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How to Crack Cases

How to Crack Cases

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How To Crack Cases

John N. Doggett, JD, MBA Global Management, Entrepreneurship and Sustainability & Energy McCombs School of Business Senior Research Fellow, IC2 Institute University of Texas at Austin john.doggett@mccombs.utexas.edu August 2, 2010

The Secret Is . . . 
     Act Like It¶s Your Company Act Like It¶s Your Money Act Like It¶s Your Reputation Act Like Time is Running Out Act Like This Is Your Only Chance Ask Hard Questions 

Make A Decision and Support it with #s

Whose Will Lose if You are Wrong? 
Put Yourself in Her Shoes  Answer These Questions 
How Bad Is The Problem?  How Long Can She Last Before She Gets Fired?  How Can You Solve This Problem?  How Much Will Your Solution Cost?  Where Will The Money Come From?  What Impact Will Your Plan Have on Profits?  How Will Our Competitors Respond?

How Do Businesses Compete? 
They Find ³Pain Points´ that Existing Products and Services serve Poorly  They Create Unique, Valuable and Hard to Imitate Products and Services  They Find Customers and Suppliers Who Are Weaker Than They Are  They ³Fit´ All of Their Activities to Interact with and Reinforce Each Other  They Constantly Scan the Horizon for Killer Disruptive Technologies

Understanding The Business  What Business Are We In?  Who Are Our Customers?  What Are They Buying?  Who Are Our Competitors?  How Do We Make Money?  How Does $ Go Through Our Company? .

Who Are Your Customers?  Who Are Your Most Profitable Customers?  Should You Drop Any of Your Current Customers?  Are There Any Customers That You Should Have and Don¶t?  Are They Buying a Product or A Service?  What Do They Think They Are Buying?  Who Should Be Your Customers Tomorrow?  How Do You Know? .

Who Are Your Competitors?  Whose Market Share Will You Take?  What Type of People Are in Charge?  Why Do They Want Your Customers?  Do They Know Who Your Most Profitable Customers Are?  Can You Win A Price War With Them?  Are They Distracted or Will The Quickly Respond to Anything that You Try? .

.´ then develop an Action Plan that says:  What We Must Do and When we must Take Action.  Where we will find this Money.What Must You Do?  What Information Do We Need To Define The Problem?  Case Facts  ³Google´ Facts  Financial Data  Quantitative and Qualitative Analysis  Once you Define the ³Problem.  How Much Money Our Solution Will Cost.

 How Long It Will Take Before We See Results from Your Solution.  How Many People And Other Resources Will We Need to implement Your solution.  What we will have to do to get and pay for these additional people and resources. .What Questions Must You Answer?  How Much it will Cost to use this Money. and  The Financial Impact of Your Solution.

How Do You Show Financial Impact?  Project The Impact Your Solution Will Have On The Bottom Line!  Income Statement Projections  Balance Sheet Projections  Cash Flow Projections  Market Share Projections  Competitor Response Projections .

How Does Your Cash Flow?  When Does The Business Have To Buy Resources Such As Supplies. Raw Materials And People?  When Does The Business Have To Pay For Them?  How Long Does It Take To Acquire A Customer?  How Much Capital Equipment Is Required To Support A Dollar of Sales? .

What Numbers Should You Crunch?  #s that help you understand the firm¶s cash position  #s that help you understand how the company makes money  #s that help you understand how the company spends and/or wastes money  #s that will help you develop a plan of action to improve the firm¶s performance .

Tricks of the # Trade  COMMON SIZE YOUR FINANCIALS  You are looking for abnormal trends  Look at the A/Rs and A/Ps  They should be in balance or A/Ps should be slightly higher  They should be growing at the same rate as sales  Look at COGS & SG&A  They should be growing at a slower rate than revenues  Look at Profits and Retained Earnings  They should be growing as fast or faster than revenues .

What Are the Key Risks?  What Can Go Wrong?  How Bad Can It Get?  What Can We Do To Prevent Meltdown?  What Resources Do We Need To Protect The Venture?  What Are the Odds of Success?  What Can We Do to Improve the Odds? .

What is Your Development Plan?  How Are We Going To Grow The Product?  How Are We Going To Improve Our Product/Service Position?  How Will Our Organization Evolve?  What Impact Will Technology Have On Us?  How Will Our Personnel and Resource Needs Change?  What will be our Next Product(s)? .

This is Where it Gets Interesting ANALYTICAL TOOLS .

What is Your Hypothesis?  The Purpose of Your Analysis is To Develop An Action Plan To Respond To The Problems That You Have Identified.  Create and Test Your Initial Hypothesis  What Analysis Do I Need to Perform to Prove or Disprove My Hypothesis?  If Analysis Supports Hypothesis. Create New One Deloitte Consulting .1999 . Continue  If Analysis Disproves Hypothesis.

Techniques ± Issue Diagrams  Issue diagrams are typically constructed in four parts:  Objectives  What needs to happen  Issues  Questions to be answered or topics explored  Hypotheses  Speculative assertions to be tested and revised  Questions and Data Specifications  Drives the primary research  Focuses on data needed to prove or disprove Deloitte Consulting .1999 .

cont. Objective: Question 1Aa Hypotheses 1A Question 1Ab Question 1Ac Hypotheses 1B Question 1Ca Hypotheses 1C Question 1Cb Question 1Cc Deloitte Consulting .1999 Issue 1 .Issue Diagrams.

1999 .Issue Diagrams. cont. Objective: XYZ Corp wants to improve customer service XYZ can partner with a ³service star´ How can this be done at little or no cost? Who are the candidates? What does XYZ offer? Question 1Ac Hypotheses 1B Question 1Ca Hypotheses 1C Question 1Cb Question 1Cc Deloitte Consulting .

 First iterations document what you know and project what you need to learn  Include ³place holder´ headlines for each hypothesis  Data needs identified here  Storyboards allow validation of the narrative ³flow´ Deloitte Consulting .1999 .Storyboards  Storyboards  A storyboard outlines individual pages in an evolving report.Techniques .

cont.1999 . The market is large The market is growing Profitability varies by state No significant new entrants have appeared in three years The regulatory environment varies by state Warm weather producers have advantages Deloitte Consulting .Storyboards.

1982 . (Mutually Exclusive and Collectively Exhaustive) McKinsey & Company .C.E.E.A Complete Diagnosis  Locates and Measures the Opportunity for Improvement  Pinpoints the Cause of the Problem  Establishes the Requirements for a Sound Recommendation  Identifies the Key Controllable Variables  Is M.

Rapidly Narrow Scope to Identify Critical Problems SCOPE REFINE AND REFORM DEFINITION ‡ INITIAL STATEMENT OF PROBLEM DIAGNOSIS ‡IDENTIFICATION OF SOURCES OF PROBLEMS ‡DEVELOPMENT OF POSSIBLE ACTION HYPOTHESIS RECOMMENDATIONS ‡EVALUATION OF POSSIBLE ACTIONS ‡DOCUMENTATION ‡INTEGRATION OF SOLUTION SET TIME McKinsey & Company .1982 .

IS WRONG? HOW. . SAYS SO? WHEN. . . . WILL IT BECOME CRITICAL? SOLUTION: HYPOTHESES GENERATION WHAT. . . . . . . . WHY. . HAS TO DO IT? . CAN IT BE DONE? . . . . . . WHEN . . . WHO. . . DO WE KNOW? WHY.1982 . . HOW. . . IS IT IMPORTANT? WHO. . . . WILL RESULTS SHOW? McKinsey & Company .Problem Validation Process PROBLEM VALIDATION: WHAT. . . SHOULD WE DO? . . . . . . . . . . . WILL IT HELP? . . . . . . . .

SEQUENTIAL ANALYSIS ± SIX QUESTIONS 1 2 3 4 5 6 Is there a problem? Where does it lie? Why does it exist? What can we do about it? How much benefit would result? What are the risks? DEFINE ISOLATE EXPLAIN RESOLVE ASSESS ANTICIPATE McKinsey & Company .1982 .

1982 Total Market Share Segment Share .Is There a Problem? Profit Contribution $ Contribution Rate Volume Selling Price Total Market Volume Segment Volume NonDiscretionary Discretionary Cost McKinsey & Company .

Where does the problem lie? Product Variant/ Model Channel Account/ Customer Region Consumer Type McKinsey & Company .1982 .

Why does it exist? LEVEL 1 Positional Availability Awareness Trial Repurchase Target Market Product Specs Region Sales Force Deployment EXPLODING THE PURCHASE DECISION Benefit Price Channel Sales Force Execution Brand Name Account/ Customer Variant/ Model Packaging Styling Selling Terms McKinsey & Company .1982 .

Why does it exist? LEVEL 2 Positional Availability Awareness Trial Repurchase Target Market Product Specs Region Sales Force Deployment EXPLODING THE PURCHASE DECISION Benefit Price Channel Sales Force Execution Brand Name Account/ Customer Sales Force Deployment Variant/ Model Packaging Styling Selling Opportunity Selling Terms McKinsey & Company .1982 Selling Mission Coverage Frequency .

Porter¶s 5-Forces .

Advantageous Competitive Position For Your Firm  The Goal of a Competitive Strategy is to Provide More Value for Your Customers Than Your Competitors  Defining Value is the Hardest Part Source: McKinsey & Company .What Is Strategy?  Strategy is an Integrated Set of Actions Aimed At Securing A Sustainable.1982 .

Price  Benefit = Attributes that are desirable to Your Firm¶s customers  Price = Total Costs to the Customer  Superior Perceived Value = Customer Believes Product Gives Net Value More Positive Than Alternatives Source: McKinsey & Company .1982 .Value Defined  Value = Benefit .

Price Customers Asset Utilization Cost Asset Utilization Competition Source: McKinsey & Company .The Strategic Value Triangle Value = Benefits .1982 Your Firm .

Total Costs  Value Is Defined By The Customer  Your Job Is To Understand Its Customers So Well That You Can Show Them A Value Proposition That Sells Your Product  Any Analysis That Doesn¶t Start With Your Customer.1982 .Strategic Value Triangle Value = Perceived Benefits . And End With Your Customer. Will Kill You Source: McKinsey & Company . Then Look At Your Competitors.

1982 . and Style Required  Shared Values are the Glue That Help Determine What Goals Your People Pursue Source: McKinsey & Company .The Seven S Approach Turing Ideas Into Actions  Strategy Determines The Skills You Need  Skills Determine the Appropriate     Structure Staff Systems.

How to Take Control in the First 2 Minutes PRESENTATION SUGGESTION .

What she wants from you right now are Answers. and findings first. recommendations. conclusions.  Give her your point of view. Then share the details and analysis that support what you have said. .  She has been trying to solve this problem longer than you have. Eliminate Suspense  Don¶t tell the CEO basic facts about Her Company. not background details.Take Control.

Bain & Dell¶s Answer First Model Situation Complication Question Answer Assertion 1 Assertion 2 Assertion 3 Evidence Evidence Evidence Fact Fact Fact Fact Fact Fact Summary Next Steps .

what issues make change difficult and why there is an immediate need to take action. value neutral short fact statement. short.Answer First Model Definitions  Situation  Describes the current conditions with a clear.  Complication Key Issues  Describes what has changed.  Question  This is your ³Call to Take Action´ where you show the scope of your presentation and engage your audience. . Should ³beg´ the question.

Answer First Model. cont.  Answer/Hypothesis  What must we do to solve the ³complication?´  This is the step where you form your initial hypothesis or answer and test it out with your analysis  This is the step where you identify all of the key issues that you need to analyze to determine what action is required that the firm can realistically implement in the time frame necessary to eliminate the ³complication´ with the resources that the firm can reasonably be expected to control .

continued  Assertions  What assertions or statements do you have to make that will convince your audience that your Answer/Hypothesis is correct?  To develop your Assertions.Answer First Model. ask ³what facts and data do I have´ that will convince the firm to accept your Answer/Hypothesis.  Facts  Hard facts and data  ³Common knowledge´  Sources for facts .  Be clear. and prioritize. precise.

 Summary  Summary of key Recommendations and Compelling Supporting Data. . cont.Answer First Model.  Restates the ³Call to Action.´  Next Steps  Tell them exactly next steps they should take to implement your answer.

Frustrated or Inspired  Once you are sure you have answered their question. go back to where you were in your presentation and continue unless you have covered that point adequately. Excited.  People ask questions because they are:  Confused. .Answering Questions  Answer them immediately.

When in Doubt .

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