Session 7: Profitability Cases – BCG Approach

In each training session, from this day onward, we will do a brainstorming case, estimation case and full case.

It is vital to layer case difficulty.

Why would this be an important teaching strategy? If we gave the candidate a complex deregulation case, and she failed, it would be impossible to know if she failed due to lack of knowledge on the:

• specific case issues (profitability, margin, productivity etc.),

• general sector issues (retail, banking, mining, pharma etc.) or,

• her general case solving approach (answer-first versus decision trees).

We need to hold as much constant as possible to test one area.

Therefore, we start by providing a basic profit and loss case because we know that by this point the candidate will know the profitability structure very well. We also use a restaurant case since again the candidate will likely have background knowledge. In this way, we hold case issues and sector issues constant, to test for case solving skills.

Technique is again the most important thing we look for. As we develop a candidates case skills we slowly release different variables – make the cases more difficult – so that by the end of the training, she can handle cases where nothing is held constant, the most difficult cases.

In these early sessions, as we teach Samantha how to structure cases, you will notice we do not get her to finish them. As soon as Samantha identifies the problem we close the case. Wrapping up cases is very easy and we leave this training for later. Learning how to structure and break down the issue in a case is far more important. We also rarely focus on speed, since speed is an outcome of good technique. It will come in time.

After this session we will consistently focus on six areas in every single interaction with Samantha: communication, estimation, brainstorming, case technique, pivoting between different case approaches (e.g. McKinsey to Bain etc) and fit/image.

Though fit is mostly covered at the end of the training, we expect to see draft responses weekly and will comment on them. We will dig and dig to find weaknesses in applying these six skills across progressively more difficult situations.

In the session descriptions which follow, we are using one description for 4 different candidates. Yet candidates do not perform the same, and while the descriptions are mostly accurate, there will be some differences as a few cases are brought forward, others moved back or candidates fail to prepare adequately. While these differences are minor, they sometimes occur.

Cases questions taught in the session:

Felix’s cases recorded in the session; Estimate the interest lost in money sitting in phone booths, Brainstorm why US ice-cream consumption increased during the recession & the Department of Defence cost reduction full case.

Rafik’s cases recorded in the session; Estimate the dollar value of Starbucks coffee thrown away by patrons, Brainstorm why a woman’s skirt length decreases during a bull market & the Video internet start-up profitability full case.

Samantha’s cases recorded in the session; Estimate the number of Twitter servers at this point in time, Brainstorm why the number of UK gasoline stations have declined in the last 10 years & the Power utility profit decline full case.

Sanjeev’s cases recorded in the session; Estimate the number of motorcycles in Paris today, Brainstorm how Apple can increase margins on the iPad & the French restaurant profitability full case.