the prompt, and what it is guiding you towards. Frameworks should not be memorized and applied in the same way to all cases. Learn the building blocks, and then pick and choose which best apply to which case. I would recommend doing some cases live to really understand this difference in practice. If you are interested in getting expert feedback or in working through some of these examples with a coach, I would be more than happy to help - feel free to shoot me a DM.
Hi there,
A framework is a starting point and needs to be tailored to the specific problem you are solving for.
Typically in profitability problems , you start with segmenting either cost or revenue components (by product, customer type etc.) and compare historical trend or against competition to identify issues that are hurting profitability. The segmentation and comparison will depend on the case context.
Thanks
Hi there,
You have it completely the wrong way around - and I don’t mean the framework itself. What I mean is that there’s absolutely no point in talking about any framework without having a specific context + objective.
You need to really engage with the latter to devise the best plan of action, which is what your framework should be: a targeted and fit for purpose analytical action plan for the 30-40 mins you have for the case, based on a specific context + objective.
What you’re doing here is a bit of a red flag (don’t mean to be harsh at all, just want you to shift your mindset to where it needs to be to be successful).
Let me know if this is something you’d like help with!
(edited)
