Paragraphs highlighted in green indicate diagrams or tables that can be shared in the “Case exhibits” section
Paragraphs highlighted in blue can be verbally communicated to the interviewee
Paragraphs highlighted in orange indicate hints for you how to guide the interviewee through the case
I. Workstream timeline analysis
In this phase, the candidate needs to determine that we need to cut scope. We have more scope than our teams can handle in the 12 months remaining, and we cannot hire more teams.
The information in this case can be provided in a fluid manner. While it is described below linearly, the candidate may ask for information in a different order. This is perfectly acceptable, and you can provide the information as they ask for it.
Exhibit I can be provided if the candidate asks whether we know how much effort/time is required across the workstreams.
You may also tell them that we currently have 10 teams, that each cost $100,000 per month.
For clarification, you can also tell them that the measurement “team months” means that 1 team would take 1 month to complete 1 unit of work.
If they ask, you may also clarify that teams can work at the same time on the same workstream.
The candidate should recognize the following:
- The teams are currently costing $1M / month in total, and will end up costing $12M by the end of the project.
- We would need 11.5 teams to finish the digitization program on time, with the current scope.
The candidate should brainstorm ideas for resolving this situation. A good candidate will recognize that, when it comes to project planning, only two of the following 3 items can hold constant: Time, Cost, Scope. In other words, something has to give; you have to accept project delays, pay more, or reduce scope (includes quality reduction).
If the candidate asks about/proposes time/cost/scope related items, let them know:
- Time – The project is unwilling to accept a project delay as they have made public announcements as to the digitization program timeline.
- Cost – The project is also unwilling to incur extra costs, as they have already been approved for extra budget and reached their maximum allowance.
- Scope – The project is unwilling to reduce quality, as its reputation is on the line, but not all work pieces are essential.
The candidate should realize that scope needs to be cut, and we should investigate the current scope of the digitization effort.
You should guide the candidate towards realizing that scope has to be cut. If they initially brainstorm solutions other than this (particularly around gaining efficiencies), that is fine (and even desired). However, you still need to counter. For example:
- Bring in more resources = we have maxed out our budget and cannot
- Restructure teams = Teams have already been restructured multiple times to no effect (and any additional restructure would be disruptive)
- Institute agile methodologies = Agile methodologies are already being used and teams are working as efficiently as possible
- Sacrifice some quality standards = We cannot sacrifice quality due to both industry regulations and our own company’s reputation/brand.
II. Scope analysis
In this phase, the candidate needs to determine that some work is worth doing and other work isn’t worth doing. They need to identify which work pieces should be continued versus dis-continued.
The candidate should clarify what work we are embarking on as part of this digitization program.
The major pieces of work in the digitization piece involve:
- Improving the customer experience
- Improving internal processes
- Leveraging data analytics to drive value
Have the candidate brainstorm how/why we might be gaining benefits from each workstream.
A good answer would include the following:
- Customer experience – a better customer experience means more customers will buy our products/services, ultimately providing a revenue uplift
- Process improvements – by improving our internal processes across products (i.e. handling complaints, processing new orders, etc), we can reduce the time taken across activities, thereby requiring a smaller workforce and reducing costs
- Data insights – by leveraging our customer and system data, we can run predictive analytics to improve marketing campaigns, recommend additional products to customers, solve issues before they appear, etc. This provides both a revenue and a cost uplift
Exhibit II can be provided if the candidate asks whether we’ve estimated how much value these workstreams will bring to the business.
Upon reading the exhibit, the candidate should note that some workstreams are worth more than others. Furthermore, benefits don’t necessarily correlate with time remaining.
- Data insights – generally have a lot of effort/time remaining, but don’t provide much value
- Process improvements – do take a lot of time, but they also provide the most benefits
- Customer experience – is somewhere in the middle effort and benefit-wise, but is much more valuable for Mobile Phones than for the Internet
Ask the candidate to calculate the marginal monthly benefit of these workstreams across our products.
If the candidate doesn’t understand: Clarify that they need to look at the Net Present Value (NPV) of each work piece compared to the months of work remaining for that workpiece.
The candidate should understand that we are figuring out the monthly benefit of each piece of work (i.e. if it takes 10 team-months and is worth $1M, it’s worth $100,000 per team-month).
The candidate should recognize that, because we have the monthly cost of each team, we’re effectively figuring out what scope will actually see a positive ROI. A benefit of <$100,000/month is not worth completing, because our teams cost $100,000/month.
Answer (cells in green are scope worth completing. Red cells are scope we should cut):
III: Team allocation and cost savings
To finish the case, the candidate needs to figure out how many teams we need, and what our ultimate savings and benefits will be.
If they don’t come to this conclusion themselves, prompt them to think about our case prompt/issue. Ask them if we still need all 10 teams. Or, ask them what happens to the teams that were working on the scope we need to cut.
If needed, specifically ask them to calculate how many teams we’ll need for each remaining piece of work.
By dividing the remaining work matrix by 12 (number of months remaining), we can calculate the # of teams required for each piece of work.
The candidate should note that we only need 5.5 teams in total. That means 5 full-time teams and 1 half-time (or full-time for first 6 months) team.
An excellent candidate will understand/note the following:
- We could actually keep all 10 teams and allocate them across the 6 work pieces until completion. This would let us:
- Realize benefits earlier
- Finish the digitization program early (good for publicity/morale)
If the candidate hasn’t taken the initiative to calculate benefits, ask them what our total savings from scope cutting will be, as well as our total realized benefits.
Total cost savings (team reduction): $5.4M (4.5 teams X 12 months X $100,000/month)
Total benefits realized: $14.1M
Total benefits realized after costs: $8.7M