Demonstrating Business Savvy in Case Interviews

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Question:

After rewatching your videos and reading the FAQ + additional resources I would like to ask you on some advice for the following.

Usually typical consultancy requirements are: analytical skills, communication skills, teamwork, attention to detail,  numerical skills, drive, motivation, ability to synthesize, ability to structure a complex problem into small partial problems, and finally business sense. The interview is like a driving test,  you need to exaggerate to show the interviewer you possess this skill.

Would starting with a broad holistic framework with lots of cost/benefits mini analyses + mentioning of crossselling / cannabalization / implications for future (if appropiate in the case) shows you have business sense?

Would you have some advice/tricks how to show the interviewer you have strong business sense/commercial awareness?

My Response:

I'm not sure that agree with the "exaggerate" your skills analogy.

I DO agree that demonstrate some basic "common sense" as it relates to business is important.  I used to interview applicants who had PhD's and were clearly much smarter than me in lots of numerical ways. But, a few of them had a very hard time with business sense / business savvy.

At the end of the day, market share is NOT really driven by using stochastic analysis to identify pricing arbitrage opportunities to maximize margins.  It's driven by giving customers what they want, making them happy enough to come back for more.

At McKinsey, I've heard several Managing Partners recall client complaints about McKinsey consultants who proposed entirely impractical solutions. These ideas made sense on papers, but were not practical in the real world.  One example of this is presenting a solution that doesn't take into account the organization's culture, which any business operator would tell you can cause a lot of problems if ignored, but might not seem that important to someone who hasn't actually run a business.

As it relates to a case, I would NOT do the following:

"Starting with a broad holistic framework with lots of cost/benefits mini analyses + mentioning of crossselling / cannabalization / implications for future (if appropiate in the case) shows you have business sense"  as a way to demonstrate business sense --unless the case required this approach to solve it.

What I would suggest is vocalize any business concerns that you might have, even if it doesn't neatly and perfectly fit the framework.

If these concerns are relevant to the "final answer", it's fine to mention them briefly up front (score points for recognizing them) and then say we may need to come back to that, but first lets look at... (whatever the relevant analysis might be).

For example, if the case is a mergers and acquisition case, but there's a labor union involved. You can be darn sure that any CEO that has worked with a union, will be thinking about how the union will react to any major business decision. I had a nasty run in with a labor union during one of my summer jobs in college when I was 19 or 20 years old. Trust me on this one, if you've dealt with a union, you know it's a practical real world factor.

BUT the M&A case decision might primarily be driven by supply / demand considerations in the industry.

In this particular example, I could see mentioning these "practical" considerations in one of two ways. At the end when you do the case, and the interviewer says, "What do you tell the client?" you might mention these concerns as a part of the overall synthesis and recommendation.

Or depending on how the case question is asked, I could see using the standard business framework that I like using, highlighting things like the union as an issue that is related to the COMPANY itself... as well as looking at overall industry demand from CUSTOMERS relative to industry supply from COMPETITORS (and the company as well).

I could also see such a case being opened this way, but the interviewer "guiding" the candidate into a quantitative industry capacity / demand curve computational analysis.  I guess this is probably yet another reason why I tend to like my standard business analysis framework -- it helps me create a big picture understanding of what's going on before diving into the details. It's certainly the way I think about the business I run personally today and my clients' businesses.

In general, I think its hard and probably irresponsible to make business decisions in a complete vaccuum.

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