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Two case mechanics questions

John asked on Sep 28, 2018 - 2 answers

I'm currently polishing my casing skills with first rounds coming up next week. After around 100, I have just a few "mechanical" questions regarding hypothesis and final recommendations.

1. I think it is important to state an initial hypothesis after I take 90 seconds to "structure my thoughts", but do you think it is better to state the hypothesis before or after you review your framework with the interviewer or does it matter? I usually do it before I review my structure because I think it helps them understand why i picked the things to look at that I picked, but I am open to other views on this because I know several folks do it after they review their structure and I would like to know why.

2. During your final recommendation, what order to review your recommendation, risks and next steps, why in that order, and do you think it matters? I usually stick to recommendation, risks in that recommendation, and next steps to move forward because some of my next steps are intended to mitigate those risks.

Looking forward to hearing others thoughts. Thanks in advance.

Best,

John

(edited)

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Guennael replied on Sep 28, 2018
Ex-MBB, Experienced Hire; I will teach you not only the how, but also the why of case interviews

When you state your first hypothesis does not really matter - and as others have pointed out (Vlad recently I think), you can very well pass the case without ever stating one. Having said that, there's some logic to saying "in order to solve the question, I will start from the hypothesis that is is possible; to prove it, here is how I am going to approach it". Not much benefit to doing it, but at least it is logical.

Fwiw, I don't really expect to hear a hypothesis until you've moved a little bit into the case.

The answer for your final recommendation is easier:

1. Repeat the question

2. Answer first

3. Supporting evidence + how that's going to help (quantify the result).

4. Next steps

If you really need to identify risks, be careful to indicated that you already took this into account. The clients wants a recommendation from someone who knows what he's talking about, not a "may be yes may be not" from someone hedging his bets.

That helps?

Vlad replied on Sep 28, 2018
McKinsey / Accenture / Got all BIG3 offers / More than 300 real MBB cases / Harvard Business School

Hi,

The major mistake of the candidates is that they start using the hypothesis and neglect having a proper structure.

Moreover, if you perfectly solve the case without ever stating a hypothesis - you'll pass the interview. So most probably you had some other issues with the case as well and they used it as a standard feedback.

There are two ways to use the hypothesis:

First - presenting a structure using the hypothesis. For example, if you are having a PE (private equity) case, you should do the following:

1) Make classic structure (market, company, competitors, feasibility of exit)

2) Make subpoints (e.g. in market: size, growth rates, profitability, segmentation, etc)

3) Present your 1st level Hypothesis:

  • - "In order to understand whether we should invest in Company A, I would like to check a number of the hypotheses - that the Market is Attractive, the Company is Attractive, the competition is favorable and we have good opportunities for of exit"

4) Present the main 2nd level Hypothesis:

  • "In the market, I would like to make sure that the market is big enough and growing;
  • In the company I would like to find additional opportunities for growth;
  • In competition I would like to check that the market is fragmented enough;
  • Finally, I would like to check if we have potential buyers and can achieve desired exit multiples"

Another way to use hypothesis is using the hypothesis to prioritize your analysis:

1) Make a structure: "Problem in sales may be related to Sales Motivation, Sales Strategy, Sales Coverage, and Sales Process:

2) Prioritize a part of the structure based on your knowledge / common sense / available data: "Taking into account that motivation is the core problem of the sales organization, I would like to prioritize this part of the analysis".

Answering your second question - It really depends on whether you have anything else to explore, that is more important than risks. The typical structure is the following:

  1. What was the objective
  2. Your recommendation
  3. Arguments why the recommendation is valid (2-4 arguments) with the supporting numbers
  4. Additional things you would like to explore. In the order of priority:
  • Things you still need to explore / data you need to get in order to provide a valid recommendation (Very typical for McKinsey cases where the interviewer guides you and interrupts in the middle of the case to provide a conclusion
  • Things you've slightly covered during the case but have not come to a particular measurable solution or were not the part of the original objective (e.g. alternative growth options or some questions on creativity)
  • Risks
  • Next steps

In my view, the last part (4th) of your recommendation should not be bigger than the rest of the recommendation (1-3), thus I will talk about risks if I have perfectly covered everything else in the case.

Example:

  1. Our objectives were to understand why the profit is declining by X and how to bring the profit back within one year (Don't forget that your objective should be measurable in terms of money / other metric and time)
  2. According to the analysis we've done so far, my recommendation is to shut down the division A and to concentrate on the divisions b/c if we want to increase the profit, and there is a number of reasons for that.. (Remember that your arguments should include numbers).
  3. You provide the arguments a) First of all, problems in Division A are the major driver of the decline in profits - 90% of the decline in profits refer to Division A. b) Secondly, the decline is driven by the contracting market size that is shrinking at xx percent and is not expected to improve in the near future. c) Finally....
  4. Additionally, I would like to check the option of seeling the division A products abroad. We have discussed several potential markets to enter but still have to check whether it will be feasible for us financially

Best