Case Interview Basics [Video] (2023)

When you work in management consulting, the approach that you use needs to be reliable and provable. You need to find an answer and recommendation for your client. It doesn’t help if you are able to intuitively make a recommendation to clients if that process of coming up with a recommendation is not repeatable.

Let me back up. One of the concerns that a firm often has in hiring its new consultants is that candidates follow a protocol methodology to consistently analyze data and derive fact-based conclusions from that data.Management consulting firmshave an enormous buy-in for conclusions that can be supported by data, mostly because the data makes it easy to defend and justify the conclusion to clients.

It is not helpful to give clients a recommendation that may be correct if you can’t prove that it is correct. Your client is usually a CEO or other C-level executive in a large company. They have to justify their plans to others higher up, such as their boss, the board of directors, their shareholders, etc. They often have to justify their decisions because they are a publicly traded company.

This buy-in trickles all the way down into thekinds of consultantsthat large companies prefer to hire. They prefer to hire consulting firms that can justify their recommendations, which in turn prompts the management consulting firms to hire future employees who have the ability to approach problems and solve them in a way that is based on data.

The purpose of the case interview is to figure out and observe how you handle these business situations. What analysis do you want? What are you looking for? What working theories or hypotheses do you have? Ultimately, the interviewer wants to know how well you can prove your case in terms of data-derived recommendations.

Case interviews are a really great way to see how a candidate thinks. The case interview originally started with the management consulting field. It started many decades ago and has since been broadened to be adopted in other industries as well.

I have heard that a form of the case interview is used in hiring for software engineering, for example. Let’s say that your client has this technical problem with your products. How would you think about troubleshooting this particular issue? What factors would you consider? What things would you like to do? Why? How do they play together in your overall plan? That kind of a thing.

I have also heard that it is used in private equity firms. For example, if you were trying to get a position in a private equity investment firm that has a particular style or strategy for investing, I have heard of cases being presented in those situations.

I have heard of the case interview being used in jobs in industry, particularly in those such as internal consulting departments. Fortune 500 companies, for example, commonly use them. Sometimes analytical departments or analysis groups use them. Or, sometimes there is a case interview to see how a candidate thinks about approaching a particular analysis.

It is used more and more broadly these days. But the origin, or at least the origin that I am familiar with, stems from the management consulting interview, and it is used as a way to evaluate the way that a candidate thinks about and addresses a particular problem.

Consulting firms, in particular, are looking for several skills to be demonstrated by a candidate in a case interview.

These skills include:

• Problem Structuring
• Logical Reasoning
• Analysis
• The Ability to Draw Conclusions from Data
• The Ability to Synthesize or Communicate Your Conclusions

Let me explain what each one means.

Problem Structuring

Problem structuring refers to taking a very large, ambiguous problem and breaking it up into smaller pieces that are easier to digest, analyze, and address. So, the earlier example I gave is that your client is an automobile manufacturer trying to figure out what they should do regarding electric vehicles and self-driving vehicles.

Usually, when I hear a case as a candidate, my first reaction is, “I have no idea what they should do.” It is such a broad, big, amorphous problem. I don’t know what they should do. Should they create an electric car? Should they create all sorts of driving cars? If they should, should it be a copy of what everyone else is doing? Should they do something differently? I don’t know. It’s overwhelming, right?

What I just described is what happens when you try to solve a very large problem in an unstructured way. All you see is problems and headaches. You either don’t know where to begin, you don’t know where to end or you start guessing. Of course, they should have an electric car. Really, given where we are in the world today in relation to climate change, we should absolutely recommend creating a self-driving car and an electric vehicle. Right?

That’s “what not to do,” because you can’t prove it. Why should a client enter the market and have an electric vehicle? What is your justification other than, “I think so,” right?

You need to be able to back up your recommendations withdata. So, the first thing that employers want to see in a case interview is not a recommendation, because frankly, you have no data on which to base a recommendation. What they want you to do is take a very, very big problem and break it up into pieces that can then be analyzed.

If I were the candidate, I would want to understand three things to help determine whether the automobile manufacturer should do anything in response to these trends:

1. What do customers actually want?
2. What are competitors doing and offering today?
3. What should we do about it?

The more that I understand about what customers want and what competitors are doing, the better equipped I am to figure out what they should do in response.

That’s an example of problem structuring. I take a very big problem and break it up into three pieces: 1) Customers; 2) Competitors; and 3) Data-Driven Recommendation.

But then there’s simple problem structuring. Problem structuring usually occurs in the first 1 to 4 minutes of a case. It helps to simplify theproblem-solving process. Otherwise, the problems that consultants get are so overwhelming that they really have no idea where to start. They need to break things up into smaller pieces.

So, problem structuring is very important, and it is the first thing that the interviewer looks for.

Logical Reasoning

You need to explain why you do everything that you do in a case. The logical reasoning is really important.

For example, if we are looking at customers of the car manufacturer and trying to figure out what they want, we want to break up customers into multiple categories. One of the questions that you may ask is “What types of personas or categories of drivers are out there? I’d like to better understand what each category wants.”

Perhaps there is one segment that really doesn’t care about the way that a car looks, they just want to get there safely with as little hassle as possible. You might have another segment that is very environmentally conscious. The carbon footprint that a vehicle produces may be significant for them.

Their needs may be quite different. So, what we are trying to do is systematically say, “I want to understand the full range of the customers who are out there. I want to understand them by their segment type or by their categories. I want to understand each of their needs in those categories.”

So, that is an example of both problem structuring and explaining logically why I want that information. You always want to explain what you are doing and why you are doing it. That’s super important.

Analytical Reasoning

Analytical reasoning refers to addressing certain problems in a systematic, preferably numerical, way.

For example, you might say, “I would like to know what percentage of the overall market each segment represents.” Are environmentally conscious people one percent of the market or are they ninety percent? That’s a big difference that will deeply affect what my client should do. You are trying to analyze the situation and size of each segment, systematically. That’s analytical reasoning.

Another very common part of analyzing a case is looking for a direction of change. If environmentally conscious customers are one percent of the marketplace, are they growing? Are they shrinking? Is it becoming less favorable? That’s another way that analytical thinking comes into play. You are trying to understand the logical, analytical process.

The same reasoning applies to the competitors. An analytically orientated question might be, “How many competitors are there?” Let’s say there are twenty. Can competitors be grouped into different categories?

Maybe ride-sharing services like Uber are competitors. If you use Uber a lot, maybe you don’t need to buy a car. That could be one kind of competitor.

Another competitor might be a technology company like Google or Apple.

The reasoning process really helps you to understand how big the competitor categories are and how many competitors are in each one. It helps you find some qualitative data about what the competitors in each category are doing. That’s an example of analytical reasoning.

This is the bulk of what you would do on the job as a consultant every day. You’re analyzing some aspect of a case and using the analysis to inform your questions, gather data, and perform calculations to figure out the answer to your question.

For example, the question I asked earlier was, “How many competitors are there?” The analysis might require you to go get customer data, get industry publication data, and count up how many competitors are in the marketplace.

Your next analytical question might be, “How big are they?” You might do some research of financial statements to see how much revenue these companies have, what kind of financial resources they have, or how much cash they have to invest in these new kinds of innovations.

So, those are examples of questioning, data-gathering, and analyzing information to answer questions. I would say about 70% of the case is about having an idea, asking questions to get you closer to a conclusion, gathering data, analyzing data, answering that question, and moving further down the line of reasoning to arrive at a fact-based conclusion that you can then present to the client.

There are times when you will not be able to do a data export from a company to create spreadsheets or build financial models. Case interviews simulate that process. You ask a question, set what kind of analysis you want to be done, and ask the interviewer, “Do you have any such data related to this particular topic?” If you are asking the right questions, the interviewer will have that data for you.

Many case interviews are based on actual client engagements that the interviewer worked on. So, the analyses that you are inclined to run, they’ve already run. You might say, “Is this true? To test this idea, here is the analysis that I would love to run.” In all likelihood, they have already run that analysis and can give you that information.

They truncate and abbreviate the entire analytical process by skipping the middle part — the actual number-crunching. You ask the question, and then you get the answer back from the interviewer.

Deriving Fact-Based Conclusions

You will hear the term “deriving fact-based conclusions” a lot, particularly at firms likeMcKinsey. They are conclusions based on factual evidence that has been gathered through the case process. In a case interview, this occurs when you ask questions or ask the interviewer if they have data on something.

For example: “How many competitors are there in this marketplace?” That is an example of gathering facts. In a real-life engagement, you would go to the library, you would go to the industry trade association, you might go to an industry conference, you might go to your corporate library to gather data on a particular set of competitors in an industry.

Consultants highly, highly value conclusions that are based on factual evidence and here’s why:

Most client companies have an ample supply of opinions as to what the company should do going forward in a particular industry. The problem is that all of the opinions contradict one another, and you can’t do all of them. So, McKinsey, Bain, BCG, and other consulting firms are quite often brought in to pick or recommend a particular direction to move in that’s based on evidence and facts.

This is how you break ties in executive teams when every executive has a different pet project or a different opinion on what the company should do. A consulting firm will come in, do analysis, and make a fact-based recommendation.

If recommendations are not based on facts, clients typically have a much more difficult time taking them seriously. So, let’s say you have a senior client, which is usually the CEO and maybe seven or eight of the CEO’s direct reports. The seven or eight executives won’t accept your recommendation if you can’t prove it. If you can’t prove it, it’s just an opinion, and they’ve got an opinion too.

You need to show why their opinion isincorrect. The only way that you can do that is with factual evidence. So, the ability to draw fact- or evidence-based conclusions is a valuable skill during the case interview.

For example, as you gather your analysis, you might realize that the biggest companies in the automobile industry — the traditional car manufacturers, Ford, General Motors, Toyota and so on — have the lowest level of activity and innovation around creating self-driving or electric vehicles.

So, the companies that have the highest market share perhaps aren’t the most innovative. And, those companies that are the most innovative don’t have a lot of market share. That would be sort of a sub-conclusion around the state of competition in that marketplace. You would make that conclusion based on specific facts that lead you to it.

The interviewer is looking for your ability to draw out those distinctions and those sub-conclusions as well as final conclusions. You need to link back to specific data that supports your conclusion. That’s an important skill to have.

Synthesis

Synthesisis industry jargon for summarizing the whole case which leads you to a conclusion and a recommended course of action. So, a summary is a restatement of facts. Synthesis is digesting those facts and developing an insight into what the client should do and why they should do it.

Synthesis goes well beyond pure mechanical summarization and creates an insight with action-orientatedrecommendations. The interviewer is looking for your ability to do exactly that.

Can you take all of the information that you have gathered and data that you have analyzed and draw aninsightfrom it?

Can you find something that the client should do or some observation that may be a little counter-intuitive that you ascertained from the data?

Can you explicitly state that recommendation to the client in a clear and concise way?

That’s the final stage of the synthesis: state your findings, actions, or recommendations in a way that is very client friendly.

Again, because a case interview is essentially an on-the-job simulation, the interviewer is asking himself, “Can I imagine putting you in front of a client and not feeling embarrassed?” This is the ultimate question that they are trying to answer in the case interview.

If you are just expressing opinions about what a client should do without using data and facts, they will not put you in front of a client. They will not. You would completely damage the credibility of the firm and damage the relationship between the firm and the client.

In the synthesis part of the case, the interviewer is looking at the way that you express your summary, conclusion, and recommendations to them. They imagine you delivering the same conclusion and recommendations to a client.

They want to make sure that you are able to speak to a senior-level executive audience in a veryconfident, clear, matter-of-fact way that is concise. That’s the skill they are looking for in synthesis. That is what they are looking for overall.

A hypothetical situation is used in the case interview as a way to evaluate thinking skills for real-life client engagements. It is a simulation of the overall engagement process. Where a client engagement process might normally take over six months, a case interview forces you to go through the steps in a much more abbreviated fashion. Be prepared.