**Case Interview Fundamentals: Lesson 18 [How to Adapt Your Frameworks] — Transcript & Summary | SozAI**
Source: https://sozai.app/transcript/case-interview-fundamentals-adapting-frameworks/

Learn how to adapt the 3 C's framework into highly specific case frameworks by adding extra decision-makers, interfaces, and structural factors to stand out in case interviews.

## Key Takeaways

- Adapting the 3 C's with extra categories and specific questions makes a framework unique and shows genuine thinking
- Other decision-makers, interfaces, and structural factors are the three types of additions beyond the 3 C's
- Each category should be mutually exclusive and tailored to the specific case problem
- Hypotheses and tests for each question complete the approach and demonstrate rigor to interviewers

## What the video covers

- Explains how to adapt frameworks like the 3 C's so they are specific to the problem rather than memorized templates
- Two ways to make a framework specific: add problem-relevant categories and make questions within categories problem-specific
- Reviews the 3 C's (customers, competitors, company) as the core decision-makers in every competitive market
- Adds three potential extra categories: other key decision-makers, direct interfaces between players, and structural factors or 'rules of the game'
- Gives the example of distribution channels in consumer goods, which can shape packaging decisions and stocking choices
- Notes that key decision-makers such as channels, regulators, or cartels like OPEC can be critical in specific industries
- Recommends splitting competitors into direct and indirect buckets when relevant
- Describes media and influencers as a bridge of awareness and meaning between supply and demand in many markets
- Emphasizes mutually exclusive categories: a key decision-maker is never an interface, and an interface is never a structural factor
- Stresses that problem-specific phrasing signals professionalism and thinking to interviewers, placing candidates in the top 10%

## Chapters

1. 00:00 Introduction to Adapting Frameworks
2. 03:34 Making Issues and Questions Problem-Specific
3. 07:27 Why Adding New Categories Matters
4. 10:00 Other Key Decision-Makers and Distribution Channels
5. 16:40 Industry Examples of Additional Decision-Makers
6. 26:40 Competitors and Media as Additional Categories
7. 31:40 Interfaces and Structural Factors
8. 38:20 Ensuring Mutually Exclusive Categories and Closing Thoughts

Answers

## Questions about this video

What are the two ways the video says you can make a framework specific to a problem?

The first is adding unique or extra categories beyond the 3 C's that reflect other factors affecting the market. The second is making the questions and issues within each category specific to the problem being solved.

What three types of additional categories does the video suggest?

Other key decision-makers in a specific market, direct interfaces between decision-makers, and structural factors, which the video loosely calls rules of the game.

Why does the video recommend distribution channels as a category in consumer goods cases?

Distribution channels link supply and demand in almost every transaction and make their own profit-driven decisions, such as choosing packaging that makes retail stocking difficult, which can affect both the company and its customers.

## Full Transcript — Download SRT & Markdown

00:00

Speaker A

In the previous videos in this module, I've shown you how to choose between issue trees and conceptual frameworks when structuring a case. I've shown you the anatomy of the 3 C's framework to solve business strategy problems, and I've shown you a proven four-step approach to use your frameworks. Be it the 3 C's or some other framework.

00:17

Speaker A

approach to use your frameworks. Be it the 3 C's or some other framework. In this video, I will show you how to adapt your frameworks so that you can have highly specific conceptual frameworks for any problem that you solve.

00:34

Speaker A

In this video, I will show you how to adapt your frameworks so that you can have highly specific conceptual frameworks for any problem that you solve. This will make your frameworks much more valuable to solve the specific problem you get for a case, and it will also make them more unique. So, you're showing your interviewer your own thinking, and not the same memorized framework that the last candidate regurgitated a while ago.

00:50

Speaker A

regurgitated a while ago. I will specifically teach you how to adapt the 3 C's to any business situation, but you can also use the same logic that I'll show you here to adapt any framework to a similar situation.

01:07

Speaker A

I will specifically teach you how to adapt the 3 C's to any business situation, but you can also use the same logic that I'll show you here to adapt any framework to a similar situation. I'll use the 3 C's instead of others because, as I've shown you in the last video, it is actually a super versatile framework that you can use in a wide variety of cases, especially once you learn to adapt it well, which is the goal of this video.

01:21

Speaker A

goal of this video. So, let's jump right in. If you remember from the video that I went through with you about the 3 C's, there are three key decision-makers in every competitive market. There are the customers who decide what they will buy,

01:37

Speaker A

So, let's jump right in. If you remember from the video that I went through with you about the 3 C's, there are three key decision-makers in every competitive market. There are the customers who decide what they will buy, if anything at all. There are your competitors who decide how they will manage their strengths, weaknesses, and resources to serve those customers' needs and desires. And then there's your own company or your client company, which will decide the same thing as your competitors given their own strengths, weaknesses, and resources.

01:54

Speaker A

competitors given their own strengths, weaknesses, and resources. This is true because every market is the sum of all its transactions, and each transaction happens because these three decision-makers are making their own decisions. However, in some markets, in most markets, there's more going on.

02:19

Speaker A

This is true because every market is the sum of all its transactions, and each transaction happens because these three decision-makers are making their own decisions. However, in some markets, in most markets, there's more going on. Adding those other things going on that may impact the transactions as extra categories in your framework is one of the two powerful ways to make your framework super specific to the problem you're solving. Adding these extra categories is what we call adapting the 3 C's.

02:37

Speaker A

3 C's. What's the other way to make your framework specific, you ask? Simple. It is to make the questions and issues within your categories problem-specific.

02:49

Speaker A

What's the other way to make your framework specific, you ask? Simple. It is to make the questions and issues within your categories problem-specific.

03:08

Speaker A

that's what we're aiming for when we build frameworks. Unique categories and unique questions within each category, all of which working together to solve the problem your client has. Now, I dare to say that if you have a framework with

03:26

Speaker A

So, a framework that has all the right specific categories and the relevant specific questions within each category to solve the client's problem is a highly specific framework that can uniquely solve this case and only works perfectly for this specific case. And that's what we're aiming for when we build frameworks. Unique categories and unique questions within each category, all of which working together to solve the problem your client has.

03:41

Speaker A

elements combined, that your interviewer will absolutely know that you're actually thinking about the problem and not being another framework robot. And this alone puts you in the top 10% of candidates. All right. So, I've gone through how to make your issues

04:00

Speaker A

Now, I dare to say that if you have a framework with unique categories, if you have each category filled with unique questions, and if you can justify each question with hypotheses that make sense and you can test each of those hypotheses, I dare to say that if you have all of these elements combined, that your interviewer will absolutely know that you're actually thinking about the problem and not being another framework robot. And this alone puts you in the top 10% of candidates.

04:20

Speaker A

add new categories? Well, we have to find other things besides the customers, the competition, and your company that can affect how transactions are made in this market and which transactions will be made in your market. And there are

04:37

Speaker A

All right. So, I've gone through how to make your issues problem-specific and doing the hypothesis and the tests when discussing steps two, three, and four in the four-step approach to use frameworks. This means that we will focus on adding extra specific categories in this video. So, how do we add new categories?

04:52

Speaker A

And number three, structural factors, which I'll loosely call rules of the game. So, let's start with other key decision-makers and build our reasoning from there.

05:05

Speaker A

Well, we have to find other things besides the customers, the competition, and your company that can affect how transactions are made in this market and which transactions will be made in your market. And there are three types of things like that. Number one, other decision-makers that happen to be key in a specific market. Number two, direct interfaces between those decision-makers. And number three, structural factors, which I'll loosely call rules of the game. So, let's start with other key decision-makers and build our reasoning from there.

05:22

Speaker A

On the demand side, the customers are always important. And on the supply side, your company and your competitors are always important. These three players are always important, which is why the 3 C's are a thing. And these three key decision-makers should always

05:39

Speaker A

So, let's go back to first principles. It is always true that any market has a supply side that makes and sells goods and services, and a demand side that purchases and uses goods and services. On the demand side, the customers are always important. And on the supply side, your company and your competitors are always important. These three players are always important, which is why the 3 C's are a thing. And these three key decision-makers should always be understood well if the problem is a business competitive strategy problem.

05:58

Speaker A

incredibly important link between supply and demand. Not only are they involved in almost every transaction, they also take decisions to maximize their own profit. And these decisions are not always obvious, and they're not always what's best for the final customer.

06:17

Speaker A

But some problems, most problems, have more relevant players to be understood, too. In many industries, such as the consumer goods industry, for example, the distribution channels are an incredibly important link between supply and demand. Not only are they involved in almost every transaction, they also take decisions to maximize their own profit. And these decisions are not always obvious, and they're not always what's best for the final customer.

06:34

Speaker A

them coming up with their own private label brands or making partnerships with your competitors or restocking your products poorly. To give you a very specific example, it could be that this shampoo company finds out a way to package their product that customers

06:54

Speaker A

Think of a shampoo manufacturer, for example. If they only think about their final customer and their competitors, they may miss opportunities to increase the visibility of their products in the retail space. And they could also miss threats from these channels, such as them coming up with their own private label brands or making partnerships with your competitors or restocking your products poorly.

07:09

Speaker A

products in their shelves that they choose not even to sell the product. This is a selfish reason for this distribution channels to take that action. And a selfish reason that could harm both your company and your customers. But it's a decision that

07:27

Speaker A

To give you a very specific example, it could be that this shampoo company finds out a way to package their product that customers love. And this is important because, you know, you use your shampoo in the shower, so the packaging is kind of a big deal. But it could also be that the same type of packaging would make it so difficult for retailers to stock your products on their shelves that they choose not even to sell the product. This is a selfish reason for these distribution channels to take that action. And a selfish reason that could harm both your company and your customers. But it's a decision that could still make sense to them, which is why we should study distribution channels if that were the case that we were solving.

07:40

Speaker A

channels in most decisions they make, the airline industry. It's feasible to think that one airline can outperform others because they work so well with their distribution channels, such as the websites that sell their air tickets. It is also feasible to think that it would

07:58

Speaker A

Let me give you another example of an industry that would need to think deeply about their distribution channels in most decisions they make: the airline industry. It's feasible to think that one airline can outperform others because they work so well with their distribution channels, such as the websites that sell their air tickets. It is also feasible to think that it would take just one of these websites to stop selling your tickets to severely harm an airline business. But distribution channels are not that important in many other markets. In the B2B software industry, for example, most companies have sales forces dedicated to go up to their customers directly and sell. They don't need a third-party distribution channel to do that for them.

08:15

Speaker A

their customers directly and sell. They don't need a third-party distribution channel to do that for them.

08:22

Speaker A

Here's another example of a decision-maker that is key in many, but not all industries: the suppliers. While they would rarely change the competitive positioning of a shampoo manufacturer or even an airline, they make a world of difference in the automotive industry. Any auto company that wants to make cars at a lower cost, with more predictability in their supply chain, and at a higher quality, has to work long-term with their suppliers and is exposed to decisions that they make for themselves.

08:30

Speaker A

While they would rarely change the competitive positioning of a shampoo manufacturer or even an airline, they make a world of difference in the automotive industry. Any auto company that wants to make cars at a lower cost, with more predictability in their supply

08:48

Speaker A

For example, if an automotive supplier decided to skimp on their quality controls, that could disrupt the whole chain of production of an auto manufacturer and cost them millions of dollars. If an auto company wants to launch a new, innovative car design that has unique parts, they need to worry about finding suppliers to make these new, unique parts. And there are many reasons why ma

09:07

Speaker A

an auto manufacturer and cost them millions of dollars. If an auto company wants to launch a new, innovative car design that has unique parts, they need to worry about finding suppliers to make these new, unique parts. And there are many reasons

09:24

Speaker A

why making these specific parts would not be feasible or even make sense to any supplier available.

09:31

Speaker A

Suppliers are also important in other industries, such as smartphone manufacturing and the high-end restaurant kind of Michelin star restaurant industry. Now, I want you to notice something here. While suppliers are extremely relevant to most strategic decisions in an auto company,

09:50

Speaker A

distribution channels rarely are. And what I mean here is not that auto companies don't need distribution channels, but that because they usually control them, they rarely have real leverage on whether an auto company is going to sell more cars or not. And this means that

10:08

Speaker A

the auto companies don't need to carefully study that specific part of the system when making most of their decisions.

10:17

Speaker A

Here's another key decision maker that is relevant in some industries, employees. Don't get me wrong. Having enough competent skilled labor is important in any industry, but just a few of them have to think of their workforce as a

10:34

Speaker A

key source of threat and opportunity. That is the case in industries as diverse as consulting, software development, biotech, and professional sports teams.

10:47

Speaker A

A consulting firm, a software house, or a football team that isn't able to attract, train, and retain the very best professionals in the market is doomed to lag behind competitors and eventually fail.

11:03

Speaker A

In a consulting firm, for example, the quality of their professional force is one of the key strategic components of their business, which is why they spend so much time and effort trying to hire people like you.

11:17

Speaker A

It is the reason why they promise so much professional development after you get in.

11:22

Speaker A

It's the kind of promise that attracts the best people and also helps them reach their full potential in their careers.

11:30

Speaker A

Another key decision maker to many industries, the government. These guys are important in any highly regulated industry such as utilities, airline, pharma, basic education, and so on.

11:45

Speaker A

These companies need to consider the government as a decision maker in their market. And if they don't, they're taking high risks that their strategy will not work out. There are even some industries where the government is the single most important player to

12:00

Speaker A

consider, such as the military defense industry and the pharma industry in countries with a high reliance in public health care. In these situations, the government has a dual role of regulator and major buyer of the goods and services being offered.

12:17

Speaker A

Other examples of key decision makers, investors. They're important in scenarios such as startups and companies working on a project finance basis, such as companies specialized in building private infrastructure projects.

12:33

Speaker A

The academia, super relevant for biotech firms as well as other non-software high-tech fields. For some B2B companies, their customer's customer might change their strategy.

12:48

Speaker A

And there are even some other decision makers that are extremely specific to some industries, such as doctors who are key to the markets of many pharmaceutical drugs, especially specialized drugs.

13:02

Speaker A

Teachers who would be key to a publisher of textbooks, for example, and so on.

13:08

Speaker A

Okay, so that's one way to adapt the three Cs to your specific case. You should find the other key decision makers that really matter for the situation you're studying and that don't necessarily matter for other situations, other industries.

13:26

Speaker A

Is this an exhaustive list of all possible key decision makers? Not at all. It's impossible to come up with such a list, but this is a good guide on how to think through this.

13:38

Speaker A

Find key decision makers in the supply side or in the demand side or making the bridge between supply and demand.

13:46

Speaker A

For these decision makers to be key, they need to, out of their own interest, be able to make or influence decisions that would affect a large portion of the transactions in your market. If they can't do that, if they can't make

14:04

Speaker A

decisions or influence decisions for a large portion of transactions in your market, then they have no real control over market and you can safely ignore them.

14:16

Speaker A

Other key decision makers are the most important type of category that you should add to the three Cs in order to make your framework stronger. You can't ignore these other key players when creating a strategy for your clients

14:32

Speaker A

because they matter in their specific industry or situation. In a few markets, you're not going to find any relevant ones and in that case, you should just stick to the three Cs.

14:44

Speaker A

However, in most markets, you should be able to find at least one or two key decision makers on top of the three Cs that would be important.

14:56

Speaker A

But regardless of sticking to the three Cs or adding a couple other key decision makers to your framework, there's another type of thing that could become a category in your framework on its own.

15:09

Speaker A

Direct interfaces between decision makers. Let's explore them. Direct interfaces are critical ways decision makers interact with each other. In some situations, if the interface that makes two players interact change, the decisions they take might change as well.

15:30

Speaker A

And it is in these situations that you want to create categories specifically for the interfaces.

15:38

Speaker A

The most commonly used interface type category in case interviews is the product. It is an interface of how customers relate to your company and to your competitors. It is such a widely used category that there's a widely known framework called the business

15:57

Speaker A

situation framework, which is simply the three Cs with the product added on to it.

16:03

Speaker A

Most people don't even think about whether they should include the product as a category or not because in most cases, it does indeed make sense to look at the products in the market with a lot of care.

16:17

Speaker A

The reason why it is usually worth it to make it a category for the product is because this is usually the most important consideration that customers take into account when deciding to buy from you or from your competitors. It is

16:34

Speaker A

also usually multifaceted enough, so you'll have more than a couple questions to ask about and issues to consider.

16:42

Speaker A

Still, I would not use the product category of analysis in every single structure that I made. In some industries such as utilities and commodity businesses, there are just one or two highly relevant questions about the product and you could ask those

17:00

Speaker A

within the company and the competition buckets. Your products are part of your company, after all, and your competitors' products are part of their company. So, the decision to create a category exclusively for products and taking the questions about products out of the

17:18

Speaker A

company and the competitor buckets depends on if they're a small part of the problem or a big part of the problem. To give you an example, let's say that we're doing a case about revenue growth in an electricity

17:32

Speaker A

distributor. There are just a couple of considerations that a customer who has to choose among two electricity providers has about the product. For example, the downtime, the volatility of frequency, and the price. And these things can be explored as one issue

17:51

Speaker A

within the company and one issue within the competitors bucket. In fact, I think it makes much more sense to do so because these things are more related to the infrastructure and the cost curve of these companies than to the product per se, which is

18:07

Speaker A

merely energy. Now, this wouldn't be true at all if you're a smartphone manufacturer. In that case, the customer will interact way more with the product itself than with the company in general.

18:22

Speaker A

In that case, your structure would probably be stronger if you separated the product category from the company category because, well, the product and the company are actually two different things, you know, my iPhone is different from Apple as a company. Now, while everyone

18:40

Speaker A

remembers the product category, no one considers other interfaces. Take unions, for example. They're the interface between the employees and the company and its competitors.

18:54

Speaker A

In some specific situations, such as the downsizing of a large manufacturer, for example, I would include unions as a category of analysis because they may have the power to limit our options.

19:08

Speaker A

Another example of an interface is cartels. They're the interface between a company and its competitors.

19:16

Speaker A

Most cases are in normal businesses in free economy markets and in these cases, cartels are illegal. But if you get a case in a situation where there is a cartel and you ignore it, you're probably leaving a ton of insight on the

19:32

Speaker A

table. So, if you got a case on an oil company and you ignore the OPEC, for example, you're at risk of giving bad advice.

19:41

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Another example of an industry under strong influence of a cartel is the diamond market as just a few companies control production and pricing.

19:51

Speaker A

Here's another example of an interface, regulatory agencies. These are the governmental bodies that control specific markets such as banking, airlines telecommunications.

20:04

Speaker A

You don't always have to include interfaces such as these ones in your framework. Many frameworks work just fine with just the key decision makers.

20:15

Speaker A

But if there is a critical interface that could change a recommendation if studied in depth, you should use it, too.

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Speaker A

They will rarely be the most important components in your structure, but they may give you some nuance that will help you find insights that would differentiate you from other candidates.

20:37

Speaker A

Now, the third type of category that you can add in your frameworks is typically even less important than direct interfaces. But they too may help you uncover critical insights in some specific situations. These are the structural factors.

20:55

Speaker A

They're not specific players, and they're not direct interfaces between these players. They're kind of the rules of the game being played. Let's explore that.

21:09

Speaker A

Underlying the limited world of the specific market you're studying, underlying the limited world of supply and demand, there's a broader world going on. When you add that to your framework, you can think of some of the broader aspects that influence both

21:26

Speaker A

supply and demand. Some of the aspects that influence every single player in this market. And if you find one that is particularly important to the specific problem you're solving, it may be worth of a whole category in your framework.

21:43

Speaker A

You can think of things such as technology, the country's infrastructure, the environment, the economy, the law, culture and social beliefs. So, just to give you a couple of examples. Suppose you're solving a case on whether or not a client should buy land in Africa or

22:03

Speaker A

South America to grow crops. Any framework that doesn't consider an environmental study of whether or not this land will be as productive in the future due to climate change is short-sighted. People buy land as multi-decade investments. So, that study

22:22

Speaker A

would help understand the risks. Another example. If you're a company like Twitter trying to define its long-term strategy, the culture and social beliefs around media, privacy, and such things become important.

22:39

Speaker A

Twitter shouldn't just think about its direct customers because many of their users are public figures such as journalists and politicians. So, the overall social beliefs around what they do and what's what's their role to the world become important to consider.

22:57

Speaker A

Now, I rarely use structural factors in my frameworks because their influence is usually captured in a more direct way as they influence each of the key players we'll study. The law, for example, already influences your company, your competitors, and the government. The

23:16

Speaker A

culture and social beliefs already influence how your customers and how other players in the market behave.

23:23

Speaker A

Still, in some cases, such as the two examples I mentioned, the the company trying to buy land to grow crops in the long term and the Twitter strategy, in some cases, this critical information isn't fully captured in the key players.

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Speaker A

And this usually happens because the rules of the game are changing. The environment is changing, and that may affect a crop grower. The culture around social media is changing, and that may affect Twitter.

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When the rules of the game change, you need to be extra wary for which structural factors are contributing to that change. You may or may not want to add them to your structure.

24:07

Speaker A

So, this is how you adapt the three Cs to create highly customized frameworks. You add other categories of analysis to the core framework that are highly relevant to your specific situation. And these categories come from three main types.

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Speaker A

They're the other key decision makers beyond the three Cs that are relevant to your specific situation.

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Speaker A

There are the key direct interfaces between these key decision makers that are relevant and that may change how these decision makers change make their decisions. And there are the structural factors that may change the rules of the game.

24:47

Speaker A

But star candidates do something extra. Instead of just memorizing a ton of options like you see on the screen and replicating them, they also see options analogous to the ones that I just mentioned, so they can make their

25:02

Speaker A

categories more specific. Let me go through that with you. So, what I've shown you in the previous slides are pretty generic categories that you can use as you see fit.

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But you want to create a framework specifically for the problem that you have at hand.

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And the best way to do it is to think of which traditional categories make sense to your case, but then name them into an expanded or specific meaning to solve the specific problem you have at hand. For example, one

25:37

Speaker A

traditional area to explore is competitors. While you can, in many cases, use the plain old competitors bucket, you can also have a bucket specifically for your direct competitors and another one for indirect competitors. So, for example, if your

25:57

Speaker A

client makes plastic packaging for food products, an indirect competitor would be a company that makes aluminum packaging for food products.

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Or another option you have is to merge these two categories into a category called direct and indirect competitors.

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Speaker A

This makes your structure slightly stronger than just calling it competitors because you're showing the interviewer that you're aware that in that specific situation, in that specific industry, indirect competitors are as important as direct competitors.

26:36

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Not every industry is like that. Here's another way you can add nuance. If you're in an industry that is prone to new entrants and they could affect your strategy, you could add a bucket on them. Sure, you could talk about them

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Speaker A

within competitors, but in some early-stage, high-growth industries, they could be even more important than your current competitors, so they may deserve a category on their own.

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That could also be true if you're a local player in a market that's quickly being taken over by global companies.

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These new entrants could wreak havoc in your market, so you want to prepare for that when you're making strategy.

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And a simple way to make your structure more specific is if you're in the market that has just one competitor, you can call it by name instead of using the generic term competitors. I know this sounds silly, but most candidates

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actually use the generic term because that's what comes in their minds, and but that sounds unnatural to the interviewer.

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And it also sounds like you would use a generic term to your client instead of the more specific one even when there's no reason for that.

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Speaker A

Now, other examples of making your categories more specific. In some markets, besides talking about the products, it's also worth talking about the substitutes.

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The customer is always important, but in some markets, the decision maker of the purchase is not the end customer, so you have to factor that person out as well.

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And as the distribution channels make the physical bridge between supply and demand, in a lot of markets, there's also a bridge of awareness and meaning done by the media and influencers.

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Naming the categories in a way that makes more sense and is more specific to your case is super important for the same reasons that you want to make your issues within each category problem specific. The less generic and the more

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specific you are, the better you'll be at solving your client's problems, and it'll also make the perception of your interviewer uh that your interviewer and your clients have of you much, much better.

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Speaker A

Now, let's pause for a second. There are three main concerns that most people have at this point. Concern number one is how to prioritize all this.

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What are the categories that happen the most so that you don't forget them? Concern number two is how many categories should I have in a single framework? And concern number three is that some people can't see how this

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technique will generate a MECE framework. Let me help you out with these three issues so that I can be more confident in using this technique to adapt your frameworks. First, let me show you the categories from this video

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in order of priority. As we know, there are three types of categories to add on top of the three Cs. Number one, key decision makers. Number two, direct interfaces between those decision makers. And number three, structural factors, the rules of the game that go

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way beyond the specific market that we're studying. Now, some of these categories happen fairly frequent in cases. Let's say that each of these appear in 10% of cases or more. So, the product category here should be relevant in far more than 10%

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of business strategy cases, say 60 or 70% of them. While the supplier category will be relevant in about 10% of cases.

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The percentages don't really matter. I'm just giving you a rule of thumb so you know what I'm calling a fairly frequent category here.

30:36

Speaker A

Now, you don't want to be overwhelmed when adapting your framework. So, when you're starting out, you should focus on seeing if any of these five categories you see on screen should be added to your framework as you build it. When

30:51

Speaker A

starting out, you can disregard all others. Just focus on these five and you'll be able to add one relevant category or two and that will already make your framework better.

31:02

Speaker A

Then, once you're comfortable with these ones and once you have internalized them and you don't need to make an effort to remember them in case they're relevant, you can focus on the not frequent categories.

31:16

Speaker A

These are those that could be relevant in about 1 to 10% of cases each. Now, you notice that there are more interfaces and structural factors here, as well as decision makers that have less influence in most markets. Now,

31:32

Speaker A

this pattern doesn't have any profound meaning or anything. It's just my guess about their frequency and it's a good guess because I've seen thousands of cases over the years. So, you can have a rough idea of how frequent these

31:47

Speaker A

categories should appear. Your goal is to try to internalize these categories so that they pop up in your head if they're relevant to the case.

31:57

Speaker A

Your goal is not to memorize them or anything. Now, that said, you can have a checklist of this as you start practicing just to make sure that you learn, but then dump the checklist later on because of course you won't have that

32:14

Speaker A

in your interview. Then, there are the categories that are so rare that you've probably never seen them. I haven't seen many of these and that's okay. Once you internalize the logic of thinking through decision makers, direct interfaces, and

32:32

Speaker A

structural factors, you'll be able to reason from first principles what is important without having to run down a list in your head as you build your framework. Now, if you want, go ahead and take a screenshot of this slide and

32:47

Speaker A

have it with you as you build your next few structures. This may help you choose which categories you want to have in your framework without needing to worry about remembering them.

32:58

Speaker A

Needless to say, this is not an exhaustive list. So, you may want to think for yourself if there's another category that is not in this list that would make sense to your case. Now, one thing people ask me

33:12

Speaker A

a lot, how many categories should I have in my framework? And the answer is that there's no one right answer. Some cases are well solved with the three C's alone, while others are so complex that they heavily involve six or seven

33:28

Speaker A

players, interfaces, and structural factors. You'll be able to solve most cases well with four to five categories. And that includes the three C's, so you just have to add the one or two categories that make the most difference to the case

33:44

Speaker A

you're solving and that makes things a lot easier. Now, there is a reason for this four to five category figure.

33:53

Speaker A

You will want to focus only on the categories that really matter. And in most markets, there's not that much stuff that really matters beyond the customers, the competition, and your company.

34:07

Speaker A

Anyway, the other question that I get a lot is how is this going to generate a MECE structure? Great question. Now, this way of building frameworks guarantees mutually exclusiveness and achieves the right balance between being exhaustive and being 80/20. Let me

34:28

Speaker A

explain. The reason why you achieve no overlaps and achieve a mutually exclusive framework is because a key decision maker is never an interface and an interface is never a structural factor.

34:45

Speaker A

They're all different by nature. Now, within each of these types, there's no overlap either, right? Each key decision makers always different from each other and also each interface is always different from each other and each structural factor is different from

35:02

Speaker A

each other. So, unless you really mess up and have, for example, a product category but also talk about products within company and competition, then your framework will always be mutually exclusive.

35:16

Speaker A

Period. Now, to achieve MECE, you also need it to be collectively exhaustive, so no gaps. And the easiest way to achieve that would be to add all categories that I've shown you throughout this video and then some more. This would make your framework

35:33

Speaker A

fully MECE. But you don't want just MECE. You also want it to be relevant. That's why consultants tell you to be 80/20 so you can focus on your time on what really matters. Being relevant is as important as being MECE in consulting. So, instead

35:54

Speaker A

of just putting all 17 categories you see on screen plus some more, you pick and choose the ones that will be more relevant to your case and then you add them to the three C's, which are always relevant for business strategy cases as

36:10

Speaker A

we've seen in the previous video. Doing this will make your framework 99% exhaustive and super to the point, the best of both worlds.

36:23

Speaker A

All right, so enough with theory. Let me put all of this in practice along with the four steps I've shown you in the previous video to building communicate frameworks so you can see how a good framework is actually done. All right,

36:37

Speaker A

so I'll create a framework using the four-step approach and the techniques for adapting the three C's that I taught in this video. Feel free to pause the video after I show you the key question to build your own framework so you can

36:50

Speaker A

get some practice if you want. So, here's the case question. Your client is a global food company, so think Nestle or Unilever, uh that is thinking of acquiring a growing European company focused on healthy snacks made of organic,

37:08

Speaker A

ethically sourced ingredients. Should they do it? All right, so the first step is to define the case well so we can structure it.

37:17

Speaker A

Here are the three questions I'd ask to define this case better. Number one, do they have a specific reason to wanting to buy this company?

37:27

Speaker A

Number two, do they want to expand this company's products outside of Europe or just stay in the European market? And number three, are they looking at other targets as well? Now, suppose the interviewer tells me that they think the

37:41

Speaker A

healthy organic snacks segment will be relevant in the future and so they want to be involved in it for strategic reasons.

37:49

Speaker A

Uh they could expand outside of Europe in the future, but for now they just uh uh want to play on the European market with this new company.

37:59

Speaker A

And they might consider other targets later, but for now they just want to know if if acquiring this specific company makes sense.

38:10

Speaker A

Uh now, notice that the first question I asked was there to define the objective better and this is helpful because if I don't understand why this company wants to acquire the other company, then I'd have to make a lot of unnecessary

38:24

Speaker A

assumptions that I'd rather not have to make. And the other two questions were helpful because they limit the scope of the case. It's easier to solve a one-target acquisition case in one market than a multi-target acquisition case in multiple markets.

38:43

Speaker A

Okay? So, one type of clarifying question that I didn't ask was one related to business model. And the reason why I didn't ask that is because I'm fairly confident about how the packaged food uh industry works and how a company in this

38:58

Speaker A

industry makes money. All right, so now that I have a well-defined problem, I want to structure my case.

39:07

Speaker A

Should I go with an issue tree or a conceptual framework at this point? In this case, I want to go with a conceptual framework because the problem is strategic and the company is not just looking at increasing profits or any

39:21

Speaker A

other metric for that matter. Right? So, to have a good logical issue tree, you need a well-defined metric to optimize for. And this problem is more long-term, more complex, more contextual, and it will make more sense to look at the

39:36

Speaker A

whole market and all of the players involved. Cool. All right, so since we're going with a conceptual framework and this is a business case on competitive strategy, I'll use the three C's and then adapt it.

39:51

Speaker A

From now on, I will just show you how I present my framework to the interviewer as I think this is the best way for you to understand how everything fits together. And you'll notice three things as I present it.

40:05

Speaker A

The first is that I will walk the interviewer through all categories first and then for each category move forth and back between issues and their hypothesis. You only see the issues on the screen.

40:18

Speaker A

Uh but I'll speak about the hypothesis and once in a while I'll also hint at the test that I would use to test the hypothesis. Now, this last step isn't necessary, but I thought that you'd like to see how this is done.

40:33

Speaker A

You also notice that the phrasing I use for the categories and the issues is super specific to the problem. And this shows specificity and professionalism to the interviewer.

40:45

Speaker A

And the last thing that you'll notice is that the presentation's fast-paced and presented like a plan to understand the situation and find an answer to our client.

40:56

Speaker A

Okay, ready? If you want to pause the video and do the structure as a first drill, an unofficial drill, uh now's the time to do it, okay?

41:05

Speaker A

Because I will start speaking the structure from now on. So, to help this client understand if they should acquire this new healthy snack food company, I'd look into five major areas or categories. The first one is the customers. I want to validate the

41:23

Speaker A

fit of this acquisition with the demand side of the market, see if this is really a relevant trend. Then I would look into the target and I want to understand if they're strong enough player and if we can add value to them

41:38

Speaker A

after we acquire. Uh then I'd look into the company and understand our abilities. First to do this uh by ourselves and perhaps create uh uh a business like this instead of acquiring one. Also, our abilities to do the acquisition and then to add value

41:56

Speaker A

once we do the acquisition if we do it. Fourth area I want to look at are the competitors and I want to get a sense of their moves in this market in the near future. And finally, the suppliers

42:09

Speaker A

because I want to understand if this business can grow on the supply side of things if demand is actually that promising. So, starting with the customer, there are two main things I want to look at. The first is if there's

42:23

Speaker A

growing demand in healthy organic snacks. And the the underlying reasoning here is to confirm the client's hypothesis that this is a strategically important market. The second thing I want to look within customers is their perception of our brand and the target's

42:41

Speaker A

brand. And the hypothesis is that their brand may have some conflicts in positioning with ours. So, to give an example, they're a family business against mass production of food and we're a huge global food company. And if that is the case, it could put the

42:57

Speaker A

acquisition at check. Right? Uh now, within the target, there are two main things I want to look at I again. The first one is their performance against their competitors. And the hypothesis is that they underperform competitors only in ways that we could add value. For

43:17

Speaker A

example, distribution efficiency, marketing. And or that they don't underperform competitors at all. Both of these things would be good. The bad uh scenario would be if they underperformed competitors in things that we cannot add value and that are

43:35

Speaker A

important in this industry. Now, I know it's kind of hard to measure uh performance by area in a private company, but we I I would do this by gathering as many indicators and benchmarks as we can.

43:50

Speaker A

Uh And then obviously, if we move forward with this idea, we could do due diligence with them. Uh the second thing I'd look at within the target is their financial and organizational health. And there are two underlying hypotheses

44:04

Speaker A

here. The hypothesis for the financial side is that even if they're profitable, maybe we could buy them cheaply uh if they're lacking capital to fuel their growth. So, if they're in a growth market and they're a small company uh

44:20

Speaker A

and they're growing a lot, maybe uh their financial position is harming them on their growth and then we could jump in at this time with a huge uh uh with a huge bank account and and fuel that growth for them and buy them more

44:36

Speaker A

cheaply because of that. And then on the organizational side uh my hypothesis is that perhaps because this is a fast-growth market and company, it has created a lot of organizational problems in their processes. Maybe their systems, their chain of command. And this could

44:55

Speaker A

make it extra hard to absorb them into our organizational structure. Uh Perhaps even hindering the acquisition. And I think this is pretty hard to measure, but one way we could do it is to interview former employees, suppliers uh and other parties.

45:13

Speaker A

Now, within the company, I think this is our company, the global food company. I think this is one of the main uh main areas. I think there's three things that we need to assess. The first one is if we have the ability to enter this

45:27

Speaker A

market by ourselves. And the hypothesis obviously is that we if we can start up a competing brand quickly, we may not even need to acquire. Now, it may still even make sense to acquire so that we can do this

45:41

Speaker A

even faster and learn with their with their experience. Uh but maybe it's cheaper to do it uh by ourselves and it may make more sense. Now, the second thing is our historical abilities in acquiring other companies like this. And

45:59

Speaker A

by like this, I mean in this type of market uh or growing as fast as this.

46:06

Speaker A

And because if we don't have the ability to make acquisitions like this work then it may not even make sense to do this even if it would be a good thing in case we had the abilities.

46:19

Speaker A

And the third thing the third this is kind of my my hypothesis is that we can bring revenue and cost synergies to the table.

46:28

Speaker A

Uh maybe we can improve their marketing and distribution of products creating more demand, more volume, and also price premiums. Maybe we can bring on the cost side operational efficiencies uh such as better purchasing and negotiation with suppliers or even manufacturing

46:47

Speaker A

efficiencies. And these things could improve their bottom line because we have some knowledge or size that they don't.

46:56

Speaker A

Now, under competitors I would look at two major things. The first is I would look at our competitors' M&A and product launch activity in this market. And by competitor here, I mean all other global food companies.

47:12

Speaker A

Uh I won't look at other targets because I think it was pretty clear that they want to look at this specific target for now, not others.

47:21

Speaker A

But I want to know if our competitors are even considering to uh a- either acquire companies like these or launch products in this market.

47:32

Speaker A

And this is kind of extra validation of the strategic importance of this market in the future. Now, if they're not doing anything, this doesn't mean we're wrong.

47:41

Speaker A

We could be the first uh guys thinking about this, but I think this would be pretty unusual and would put a question mark on that assumption. And the second thing I'd look at within our competitors is their likelihood to try to acquire

47:59

Speaker A

the same uh the same company, the same target or a competitor of that target.

48:05

Speaker A

And we could do this by looking at the news, for example. Uh but the idea is or the hypothesis here is that we may need to do this deal very carefully not to be on in the weaker side of the

48:19

Speaker A

negotiation table and overpay this. Because if our uh say we announce we're thinking of buying this company or a company in this uh in this space, this may trigger a an arms race of acquiring strong companies in this space, which would

48:41

Speaker A

drive the cost of acquiring these companies up. And finally, with suppliers, I think this is pretty important. I want to know the ability of increasing volumes of uh of acqui- of buying uh raw materials with current or new suppliers without losing quality.

49:02

Speaker A

And the hypothesis here is this is a growing market, there may be volume synergies, and this all means that we could need more raw materials because we're thinking of growing.

49:15

Speaker A

Now, this company's positioned as organic, healthy, ethically sourced raw materials. And these types of ingredients are often hard to scale production.

49:29

Speaker A

Uh So, for example, certain nuts uh the they you You to grow trees, which take years to grow that and we may not even be able to grow that fast because of a supply constraint. And I just want to

49:45

Speaker A

check that before we do that because maybe on the demand side of things things are great. But on the supply side there could be problems. I wouldn't worry too much about manufacturing and things like this because we can just uh

49:59

Speaker A

invest in case it's worth it. But uh on the raw material ingredient side of things uh this would be important.

50:09

Speaker A

And what I would start is just checking with the customers quickly, the brand analysis and the demand analysis.

50:19

Speaker A

Uh and then I'd move right into the target to see if they are actually a good target in terms of performance uh competitive performance, financial, and organizational health.

50:32

Speaker A

And that's it. That's how I adapt and present a framework to an interviewer. Now, I took a whole 9 minutes to communicate this framework. This may be too long, especially at BCG and Bain. At McKinsey, you can uh communicate a pretty thorough

50:50

Speaker A

framework. So, why did I take so long to do it? It's simple. I gave hypothesis for every single issue in this framework. And I counted after recording this. I'm actually speaking to you now after I recorded the framework so I

51:04

Speaker A

could count. And of the 9 minutes, 5 minutes and 15 seconds were used to explain the hypothesis. Now, the reason why I did it, the reason why I explained every single uh hypothesis behind every single issue is so you could understand why each

51:24

Speaker A

thing was there in this framework. And in this course and in other courses, I will often uh on the longer side of explaining my structures better so that you can learn. But in a real interview, you may want to go a little quicker. And

51:38

Speaker A

the way to do that is not to make your framework less comprehensive, but to explain less hypothesis. You just need to explain a few of them instead of all of them. And by doing that, you could easily cut 4 minutes of your

51:52

Speaker A

presentation as the hypothesis part is the one that takes longer to go through. And if you do that, you'll be down to 5 minutes to present a thorough, comprehensive framework, which is well within the best practices of candidates

52:07

Speaker A

who get multiple offers. Just another note here. This is not a perfect framework and there are many other ways to do it. For example, you could argue that the product category would be very useful here. Or at least

52:20

Speaker A

that studying the products within the target category, so our target uh product portfolio would make sense to see how it looks like. You could also argue otherwise. You could say who cares about the specifics of their product portfolio if they're performing well

52:36

Speaker A

financially and if customers like their brand, we as a global food company could fine-tune the product portfolio after we acquire them. Now, you may have also thought about other issues that I didn't in this framework and this is normal.

52:53

Speaker A

There is no one right answer, but there are many good answers that you can give.

52:58

Speaker A

If your framework solves about 90% of the problem, it's good enough for the interview.

53:04

Speaker A

Now, if you didn't mention one or even a few of the issues that I did, my advice to you is to think about why that issue would be important. And if you think it is indeed important, then to use similar

53:17

Speaker A

ideas in the future uh if you get a a case that is similar to this one.

53:23

Speaker A

When you're at the stage of preparing for the interview, it's much more important to learn as you do cases and drills than to obsess over not making mistakes. Uh you know, you're practicing. You're not performing yet.

53:39

Speaker A

With that said, this is the end of this video and now's the time for you to go uh do a couple of drills to solidify your learnings into practice. So, I'll see you in the next video, which is a

53:50

Speaker A

drill and there's another one after that. And then I'll teach you how to create completely brand new structures from scratch.

Topics: case interview consulting frameworks 3 C's framework framework adaptation business strategy issue tree case structuring market analysis interview preparation competitive strategy

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