How to Open, Analyze, and Close a Case Interview (Part 3 of 12) | caseinterview

Summary

This video script offers a structured approach to case interviews, emphasizing a three-step process: opening, analyzing, and closing a case. It highlights the importance of understanding the problem, verifying facts, and choosing the right framework for analysis. The speaker shares personal experiences and strategies, such as using 'stall' techniques to gather thoughts and being flexible with frameworks. The script provides insights into consulting methodologies, including hypothesis testing and breaking down complex problems into manageable components.

Takeaways

• 📚 The speaker emphasizes a three-step process for handling case interviews: open, analyze, and close.
• 🔍 Opening a case involves stalling for time, verifying understanding of the facts and terminology, and structuring the case for analysis.
• 🤔 The importance of pausing before speaking is highlighted to gather thoughts without giving the impression of confusion.
• 🗣️ Clarifying questions are essential to avoid misunderstandings due to industry-specific jargon or complex business models.
• 📉 When structuring a case, identifying the type of problem and selecting the appropriate framework is crucial for effective analysis.
• 📝 The speaker suggests using a 'backup framework' for cases that don't fit standard problem types, essentially breaking down the situation into its core components.
• 🔑 Hypothesizing is a key part of analysis, where one formulates a preliminary assumption about the problem and tests it with data.
• 📊 Data is used to validate or refute hypotheses, guiding the direction of the analysis and ensuring a logical progression.
• 📈 The process of analysis is likened to breaking down Lego blocks, examining each piece to understand the whole.
• 🛠️ Flexibility in problem-solving is encouraged, with the speaker noting a transition from a rigid approach to a more creative and flexible one as one gains experience.
• 📚 The speaker also mentions the concept of 'compound framework problems,' where multiple frameworks may be necessary to address a single case.

Q & A

What is the three-step process for handling a case as described in the script?

The three-step process for handling a case includes: 1) Opening the case by stalling, verifying understanding, and structuring the case for analysis. 2) Analyzing the case by breaking it down into its constituent elements. 3) Closing the case, which is not explicitly described in the transcript but would involve solving the problem based on the analysis.

Why is stalling an important initial step when opening a case?

Stalling is important because it gives the consultant a few seconds to think about the problem before responding. It also prevents the impression that something is wrong if a pause exceeds five seconds, which can be perceived negatively.

What is the significance of verifying understanding in the case opening process?

Verifying understanding is crucial to ensure that the consultant has correctly grasped the facts and terminology, which can vary across different industries. Misunderstandings can lead to solving the wrong problem.

What does the speaker mean by 'structuring the case for analysis'?

Structuring the case for analysis involves identifying the type of problem, selecting the appropriate framework for that problem, and identifying the key components of the framework that will guide the analysis.

Can you explain the concept of a 'compound framework problem' mentioned in the script?

A 'compound framework problem' refers to a situation where multiple frameworks are needed to solve a case. It can be challenging for beginners as they might struggle to determine which framework to apply, especially when the problem seems to fit multiple categories.

What is the role of hypothesis in the case analysis process?

The hypothesis guides the direction of the analysis. It is a proposed explanation made on the basis of limited evidence as a starting point for further investigation. In the context of case analysis, it helps to focus the investigation on potential causes or solutions.

How does the speaker suggest approaching the analysis of a case when no specific framework is suggested by the client?

The speaker suggests starting by asking if there's any information that would suggest where to begin in the framework. If not, they recommend stating a hypothesis and then picking a branch of the framework to start analyzing.

What does the speaker mean by 'breaking apart' when referring to the analysis of a case?

The term 'breaking apart' refers to the process of dissecting a complex problem into its fundamental components or elements. This allows for a more detailed examination of each part to understand the underlying issues.

Why is it important to state all the major issues within a branch of logic before diving into the analysis?

Stating all the major issues ensures that the consultant has considered all possible aspects of the problem. It also prevents the client from assuming that any unmentioned issues were overlooked.

How does the speaker describe the transition from a rigid, mechanical approach to a more flexible and creative one in case practice?

The speaker describes an initial phase of practicing cases in a very regimented manner, strictly following the steps until the process is mastered. After that, they suggest becoming more flexible and creative, adapting to the nuances and complexities of real-world cases.

What is the significance of drawing the framework during the case analysis?

Drawing the framework is important for visual clients to follow the consultant's thought process. It makes the analysis more collaborative and easier to understand, especially when dealing with complex problems and solutions.

Outlines

00:00

📚 Opening and Structuring a Case

The speaker introduces a three-step process for opening, analyzing, and closing a case. They emphasize the importance of practicing the process rigidly until it becomes second nature, and then becoming more flexible and creative. The speaker also discusses the concept of using multiple frameworks within a single case, which can be challenging for new practitioners. The first step in opening a case is to 'stall' to buy time to think, followed by verifying understanding of the facts and terminology, which is crucial due to industry-specific language. The speaker provides an example involving the reinsurance industry to illustrate the importance of understanding terms like 'reinsurance' and 'premiums' before proceeding with case analysis.

05:02

🔍 Verifying Understanding and Structuring the Case

Continuing from the previous paragraph, the speaker stresses the importance of verifying the understanding of the client's problem and the specific words used. They advocate for paraphrasing the client's issue to ensure clarity. The third step in opening a case is structuring it for analysis. This involves identifying the type of problem, selecting the appropriate framework, and identifying key components. The speaker provides an example of a profitability problem and explains how to structure it by looking at revenues and costs. They also mention the importance of drawing the framework out during the discussion to make it collaborative and visually accessible to the client.

10:02

🧐 Analyzing a Case and the Scientific Method

The speaker defines 'analyze' as breaking down a subject into its constituent elements, like separating Lego blocks. They discuss the importance of this in consulting and case interviews. The process involves asking if there's any information suggesting where to start, stating a hypothesis based on the framework, and then testing this hypothesis with data. The speaker uses the example of a company with a 20% drop in profits, hypothesizing it could be a revenue problem, and then adjusting the hypothesis based on the data received. They also emphasize the importance of identifying key issues within each branch of the framework and asking for specific data to address these issues.

15:04

📉 Hypothesis Testing and Framework Branching

In this paragraph, the speaker further explains the hypothesis testing process. They illustrate how an initial hypothesis about a revenue problem could be proven wrong if data shows that revenues have increased. The speaker then shifts the hypothesis to a cost problem. They discuss the importance of selecting a branch of the framework to start with, such as revenues, and identifying key issues like whether revenue has increased, stayed the same, or decreased. The speaker emphasizes the need to state all major issues before diving into data analysis to ensure nothing is missed and to maintain a client-friendly approach.

Keywords

💡Framework

A framework in the context of the video refers to a structured approach or set of guidelines used to solve specific types of problems. It is integral to the video's theme of case analysis, where different frameworks are matched to different problem types to streamline the problem-solving process. The script mentions the use of multiple frameworks within a single case and the difficulty of transitioning between them, illustrating the complexity of real-world problem-solving.

💡Case Analysis

Case analysis is the process of examining a situation or problem methodically to identify issues and formulate solutions. It is the central theme of the video, where the speaker outlines a three-step process for opening, analyzing, and closing a case. The script demonstrates the mechanical and creative aspects of case analysis, emphasizing the importance of a structured approach before delving into more flexible problem-solving.

💡Profitability Problem

A profitability problem is a type of business issue where a company's profits are decreasing or not meeting expectations. In the video, the speaker uses this as an example to explain how to structure a case for analysis. The concept is used to illustrate the process of identifying the problem type and selecting an appropriate framework for analysis, such as examining revenues and costs.

💡Hypothesis

In the video, a hypothesis is a proposed explanation made before conducting a detailed analysis, which can then be tested and validated or refuted with data. The term is used to describe a preliminary assumption about the cause of a problem, such as assuming a drop in profits is due to a decline in revenue. The script illustrates how hypotheses guide the direction of data collection and analysis.

💡Revenue

Revenue is the income generated from the sale of goods or services. In the context of the video, it is a key component in the analysis of a profitability problem. The speaker discusses how changes in revenue can affect profits and is a critical factor to examine when trying to understand why profits are down, as seen in the example where the CEO of a company is concerned about a 20% decrease in profits.

💡Costs

Costs refer to the expenses a company incurs in the process of generating revenue. The video emphasizes the importance of examining costs in conjunction with revenues when analyzing a profitability problem. The speaker mentions fixed and variable costs, and the need to understand cost trends and structures to identify issues affecting profit margins.

💡Stall

To stall in the video means to intentionally pause before responding to a question or problem, buying time to think without giving the impression of being unprepared. The speaker suggests using a stall as an initial strategy when opening a case, as it allows for a moment to gather thoughts and plan the approach to solving the problem presented.

💡Verify

Verification in the video script refers to the process of confirming one's understanding of the facts and terminology presented in a case. It is a crucial step in case analysis to ensure that the problem is correctly understood before attempting to solve it. The speaker emphasizes the importance of asking clarifying questions to avoid misinterpretations that could lead to solving the wrong problem.

💡Structure

Structuring a case in the video involves organizing the approach to problem-solving by identifying the type of problem and selecting the appropriate framework. It is the third step in the speaker's outlined process for opening a case. The term is used to describe the act of laying out a clear path for analysis, which includes identifying key components and drawing out the framework to visualize the problem.

💡Collaborative

Collaborative in the script refers to the approach of working together with the client during the case analysis process. The speaker mentions adjusting body language and positioning to convey a sense of partnership, such as moving the chair closer to the client and drawing the framework in a way that is visible and understandable to them. This approach is meant to foster a more interactive and client-friendly experience.

💡Analyze

To analyze, as defined in the video, means to break down a complex entity into its constituent elements to understand it better. The speaker uses this term to describe the process of examining each part of a business problem individually. The act of analyzing is central to consulting and case interviews, where it is necessary to dissect issues to identify the root causes and potential solutions.

Highlights

The importance of following a structured three-step process for opening, analyzing, and closing a case.

The initial mechanical approach to practicing case interviews to master the process before becoming more flexible.

The concept of using multiple frameworks within a single case to address compound problems.

The challenge of transitioning between frameworks as new information becomes available during a case.

The strategy of stalling at the beginning of a case to buy time for thought.

Verifying understanding of facts and terminology to avoid misinterpretation across different industries.

The necessity of asking clarifying questions to ensure a correct understanding of the case's industry-specific language.

The method of paraphrasing the client's problem to confirm the correct understanding of what the client wants solved.

Structuring a case for analysis by identifying the type of problem and selecting the appropriate framework.

Identifying key components of a framework to guide the analysis of a case.

The technique of drawing out the framework during the case discussion to visualize the problem-solving approach.

The significance of body language and collaboration in presenting information during a case interview.

Breaking down complex business problems into their constituent elements for analysis.

The scientific method approach to hypothesis formation and testing in case analysis.

The process of selecting a branch of the framework to start the analysis based on the hypothesis.

Identifying and stating all major issues within a branch of logic before diving into data analysis.

The iterative process of revising hypotheses based on new data and analysis.

The importance of client-friendly communication, including laying out all issues and asking for data.

Transcripts

oh good right on track here okay uh

let's talk about how to uh open uh

analyze and close a case so it's a

three-step

process I'm going to go through the

process mechanically and then I'm going

to demonstrate it one thing too is um I

mentioned earlier there's sort of more

well um I'll I'll say that for

later actually what I wanted to mention

was when you go when you practice cases

I found for myself that was very

mechanical early on in the process of

practicing okay so step one step two

step three every single time um very

rigidly until I sort of mastered that

process and then later what I do is I

would be sort of more creative and more

flexible and I don't know if that's sort

of how everyone does it but I thought I

just point that out that for me it was

very regimented early on until I could

do it in my sleep sort of this the first

part of a case uh and then I started

getting very flexible so an example is

you heard of framework which is sort of

standardized approaches for solving

certain kinds of problems um you often

times find that in reality you'll use

multiple Frameworks within a case okay

we'll talk about I call I call that a

compound framework problem and

um and it's very hard for um someone

who's just practicing to do a compound

case problem because they're thinking

which problem is it and which framework

do I fit it in but as you get

information through the case you realize

ah I thought it was a you know cost

problem but it's actually like a

marketing problem different problem

different framework and sometimes people

can't make that transition okay so

here's how I open a case there a lot of

ways to be right um first thing I do is

I stall okay they say client says you

know should I go acquire my biggest

competitor okay and I always say no joke

H that's an interesting question bought

myself 10 seconds okay five seconds

before I speak because you get past six

study show if you pause for more than 5

Seconds people think something's wrong 5

Seconds say the work another 5 seconds

I'm thinking like how the heck do I

solve this problem I have no freaking

idea okay um and I've had I've had out

of my 60 cases I did I probably I've

said that probably at least 20 30 times

and about 15 of them I literally had no

idea because it was sort of really out

of left field okay and I had to stop and

think for a second um so it's good to

have a phrase don't all use that phrase

but if you if it all come back to

me okay the first thing you want to do

is you want to verify your understanding

of facts and terminology very important

because in different Industries they use

different words to mean different things

uh so for example if I I had a client

who was in reinsurance and so I might

give a case that would say uh the CEO of

a reinsurance company uh is concerned

that premiums are down 15% what do you

tell the client to do okay and and if I

were on the receiving end of that my

first thought is hm that's an industry

question what the hell is reinsurance

right and so I would say can I ask some

background questions before I get

started sure what's reinsurance it's the

insurance company for insurance

companies oh okay so for example if

you're in a hurricane insurance

companies have insurance policies on

their homeowners policies so if they

lose more than $2 billion in Florida for

example the reinsurance company pays ah

okay so the insurance company I get that

um next question what's a premium is

that like profits no that's like

revenues that's what people pay on their

policy they call it premiums ah okay so

basically you're saying that the client

is asking me that uh revenues are down

20% what should he do is that right yes

I got it okay so almost all the time I

would ask I'll ask clarifying questions

um for a couple reasons because you

don't want to like just because of a a

difference in vocabulary words like blow

a case because you misunderstood the

information so if you don't get it

explain it and sometimes what happens is

a lot of interviews they will use um

their actual clients cases they'll just

change the names so they have like

they've done lots of data analysis and

they know everything

and and so some of these clients are

really esoteric businesses like I had

one I had one case that was um in a

really bizarre Health Care insurance

client was the client situation and it

took me 10 minutes just to even figure

out what what business are they in like

and like and there's like there's not a

customer but there's like a customer and

an affiliate it was a very complicated

relationship and I couldn't even

understand the basic facts of the case

let alone the problem they were asking I

had a very hard time understanding is

there one customer do they pay no they

don't pay somebody else pays oh so the

person paying the money is not the

person receiving the service correct but

there's a fourth party involved that's

the government oh how does that work and

I couldn't understand that and so I

spent I devoted time to figuring out

just what the heck are they talking

about so if you don't understand what

they're talking about take the time to

make sure you understand it because if

you're solving the wrong problem you

can't get it right

okay second thing to verify is making

sure that the that your understanding of

what problem this client want solved is

in fact right okay so pay attention to

the specific words and literally the

grammar what's the subject what's the

object right and think about what it is

they're asking and and I would spit it

back out paraphrase it's like a good

listing skill in general spit it back

out so do you mean the client wants to

know whether or not they should merge

with their biggest partner correct got

it okay

um so that's important and and the last

one is when you open a case the third

step in opening a case is you structure

the case for

analysis which is a a putting a a

framework basic picking the right

framework essentially and saying to

solve this case we need to understand

four core

ideas so to open a case stall verify

structure I'll move it up there you

go

yes struct the case do

you next slide what do I mean by

structuring case

um I love when people do

that it's a four-step process to

structure a case means first identify

the type of problem or situation that

we're trying to solve for the client

like it's a profit problem it's a very

common one profits are down what do you

do oh okay it's a profit problem

or uh they're thinking of launching a

new product Oh that's a new product

problem okay or they're thinking of

entering the China Market oh that's a

market entry problem okay so there's

sort of categories of problems and and

I'll show you for what kinds of problems

which Frameworks I found useful to solve

those kinds of problems so it's like a

matching thing so the first thing you're

doing when you're opening a case is

figureing out what the heck are they

talking about okay what kind of problem

is it and sometimes it's confusing so

that's why you have to verify your

understanding make sure you understand

that uh find the type and then pick the

right framework for that kind of problem

okay because if you sort of pick the

wrong framework you start Gathering data

in the wrong places right and it sort of

waste time more than anything

else once you have a framework chosen

you want to pick the key components

identify the key components of that

framework so as an example I'll show you

in a second if it's a pro problem the

framework is you know revenues Minus

cost equals profits right so to

understand profits are down by 20% we

need to look at revenues and we need to

look look at costs and that'll help us

understand that's sort of like a

standard opening for a profit problem

I'll walk through all the standard

verbiage you don't want to mention the

actual framework by name so don't say

you know oh that's emergers and

acquisition framework problem or that's

a Portis 5 forces problem um just use

the framework it makes you look smarter

and you know they know they know you're

sort of know this stuff and but it's

just like pretend right that sort of

came out of your head um and then

finally draw the framework

out it's important so I'll give you an

example that right

now so let's say um the example is the

case interview is um uh the CEO of ABC

company comes to you and say profits are

down by 20% what do you do okay and and

I would say I would verify that's

interesting let me think about that for

a second verify my understanding what

they what they're asking

for and um and then say okay that's a

profitability problem I know that I've

seen those before

and what I would say great to understand

uh how to address this client situation

we need to look at their company's

profits and why it's decreasing by 20%

once we understand that we can figure

out what we can do about it to

understand profitability we need to look

at two key things revenue and costs and

I would literally I'll literally

literally draw this as I'm talking

okay and just from a dynamic standpoint

um sometimes I'll actually move my chair

closer to them so rather than being sort

of adversarial

I will do it this way let me show you to

understand profits we got to look at

revenues first okay and then costs right

um and that's more collaborative and

it's a client skill too right if you're

meeting an average saleor clients

there's a reason for behind all if

you're meeting an average saleor client

when you when a police officer

interrogates a criminal what do they

do right across from one another if

you're being collaborative you do it

together you see and so it has a

different body language so I'll do that

too little things um and but but also

the other reason is that way you don't

have to like write upside

down because they can't if you do it

this way they can't read it like I can't

draw it upside down so I got to come

around and say come on over here let me

show you first we got look at profits

revenues and costs or I'll draw it my

way and then I'll turn it around and

show it to them like a lot of little

little things um but you want to figure

out how you're comfortable sort of

presenting information visually I told

you visual is client friendly right so

you can't just say Obviously

profitability you got to look at

revenues and costs right within costs

there sort of fixed cost varable cost

this that and that kind of cost unit

cost and you got look at the trend line

and this they can't follow right so you

got to draw it

out so it's very important to draw that

out and so for for all the major types

of case problems I will give you the

list of my four favorite Frameworks and

I'll give you the standard opening that

I've used on those four Frameworks okay

so like I mentioned earlier opening a

case is very mechanical and then as you

get information that's where sort of

creative problem solving and analytics

sort of comes into play okay but up at

this point it's really about sort of

opening it

correctly that's how to structure a case

um the next step in the process is once

you sort of opened it up you've sort of

laid out how you're going to approach

this case all the major categories of

issues next thing is to analyze the

case I Googled the word analyze last

night turns out the definition which is

actually kind of nice

is uh the separation of any material or

abstract entity into its constituent

Elements which basically means to

analyze means to break apart into pieces

okay so if you have a business it's a

bunch of Lego blocks analysis means you

pull apart the Lego blocks look at each

one individually okay by the way that's

the what I call the backup

framework if you ever get a case where

you don't know what's going on and it

doesn't match any of the ones I've

mentioned and I had a couple of those

you get the wacko you get weird ones

once in a while um if you got enough in

it's not a matter of you know if you'll

get them you definitely it's a matter of

when when and doubt pull apart the

pieces you know so for for example uh

well that's a bad example so so that's

sort of the the main idea to analyze

means to break out into its component

parts and this is what you do all day

long as a consultant you're breaking

things into Parts you're breaking the

parts into more parts you're breaking

those parts into more parts and and

we'll talk about why you do that and you

have to do this in a case interview have

to impossible to pass without doing this

very important okay so when they say

analyze a case it means breaking it

apart and I'll give you some ways of how

to standard ways of breaking things

apart but even if you forget everything

I said and then you get a question if

the first thing is out of your mouth is

well that's interesting I'm not sure how

to solve that let's break it apart okay

that's a good way to

start let's

see okay step by step how do you analyze

a case sort of generically and then

we'll go into specific

cases first thing I do is I ask them if

there's any information about the

situation that would suggest where I

ought to start in my framework okay so I

would say um to uh to understand why ABC

companies's profits are down 20% and how

to respond to that we got to look at the

revenues and the costs because those two

combined form profits okay do we have

any information from the client that

indicate whether this is a revenue

problem or a cost problem okay 80% of

the time they'll say no okay or they'll

smile and smirk and still say no okay um

sometimes they'll say sure you know why

don't we start with costs first and they

deliberately lead you down a wrong end

like it's Del it's they know it's a

revenue problem but they're telling you

why don't you start with cost first just

to see if you can figure out that he

threw you down the wrong direction and

see if you can kind of come back up okay

about 20% of the time they actually tell

you particularly if you have like a big

framework there's a lot of things you

need to analyze um

they can save you time and if sometimes

they don't have sometimes they don't

have data on parts of it so like if they

know it's a revenue problem and they and

because it's a real life case they they

were working on they didn't do any of

the cost analysis so they have no data

so they don't want you to go there

sometimes so if you ask them they'll

sort of steer to steer you sort of in

that direction about 20% of the time so

that's what I usually do again this is

my process um you can certainly succeed

without without doing this step the next

thing is you state a

hypothesis okay and um hypothesis

interesting enough I I actually never

did this explicitly when I was

interviewing I sort of did it implicitly

they could tell I I had a hypothesis I

never use the words but it's actually

not a bad idea to use the word

hypothesis you know it comes from you

know science and the scientific method

uh of you you have an experiment and you

think that you know the key to curing

cancer is in like Gene number 24 okay

what do we got to new what do we got to

do to sort of isolate and prove whether

or not that assertion is that hypothesis

is correct well we got you need

structure an experiment to figure that

out same process to solving business

problems again this is a Consulting

process it's not the only process you

can solve them business problems in

creative ways lots of other ways but in

Consulting it has to be this sort of

scientific method

approach so I'll give you an example of

hypothesis

um company ABC's profits are down 20% we

need to look at revenues and costs uh

I'm going to hypothesize that it's

probably a revenue problem so I'm going

to gather some data on to see whether

that's true or not okay um and then also

not continue have revenues declined stay

the same or increased okay oh revenues

have increased oh okay hypothesis is

wrong profits are down but revenues are

up what does that mean interpretation

it's a cost problem right okay so my

hypothesis was incorrect new hypothesis

I'll say ah obviously it's not a revenue

problem the revenue is not causing the

loss and profitability it must be cost

okay so that's an example of how that

the dialogue would

work uh the third step which I sort of

already demonstrated is you once you st

your hypothesis you want to pick a

branch of the framework to start okay so

I said my hypothesis is it's a revenue

problem let's look and analyze revenues

first has Revenue changed if so in which

direction

right next step is to identify the key

issues within that branch of logic

you'll see in a second that there are a

lot of branches to these sort of

Frameworks that are sort of very logical

um so I will say uh to to understand

whether or not revenue is causing the

profitability problem we need to know if

Revenue has changed and in which

direction so has Revenue increased stay

the same or decreased it's it's only one

of those three things and those are the

three issues do you have any data that

will indicate which one of the three is

correct okay um and so I'm very

deliberate about that so stating the

things I want to know and consider and

then ask for data okay it's very

important to do that by the way um it

seems like a a little obvious but

obviously Revenue you can only go up

down or say the same right um but you

again we're trying to be client friendly

so we're laying out all the issues um

and on that one in particular I probably

wouldn't draw it out because it's sort

of simple you know um but in general

when you have when you're starting to

work down a branch you want to break out

what are the key issues within that

Branch State all the major issues and

then dive in if you just dive in without

stating all of them they will assume you

missed them

okay they will assume you missed them

and I'll give you an example a little

bit later

on then what

I

for