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***

Straight off, I want to say that I have never used a spreadsheet throughout my life.I tried to stay as far away from them as possible. Although I did well in high-school quantitative subjects, I deliberately chose literature since it was free and open to interpretation. I was never good with analyses. My internship at the FMCG was in the planning department but I physically never changed a cell in any of the economic modelling. Therefore, it was a bit of a surprise to me when I passed BCG’s screening test and even more of a surprise when I made it through all the interviews. I knew I could do it, but felt that some of my lack of analytics experiences could have held me back.

Straight off, I want to say that I have never used a spreadsheet throughout my life.I tried to stay as far away from them as possible. Although I did well in high-school quantitative subjects, I deliberately chose literature since it was free and open to interpretation.

Background. Within six months of joining BCG, and after being staffed on two organizational design studies, I was assigned to a pharmaceutical new division feasibility study project. It was an interesting engagement. One of the largest pharmaceutical companies was undergoing a complete transformation. The engagement was led out of the Boston office, and teams were sent to locations around the world to analyses different issues. Eastern Europe had been identified as a potential base for new manufacturing facilities. An abundance of talent, tax incentives, good universities and land made it a good choice. My home country was at the center of a discussion to build a multi-million dollar manufacturing facility. I was staffed on a multi-national team with six nationalities and overall led by the one of BCG’s most respected senior partners, David Matheson. In the world of healthcare, this man is given god-like status. So, although I was not expecting much face time with him, at least the opportunity existed.

Too many people, and consultants, do not understand the visceral fear others have of spreadsheets. If math is scary, than spreadsheets are the king of boogeyman.

Challenge. I knew less about Pharma than most sectors but the idea excited me since I had read so many medical thrillers. I was less pleased about the role. I was assigned to build the economic model to determine if the plant would be profitable. You have to imagine my feeling! Imagine never having driven a car in your life and being told you would need to go out the next day and drive a car to work. It’s similar to this, but with the added pressure that if you do not arrive at work, you will be fired! Too many people, and consultants, do not understand the visceral fear others have of spreadsheets. If math is scary, than spreadsheets are the king of boogeyman. It is widely believed that only the smartest and most numeric consultants can tame these beasts, and the ability to do so is an essential rite of passage to promotion. I left the BCG office that Thursday fully convinced I would be exposed as a fraud within the next 2 weeks.

That night I had a nightmare about a nameless BCG partner walking in and taking away my laptop, then escorting me to the front door.

Friday morning, the day of the team debriefing, I spoke to my mom for some advice, convinced that her eldest child, who supported the entire family of 4, would soon be unable to take care of everyone. She offered the usual encouragement of doing my best and not letting anything get me down. I dragged myself into the office and listened as this jumble of ideas fell out of the partner’s mouth. For the record, everyone at BCG was very supportive and the firm had plenty of resources on which I could draw.

Patient, deliberate and willing to answer any question I had, you would think it would be enough. Yet, it did not work.

It’s like having Ayrton Senna next to you and providing instructions. Sure, he is the best tutor, but am I ready to be the type of student who would thrive under him?

I went to see my assigned mentor, an economics graduate of a prestigious Grand Ecole in France. He gave me 6 power-point guides to read, two books on economic modelling and 3 sample economic models. He also spent a good 40 minutes talking me through how to build the model and how to get help. It felt like I was on a trip to Cambodia! I understood nothing. I visited the knowledge managers who also just gave me more reading material. I looked at the training videos and reached out to other consultants who had built similar, but not the same, models for other Pharma clients. That weekend was not a good time for me.

All the material was so confusing. I literally did not know the beginning point or the end point. We would be planning the engagement on Monday and meeting the client soon, yet I had no clue what was happening. I cried a little that weekend. There, I said it! Panicking, I admit that I reached out for help. I called Michael for advice. For the record, I did not share any details whatsoever but wanted help on how to approach the problem. What follows is how I applied his advice on the engagement.

Step 1 – Forget about the economic modelling, excel, spreadsheets, macros and formulas.

Model building does not start with economic modelling. It starts with plain logic. I was told to do a few things, which was different from what the BCG manager recommended, but impressed him no end. Later I would see my BCG manager was telling me exactly the same thing but I just failed to grasp his advice because I think he was speaking a language just a little out of my reach.

First, I was told to think about the problem I was solving. What was the key question I was trying to solve. The team was trying to determine if the new division and product should be launched, but surely the model was not meant to do be doing all of this? So, over the course of the first day I spoke to the engagement manager and the rest of the team to determine what they wanted me to do. Over coffee, pastries and countless scribbles on my notebook, I realized they wanted me to calculate the return-on-invested-capital (ROIC) from building the plant. Moreover, they had more than one way to build the plant and they wanted to compare the returns for each way.

At this point, we are still not talking about economic modelling. All I am trying to understand is what I needed to do. With my manager, we agreed the most important question I would need to solve was to calculate the ROIC for the new division. Mind you, I still had no clue what ROIC was (roy-EEk; sounded more like an Icelandic village!), but I knew that this was the main question I needed to answer.

One great piece of advice was to always place a +, -, x or / sign between the branches. If you cannot find this relationship then you cannot model it. I did this and it forced me to make sure I understood the relationship between each branches.

Step 2 – Write down the levers and drivers of ROIC

Remember, we are still not using excel or even talking about it at this point. I am also still following Michael’s advice, which is different to what my manager recommended but he is still incredibly happy so far. So I worked out the levers and drivers of ROIC. The early stage of this was easy to do. You can get it from any finance textbook and BCG has many guides with the ROIC tree. I just took one and worked with it. The hard part is in adapting it for the industry in which you work. So in this case, I basically had to do three things:

(1) Understand Revenue

This meant understanding the sources of revenue for this division. I knew they sold drugs to pharmacies, directly to patients, and online through their website. Since revenue is driven by price and volume of drugs, I had to get the pricing sheets and then estimate the volume of drugs sold. So you can imagine this ROIC tree expanding from left to right over the 2 meter width chart behind the desk where I worked. One great piece of advice was to always place a +, -, x or / sign between the branches. If you cannot find this relationship then you cannot model it. I did this and it forced me to make sure I understood the relationship between each branches.

For volumes sold (demand), it was a bit harder. I need to estimate the growth in each segment by looking at past segment growth and extrapolating it based on expected market demand. Easily explained here, but something I only figured out once my manager explained it to me.

(2) Understand Costs

As with the revenue side, I needed to continue building my tree on the cost side. I split costs in fixed and variable costs, and then collected information from the company to work out the relationship between variable costs per pill manufactured. This way, as I changed the demand, and the volumes of pills manufactured increased, I could determine the increase in variable costs.

For fixed costs, I basically needed to determine all the major cost categories and work out over what period to depreciate the costs. This was the easiest part to do in the model, but the hardest to understand when building my tree. In fact, I never really understood this part until I built the model. Depreciation is technically easy to model but intuitive hard to understand.

Key thing to remember here, is at this point, I have just done two things. I knew what the team wanted me to calculate and I also had built a large decision tree to calculate ROIC. That’s it.

(3) Understand Capital Use

Once I knew all the costs (capital) I would use, I could then split it up and divide its use for fixed or variable costs, and work out the return on capital. This was the easiest part since the formula is given to you.

Key thing to remember here, is at this point, I have just done two things. I knew what the team wanted me to calculate and I also had built a large decision tree to calculate ROIC. That’s it.

Step 3 – Map the process

This was the easiest and most fun part. I worked with a BCG internal pharmaceutical manufacturing expert and the client operations manager to build a simple process map all the way from the procurement of raw materials to the arrival to pills at the three customer segments. This took me about 3 days to do, but was really useful because I took my decision tree to the workshops and found a few parts where I had either misunderstood a part of the process or ignored a vital step. For example, in my decision tree, I assumed volume of pills produced was driven by the demand in the market. I found out that some pills were manufactured and shipped to developing countries, irrespective of the demand in the market. They were a type of gift whose volume was fixed and not driven by demand.

This took me about 3 days to do, but was really useful because I took my decision tree to the workshops and found a few parts where I had either misunderstood a part of the process or ignored a vital step.

I also realized how complicated the quality approvals process was for checking drugs. A huge amount of money was spent on equipment to screen drugs after they had been prepared. The amount was at least 15% of all capital costs and made me realize that by lumping all the capital costs together, I was missing opportunities to understand the cost structure and cost drivers better.

I had also assumed that demand drove prices. This was not the case. The 4 countries which this plant would supply all had regulated drug prices which tried to guarantee a net-margin, after shipping costs, of 7%. So the prices were basically fixed and could only change every 4 years. An important insight!

Step 4 – Model description

I was asked to write a one slide description stating what the model would do. I thought this was a joke! Just one slide! Surely I needed to put together a 10 page description at the least. This was the one part I wanted to ignore Michael. In the end, after a few more calls, I decided to go with the process. This was the toughest thing I had to do. I needed to write about 40 words which explained to people what the model did, and therefore, did not do. It took me about 20 tries to get this right.

Michael told me that Winston Churchill had a war-time rule. His cabinet was only allowed to present their ideas on a single-side double-spaced typed page! Irrespective of the size of the issue or its complexity, they had to get the idea, recommendation and required decision on one page. His view was that if Britain won the war with this approach, surely it could work for any other planning. It did.

Attempt # 1 – Too technical

Attempt # 4 – Forgot to mention the model outputs (Graphs I would produce)

Attempt # 8 – Ignored the key variables (data I could change in the model)

Attempt # 12 – Forgot to mention the 2 key assumptions (In my mind all the assumptions should be listed. Only when I ran the sensitivity analyses, did I realize why some assumptions are more important than others)

Attempt # 16 – Ran out of space

Attempt # 20 – Perfection!!

Michael told me that Winston Churchill had a war-time rule. His cabinet was only allowed to present their ideas on a single-side double-spaced typed page! Irrespective of the size of the issue or its complexity, they had to get the idea, recommendation and required decision on one page. His view was that if Britain won the war with this approach, surely it could work for any other planning. It did.

Step 5 – Building the model

By knowing the main question I was trying to answer, having a clear description of the model and the drivers of ROIC, it was very easy for me to sit down with my manager and take him through my thinking. To be honest, I was a little slower at getting this all done, but I think my manager was very impressed with my work. For example, I could show him, on the decision tree, what I would change to test all three different options for building the plant, as well as how I would test some assumptions the team was making. It is really simple to do so by pointing out the changes in the decision tree and together we could work out the likely impact by following the decision through the decision tree. It helped build my credibility. Many of my colleagues were surprised I even know of this approach since I lack an engineering background.

The model I built, pretty much mirrored the decision tree. One page actually had this big tree with all the numbers flowing in.

All he said at the end was to make sure I remembered to build an income statement, balance sheet and cash-flow statement. Which I forgot to do! Thankfully, my colleagues showed me that I already had all the data in the model and it was just a question of bringing them together.

The model I built, pretty much mirrored the decision tree. One page actually had this big tree with all the numbers flowing in. It was probably not the most beautiful way to depict data, but it was incredibly useful when it came to sitting down with the client and explaining how different issues and changes would impact the returns. The clients happiness at the end of the day, translated into some great feedback for me, and my continued career at BCG.

This experience taught me several things.

It is a myth that model builders must have math or engineering degrees. By attacking a model as just another consulting problem and trying to understand the logic, before thinking about the excel component, anyone can build models. The logic is far more important that any fancy functions in the model.

You do not need to know how to programme. My model was really simple but it worked well. It had no macro’s, vlookup’s and what-if statements or code embedded. I still do not know how to do these things and have now completed about 6 engagements where I have built or helped build a model.

You can only build the model if you really understand what you are doing. If you do not perfectly understand the engagement, you will never be able to build the model. Think of the model as translation of the engagement into another language. You must understand the nuances to complete the translation.

The best models DO NOT do everything. The best models only answer a few key questions. They are not meant to help the clients with other issues, or simulate ROIC and help optimize inventory. They are focused with a well-defined boundary.

The model is not the deliverable. This was a bit of a shock. I expected my manager to parade my brilliant model. He did not. The model did not even come up much in major client updates. Interestingly the team was far more interested in understanding the implications of the model output. I suppose that’s the difference between to the top firms and others. The top firms care about the implications of their findings.

Model building is easy; relative to building storyboards. That’s for another post, but in hindsight, I think building effective storyboards is far, far more difficult than building a model.

An arts degree does mean anything; positive or negative. Having an arts degree does not at all speak to your ability to build economic models. Your ability to think in a clear and structured way is far more important. So, measure that skill before thinking your arts background is a liability.

I urge everyone to seriously consider management consulting irrespective of the background they have. Please post comments if you have any questions.

Maria

“Hello Michael,

Thank you for a great website. I posted this to your forum and decided to email you too.

My question relates to understanding financial statements. I have a master’s in political science from a great school but have no clue what is on financial statements. I have an offer from BCG but my question is what would happen when I join. How important is this skill as a consultant, what must I know and how do I learn it. Everyone has a different opinion here.

I don’t want to get kicked out after all the work preparing to get in.

Thank you in advance!

Dasha”

***

Hi Dasha,

Thank you for the email.

I will not touch on case interviews at all since that has no bearing on your performance once you join the firm. The rest of your questions are also easy to answer, but I will take care to explain them since my advice may be counter intuitive.

You need to keep some facts in your mind as we discuss the answers.

Fact 1: Until you make partner at BBM, you are just an apprentice who is still learning the ropes. I don’t mean to sound harsh here, but logic dictates that if there are levels below partnership, capability separates the levels and the highest level is the most capable, then the lower levels are still learning. Moreover, you do not have tenure until you become a partner and there is always a strong chance of being managed out for poor performance.

Most people who claim to understand business finance really only understand the income statement side.

Fact 2: If you cannot understand the financial statements, you cannot understand a business, and cannot best advise management. That is not to say you cannot advise a client on marketing or organizational issues, but at the end of the day unless you can translate this to concrete shareholder value impact, it is just speculation on the ultimate impact that shareholder care about: shareholder value.

Choosing to ignore the balance sheet is like saying you are fluent in Spanish when you only know 10% of the words. I even know a few people who published business books but cannot read a balance sheet.

Fact 3: If you cannot understand the balance sheet, you cannot understand a business, and cannot best advise management. Most people can understand an income statement, and cash flow statement. They are intuitive. These are important of course but the real action takes place in the balance sheet. Most people who claim to understand business finance really only understand the income statement side. A colleague once joined a much respected bank in London and mentioned she was intimidated by all the sharp minds around. My response was to not worry, 90% of the people in her team sound they understand the balance sheet but even very senior people will not know what is happening. 4 months after she joined she regaled me with stories about some of the silly comments made which demonstrated a lack of understanding of the basics of balance sheet analyses.

Choosing to ignore the balance sheet is like saying you are fluent in Spanish when you only know 10% of the words. I even know a few people who published business books but cannot read a balance sheet. I am at a loss how they feel they can help clients create the maximum value, or even test the validity of their assertions.

You will hear countless stories from younger consultants – those very early in their careers, those who left early and those who were managed out early – that they did not need to know finance. Before assuming they are correct, there are a couple of things to understand here.

First, everyone is different. The people making this claim could have very well have picked up the finance knowledge needed quite quickly. So while they did not go through formal training, they picked up the skill on engagements. To say you did not need a skill is quite different from saying you picked up it easily and many people regularly confuse these two points.

Second, let’s look at someone making this claim but this person has yet has never had to analyze a balance sheet or build an economic model. Does this mean finance skills are not important? It is possible this person did not actually get staffed onto an engagement requiring much financial skill. They could have just been designing organizational structures. If so, how can they say they did not need it? Solving a finance problem without deploying finance skills is an example of “not needing it.” It does not mean they should not have used the skill or their results could not have been much better if they had used the skill.

Read that line again. Never being placed on such a tough project where you need finance skills is just good luck. If the person left management consulting too early, the opportunity to use finance skills may not have arisen, or the firm could very well have managed them out because of this lack of skills. In fact, since they never stayed to partnership, they could never know. So be wary of whose advice you take.

Third, many juniors can get away for a few months or even a year without being exposed to financial calculations. It is unlikely but possible. Do not use this one outlier of advice to draw a trend.

Fourth, I know several partners who were slightly weaker on the numbers side. I cannot say they led the most influential parts of the business, nor can I say I interacted much with them. There is a certain perverse logic here. You become a successful partner if clients like you. Let’s define “like”. No one likes a consultant. Given the money paid for a partner’s time, they either perform or are replaced. It is all about who creates the most value for clients and over time, unless you can read that balance sheet and dissect the numbers you will ultimately be leaving opportunities on the table: a process of natural selection. Yet, you can still become partner with an adequate grasp of the numbers. I can assure you many Harvard or Wharton MBA partners who focus on strategy, marketing etc. have a good enough grasp of the numbers but some will be better.

Psychologists should use balance sheets for Rorschach tests. I can assure you no two people are seeing the same thing.

Strategy partners always have a ridiculous grasp of the numbers. We have no choice but to be like this. When a client appoints and works alongside us, not only are we trying to bring value to them, we are also up against our client’s competitors and their armies of consultants. He who knows the numbers and understands the linkages always wins because they can see gaps and strategies others cannot.

Psychologists should use balance sheets for Rorschach tests. I can assure you no two people are seeing the same thing.

Even today, I am a numbers hog. But, I am never tired poring through spreadsheets and data because I like doing it. I always believe in speaking extensively with staff and then comparing this anecdotal evidence with the numbers. You must always do both. It is just naturally the way I operate. I always tell people it is easy to find me in a restaurant. I will be the guy with stacks of annual reports and spreadsheets. I have no problem eating and going through numbers.

Surprisingly many people know the numbers but do not understand the linkages. I know lots of people who can recite the meaning of ROA, EROC, EV, asset dissipation etc, but actually have no idea how to generate meaning from this.

Want to see an example of what I mean? Here is an interaction I had with a candidate, not a client, who wanted to understand why I said approaching a profitability case by cutting costs and raising revenue is flat wrong and I would fail you for it if you faced me in the final round and spouted this wisdom.

This guy took the time to understand the linkages. Most would not. And the scary thing is that this is such a basic concept on the income statement that everyone should understand it, and you can imagine the damage done to client if you do not.

See if you can follow the unedited discussion and extract the counter-intuitive understanding here.

***

Candidate: Relative to other podcasts I was a bit confused about what you are saying here [podcast 122]. I had to listen to it a few times before getting a clearer picture of the implications of what was said. I don’t believe that you are saying that it is “wrong” to explore top line cost reductions when looking at a profitability framework.

Rather you are saying that it depends on the context of the particular case in question. For example, if this case was GM circa 2008 where demand is declining, there is too much capacity in the industry, and the current compensation scheme is not competitive relative to peers. In this scenario the correct analysis would be to focus on reducing top-line costs (i.e. employee compensation) faster than the expected fall in revenue due to reduced production (i.e. due to moral, restructuring costs, etc). in such a case it would not be wise to recommend GM to expand into another industry where they have little comparative advantage (i.e. finance, airline manufacturing) to expand into .

However, if the external conditions are different or there is a market segment that the client has not fully penetrated then a top-line cost focused analysis would be counterproductive. What do you think?

Michael: I am not sure if we are in agreement. I will summarize the concept here. It is not an easy concept that is why so many people make a mistake here.

If a company merely cut its costs to increase profits, it would not grow.

If a company merely focused on revenue to increase profits without cutting costs, it would grow unprofitably.

In the real world, you cannot just pursue one angle.

You have to increase costs since costs must go up to invest in revenue producing initiatives.

However, you know the costs are well used if the return they generate exceeds the original cost incurred.

Therefore, increasing costs is not bad if the returns are there.

In fact, any company is increasing its costs to grow, but the returns are greater.

Therefore, to say you will merely cut costs to increase profits does not take into account what shareholders look for: growth and ROIC.

Cutting costs is not a solution by itself.

Does this make sense?

Candidate: OK, just to be sure that I understand what you are saying:

1. Shareholders always want growth and ROIC

2. To create growth you must increase the total cost

3. As long as the return from the marginal dollar invested is positive, total costs should increase

4. If costs is beneficial if the ROIC is positive.

What I am having a bit of trouble with is understanding how to apply your position to the case where ROIC is negative due to an overinvestment in fixed and/or variable costs. I would find it helpful if you could apply your perspective to GM in early 2008 or another industry currently experiencing overcapacity such as petroleum refining.

Michael: Let’s discuss GM. The most important thing to remember is that you are looking at GM’s aggregate ROIC.

Second, I went through Bloomberg and skimmed GM’s 2004 to 2008 annual reports; costs were driven by retirement costs and finished goods inventory, versus in-process inventory. The first is not a capital fixed cost but just as bad.

The second is more interesting. GM built factories to build products no one wants.

These reinvested savings will show up as a cost on the income statement of the division which received the capital.

That said…

GM’s ROIC across different divisions would be very different. So, it should cut its costs in those areas/divisions where it is not able to produce products earning a marginal positive return.

It should then take that saving and invest it in divisions where the marginal return is positive.

These reinvested savings will show up as a cost on the income statement of the division which received the capital.

Moreover, if the investment works and revenues increase, variable costs will have to go up.

This is what BCG actually recommended and did 3 years ago.

Candidate: I see, that is a very nuanced point you are making. Even if the aggregate ROIC is negative and the firm needs to cut capacity in some divisions, the reallocation of capital will be placed on the costs side of the ledger.

This is counter to intuition that costs have actually decreased due to the company on aggregate getting rid of stuff while it figures out how to invest the proceeds of the released cash flow. If I understand this correctly then the only way costs could decrease from an accounting perspective were if the company began to horde cash, deleverage or increase dividends.

I agree that this is not desirable from a consulting perspective as it is akin to admitting that shareholders have a better use of the firm’s capital than the firm itself. From perspective of an investor that holds a portfolio of companies, some companies will have a higher return than others making the return of capital beneficial under certain circumstances.

Michael: This is not a nuanced point. This just requires the ability to follow a $ though a balance sheet, which is not something people do.

Yes, the savings/capital reallocation must go to the cost side unless it is just sitting as cash or gets displaced to shareholders. Neither option is preferable.

This view is important to understand the life cycle of value. Savings mean little unless you can understand how it is going to be recycled back into the business.

At the end of the day, a company is merely an investment vehicle and needs to do just that.

***

Granted, you will not face an interviewer like me every day that pushes for the deep insights, but this case is also something I do with our corporate finance clients and the failure rate is through the roof.

My point is that it is vital to think deeply about the meaning of even the simplest concepts. Every single person attacking a profitability case assumes they know what they are doing. This discussion indicates how a good understanding of finance can unlock so much more value for clients.

Now ask yourself how you would have done the case: It is 2008 and GM’s profits are down from over-investment in fixed assets and a demand drop. What would you do?

To be clear, “really understanding finance” does not in any way imply you should know more than another person. It means you extract deeper meaning from what you do know.

This goes to the heart of my earlier argument. The average consultant would merely approach this as a plain vanilla case of cutting costs and boosting revenue, naively thinking they are mutually exclusive. The one who really understands finance can tackle the logic above and come out with a much more nuanced strategy.

To be clear, “really understanding finance” does not in any way imply you should know more than another person. It means you extract deeper meaning from what you do know.

Here is something very counter-intuitive. Having an MBA or being trained in finance does not in any way mean someone understands how to read income statements. Think about that for a minute.

Daily we read about financial scandals not because of some sophisticated chicanery, but because investors are sometimes just unable to check even the most basic things due to lack of knowledge. As shocking as this may sound, I have found the same thing with MBAs. Many, in fact the majority, cannot read a balance sheet. Anyone can read an income statement – even a bull. Place a bull in front an income statement bleeding red ink and it will charge it. Place it in front of an income statement in the black and we have a peaceful Zen master.

Lots of people and consultants will tell you how easy it was for them to pick up the finances to analyze and build an income statement and some variation of a cash-flow statement. That is nothing, if not too easy.

Even with MBAs from great schools, most will struggle to read the balance sheet and extract the implications. They can tell you what each item means and loosely the impact, but to understand its implications is a vital skill.

That said, you do not need an MBA or finance degree to read balance sheets or build them. I know many consultants who made partner without this formal degree. They did not have the degree, but they knew how to read balance sheets and help companies. An MBA helps but consulting firms provide sufficient training on the job, though that is harder to pick up given the work load.

In summary:

• You need to understand a balance sheet.

• You need to learn to do this over time.

• Having an MBA would imply you can read a balance sheet. It does not guarantee it.

• You do not need an MBA to learn this skill. You can learn it on the job – though an MBA can make it far easier.

• You will never make a great partner or business person unless you can understand a balance sheet.

• Knowing more about finance is not the same as truly grasping the implications of what little finance you do know – he latter is always preferred.

“Hi Michael,

Thank you for taking the time to discuss my career. I thought your stories were a little funny but really insightful, especially the Paris Hilton analyses. I never looked at it like that before.

You were right, Joe Davis is a great guy to work with, and he likes constant contact.

If you recall, I mentioned I would be going onto my first BCG business case engagement and wanted to know if you had any specific guidance on what I need to know to support my manager. I do not have a quantitative background and read history at Oxford. Any tips or guidance will be greatly appreciated.

I would prefer printing the advice, so if you could kindly respond as an article that would be great.

Scott”

***

Scott,

It was a pleasure meeting you as well. It was a pity we did not have more time to speak. I am going to elaborate based my own experiences from three perspectives: when I was a consultant, manager and then principal.

While you need to support your manager, you also need to know what your peers and engagement partner are thinking. I was also a corporate strategy specialist and developed more than my fair share of business cases, as well as oversaw many teams as a manager and principal.

In thinking through your positioning, don’t ever lose sight of these three groups of consultants you will need to engage.

All of our Succeeding as a Management Consultant books cover business case development in extensive detail. I notice you are not a subscriber to them so I will capture just the salient points here.

Here are some general tips, followed by my experience of working with each level.

1 – Be accountable and assume nothing. When you join, you will be surprised how intense things can be and how quickly you need to deliver very high quality slides. You will get guidance from peers and your manager, and partner. Yet, do not rely on this. You need to own the problem and it is your responsibility to raise obstacles before the engagement manager or partner identifies them.

So, make sure you completely understand all the analyses to be done, make sure you can complete it on time, and make sure you are not making assumptions that something will be done on time if you are not the person doing it – if you are not doing it simply assume no one is doing it.

As a principal, I was not at all pleased when consultants raised delays which were driven by things they could have easily checked. The most annoying such incident was a young associate who did not check if the printers would be open at 7am to color copy our presentation. In another case, a young manager did not check the vacation times of a very important financial analyst at an insurance client. Two days before a vital board meeting, we were unable to verify crucial assumptions in our analyses.

2 – Do not over promise, no matter how easy something may look. In one striking example, I was leading an extremely complex analyses for a client. We were trying to simplify a complicated actuarial calculation given the data constraints we had.

It was a crown jewel client and on a sensitive issue which was generating lots of negative media attention. Our analyses would directly inform the capital allocation decisions of the CFO, and form the bulk of the press release to be issued by the CEO.

My manager on the project was very hard-working and capable. However, the type of analyses we were using on the project was a little too much for him – he was a smart engineer with an MBA, but this was some scary math! So, he relied on me to guide the business case team, and relied heavily on the business case consultants to make sure they would inform him of problems.

The consultant leading the business case team was very arrogant, and once told me that the analytical work was beneath his skills – he wanted more difficult work and I explained he would get them if he could prove himself on this engagement.

That same consultant failed to build the analytical model, and completely failed to understand the business case we were trying to develop. Moreover, he only told us about the problem, 16 hours before he was about to leave on a 2 week vacation. I let the consultant go on vacation, but managed him out 2 months later. You never ever, ever let your team down.

My team worked over 6 intense days to complete the model and that was the only time I stepped in as a principal to lead the model building directly. I had no choice. It was not fun, and was a problem created due to hubris on the side of the consultant.

It should never have happened, and even if there were problems, we should not be finding out about it 16 hours before he was leaving for an island with no internet access. He lost my respect.

3 – Build the overall work plan early in the engagement. You need to do this and it requires you to understand the overall problem, outline how you will design the solution, list your data requirements and understand all the questions which need to be answered. Where there is an overlap of activity with your peers, you will need to agree on roles and responsibilities.

This will be a steep learning curve for you since this is your first business case engagement. To overcome the problem of building a plan which cannot be adjusted, make sure you set weekly milestones to make sure you can track progress and see if you are falling behind.

At the end of the first two weeks, in your head, you should be able to see how all the analyses will come together and the data you will use. If you cannot logically explain this to the partner, you can just assume you do not have a handle on things.

So, those first 2 weeks are very important. I would go as far as to say they are the most important weeks on the project.

4 – Make sure you are not assuming perfect information from the clients. Clients usually do not have the data you want, almost certainly not in the format you need it, and rarely accessible in the time you need it. Check that the data available will work for the analyses you will want to run. If it does not meet your needs, you likely have to change your hypotheses or take time consuming steps to change things.

5 – Have a flexible process so you can incorporate likely changes in findings. While you need to design the overall work plan soon, you also need to have a process which is flexible enough to incorporate likely changes in findings from the rest of the team.

For example, what if the partner decides a new area must be analyzed? You need to make sure your analyses can cater for such changes, or at least be able to explain why such an analysis could not be incorporated.

It did not please me when my managers would agree to do something they had not thought through. They are closer to the work and are best placed to understand what level of analyses is and is not possible. Blindly following a suggestion from the partner is dangerous. You must be accountable and vet each step and action. It is expected of you.

I, for example, would routinely throw out hypotheses of what I thought was happening. It was, however, very important for the team to screen these and see what and what would not work, and keep me informed on the way forward.

6 – Give direction and request inputs. You must give direction to the rest of the team but also require in-puts from everyone else to complete your work. You must design your approach to cater for this: providing direction while also collecting information.

7 – You cannot work in isolation. You need to present meaningful updates of sufficient depth and at regular intervals. These updates are critical input for the rest of the team and must be carefully planned.

Remember, you must conduct the financial assessment of options to solve the problem. That is the role of the business case team. The result of your analysis provides enormous insight to the engagement team. It directs the teams to possible areas of improvement or point out areas likely to generate little opportunity for improvement.

So, you cannot hole yourself away for the duration of the study and present your findings at the end. That would be a disaster. The team needs to see your thinking at various stages and the same numbers in various stages of granularity. They need this information to guide them.

8 – Find allies in the client’s finance department. You must find allies in the client’s finance department who can share data, work with you to test hypotheses/answer questions and validate your approach. This can only be done if you can clearly explain your approach and rationale, and instil confidence amongst the finance department employees.

You need to build these relationships at several levels of the finance department. Do not be shy doing this at the mid-level, where you will work with the finance team on a day-to-day basis and at the CFO level where you need to build rapport and trust to ensure she/he accepts the recommendations and owns the findings once you leave.

Building these relationships is difficult to do if you are unable to explain your objectives and approach articulately. In other words, communication matters enormously.

Some advice for working with peers:

1 – Do not work in isolation. You need to share your work since it impacts everyone else’s work. I insisted my teams meet regularly and use large charts in the engagement room to ensure visual understanding of what was required. This was far from common across the firm, but I insisted on it.

2 – Share your work and help your colleagues. I sometimes get emails from clients we placed asking if they should share their work. You should liberally share your slides, thinking and analyses. Also never ever leave early unless you have first checked with colleagues to see if they need additional help.

3 – Don’t be arrogant. I see this often where new hires try to show off their skills by being arrogant. You are only measured on demonstrated competency, not your ego. Eventually, you will be placed in a position where you need to prove yourself by relying on others, and arrogance does not build friendships.

Some advice for working with managers:

1 – Managers are under intense pressure. I recall really pushing my engagement managers to deliver the very best in each engagement. We just had to beat our previous best. Knowing that, help them help you by being specific about the advice/guidance you need. Managers are busy, so go to them when you need help. Do not expect them to “do the rounds” daily with each and every team member. That is an inefficient use of time.

2 – The manager is not the expert of your work. You should always know more about your analyses and it is your job to bring insights/challenges to the attention of your manager.

3 – Make your manager look good. Make your manager look good by at least trying to understand what the principal/partner/director is looking for from him/her, and provide this information. Only you can know this, and only if you take time to get to know the partner.

Some advice for working with partners:

1 – Partners are usually very friendly and willing to help. I spent a lot of time simply coaching and teaching consultants how to engage clients, think through issues or even complete analyses. That said, I expected them to be ready, communicate clearly and build on my work. Someone merely recycling my ideas is not showing where they added any value to the process.

If I found a consultant was not working with my guidance, or ignoring it without reason, that consultant would not get much of my time in the future.

I recall one consultant for whom I gave 30 minutes of detailed feedback on just 2 slides. She did not take notes, despite my suggestions to do so, and came back the next day with about 80% of the suggestions missing. That did not please me and such repeated behaviour led to her being managed out within 3 months of this incident.

2 – Every partner is unique, wants feedback in different ways and has lots of advice. Take the time to understand the partner on the project and help them succeed. When I was asked to pick up a partner from the airport, I would take 5 note cards containing all the information the partner would need to know so he could sound as if he had never been away. Partners loved this. When I was promoted to principal, I had trained my teams to manage me in this same way.

3 – Don’t be perfect, no partner expects that, but don’t make the same mistake twice. That is not forgivable. I once had a consultant make a major mistake on a slide I asked her to prepare. She included the benefits without discounting them. I was not happy, but the consultant learned her mistake quickly. I took her under my guidance and mentored her heavily. She eventually rose to associate principal before leaving for a corporate role.

The flip side of this – find a partner to mentor you. No matter how smart you are, it is not enough. The consultants who rise to the top the fastest are always mentored by very capable partners. My progression was no different.

Scot, I hope this guidance helps you. If you are still struggling, feel free to call me at any time for further guidance.

Michael

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We received the following query via email from an experienced hire candidate looking to make a transition to McKinsey. We will answer this in an open forum on the site since we think it is relevant to many of our readers. You can apply our process to determine your chances own changes of moving across. [To the candidate: We would need to see your résumé to accurately assess your chances.]

***

“You’ve got a very stimulating website which I’ve been directed to by one of the online “tutorials” on the YouTube site, which I also found exciting and well presented.

However, one small issue seems not to be addressed, as far as I’m aware, and that is the issue of experienced hires without a business/MBA background. I recently attended a McKinsey and Company recruitment event and had the opportunity to speak with a director and a few associates who have strongly encouraged me to submit an application. In fact, I was told that at the present time, they are particularly anxious to recruit “experienced hires” and they were very keen to point out that prior business experience is definitely not required and I got the impression that they would prefer a blank canvass from that point of view. My background is in medicine, dentistry, higher surgical training and [deleted]. As mentioned, I’ve enjoyed the online tutorials available on YouTube but they seem to assume an existing knowledge of the business and financial world.

My first question therefore is do these tutorials represent the type of case interviews administered to all potential applicants to the large management consultancy firms?

I’m also very interested in the online book and would like to know if this, or indeed any other information source you supply, can help someone like me in my potential application to one of these firms or do you think that perhaps the pathway for the experienced hire has yet to be addressed by Firmsconsulting?

Many thanks for your consideration and keep up the good work!”

***

Given the above, do experienced candidates without an MBA/business background have a reasonable chance of moving up to McKinsey, Bain or the BCG? If so, what does it take?”

Advice for experienced candidates is covered throughout the blog. To save you time I have pulled it all together in this one post. We offer selective career coaching for experience hires, MBA’s and current consultants. In this post we will show you how we would assess this candidates chances and whether he has a shot at making it.

Step One: Resume check. It is always better to prepare your résumé and then determine your chances. Prepare a one-page resume using the Harvard format. Things look very different when they are committed to paper.

• What degree does he have? Is it a graduate degree? Did she do well; as in getting an 80% average or more or finishing with a distinction? Having a masters or doctorate will definitely be a bonus. Being a medical doctor could also count in your favor, but again it depends on the actual experience you have and your age.

Great grades are important and can overcome the problems of graduating from a weaker school.

• Where did he study? Is it a good to great school? Most consulting firms have target schools. These are schools from which they regularly recruit. If you are not from a target school it is also not a problem. Great grades are important and can overcome the problems of graduating from a weaker school.

• Was the degree full-time or part-time? Part-time degrees will not count for much. We have heard of students being recruited with part-time MBA’s and doctorates; however this is the exception and not the norm.

• Do any of the consulting firms recruit from this school? This is not a decider, but it does influence the decision.

• What is his experience? Did he enter as a technical specialist and then start managing people or did he always stay in a technical role? No one answer is better than the other. It really depends on the other answers and the picture we get when they are viewed together.

Therefore age is critical for technical specialists seeking entry to management consulting. Older technical specialists find it harder to adapt to new careers.

• How old is he? A 30-35 year old candidate without an MBA, but specializing in a technical field is fine. There is still time to teach you business and help you grow into the firm. The older you are, the harder it will be to change. Assuming you are 40 years old, you should be able to show proven excellence in your field, and the ability and willingness to adapt to management consulting. Therefore age is critical for technical specialists seeking entry to management consulting. Older technical specialists find it harder to adapt to new careers.

• What is his experience? Having no business experience is not at all an issue. Consulting firms are hiring you for your problem solving ability and not your business knowledge. They would always pick talented and smart people who can solve problems over someone with some experience in business.

• Any blue-chip experience? Just because you were in a technical field does not mean you could not have worked for GE, P&G, and Mercedes and so on in R&D. Blue-chip experience is counted and is generally more valued than working at a smaller or lesser-known firm.

• What kind of leadership activities has he been involved in? The more time you spend out of school, the more this becomes important.

• Does she have a medical degree or similar advanced qualification? Medical degrees do stand out. They take longer to obtain, they usually require much higher qualifying grades and they show an ability to work with people. All other things being equal, a medical degree would be an asset.

• What was your rate of progression? Smart and capable people will always show a consistently rapid progression in their careers. Consulting firms look for this.

So let’s look at some scenarios.

Scenario 1: Let’s assume the candidate is 32; same background as in the question above and has a medical degree from Harvard Medical School and graduated with a 3.4 GPA. He was successful as a doctor and tried to specialize in surgical training but only spent a year in this field. He has a healthy social life and maintains a full list of hobbies. He would have excellent chances on paper, though his low GPA will raise some concerns which will need to be tested via the interviews..

Scenario 2: If the scenario was the same but he was 40 years, the chances would diminish unless the candidate demonstrated great success his field, could explain why he never considered business before and why he is willing to make the jump now, and can demonstrate the ability to learn business problem solving (this is shown via the ability to solve cases).

Scenario 3: Same as scenario 1 but he was 45 years old. His chances would be very slim.

Scenario 4: Same as scenario 1, however he is 40 years old but has a doctorate in physics from Stanford and only worked in physics labs. This is still tough. Age is a big factor here. It will come down to the candidate’s determination, school and his success in his career. Yet, it is still slim.

So as you can see; lack of a business background becomes more important the older a candidate becomes. That’s because the older he is, the more important it is for him to demonstrate excellence in his technical field, yet the very same excellence raises questions about his reasons for changing careers and his ability to make this jump.

How does the candidate dress? Is this someone we could imagine in front of a client?

Step 2: Does the résumé and reality match?

Let’s assume, we looked at the résumé, and the candidate fell into scenario 1 or 2. We would then arrange for a discussion via video-conference to look for the following:

• How does the candidate dress? Is this someone we could imagine in front of a client?

• How does the candidate speak? Are they engaging, articulate and presentable?

• What are the candidate’s values? Is integrity important?

• Is the candidate worldly? Does he know what is happening in the world? Does he have a considered view-point and can debate topics?

• Is he confident? Can he stand his ground and intelligently debate?

• Does he command attention?

• What is his etiquette?

• Is he curious about the world?

Many of these things can be taught. So do not worry if you feel you may be weak in some areas. We use video-recording to see your improvement areas.

This is how we rank candidates:

• He has all the attributes.

• He does not have all the attributes but she can be coached and taught.

• He does not have key attributes which cannot be taught.

If you are ranked in the first 2 groups, then its fine and we allow you to join our coaching program. If we think you lack key attributes which cannot be taught, then we would decline, since you would be unlikely to get in even with the best coaching.

Explicitly answering your questions

Yes – McKinsey, Bain and BCG like to hire experienced candidates with graduate degrees in other fields, even if they have no business background. So if you are a particle physicist, medical doctor or ethnobiologist, it will be fine, provided you fulfill the criteria above. BCG, in particular, likes specialists from other fields. That is not to say McKinsey or Bain is less friendly to them, we just know BCG tends to more actively seek candidates with other backgrounds.

Typically if you met these criteria and where young, you would slot in at the Associate level which is the same level as all new MBA graduates. Your career path may be a little different but not in any particularly worrying way. You would just need greater exposure to internal business training and you would easily receive this.

For interest, Michael Wolf who led McKinsey’s Global Media Practice only possessed a BA in international politics from Columbia. No master’s degree and no business background. That is one prominent example but there are many others.

Assuming you were an extremely talented scientist from Johnson & Johnson and had risen to the senior ranks of the R&D unit, you would not necessarily come in at an Associate levels. Firms do make exceptions and sometimes bring in candidates on accelerated development paths. Sometimes you join as an associate with the intention to be developed rapidly or in other cases you join as an associate manager. However, this applies to exceptional individuals. You can also join as a specialist, which is more common if you have some deep skill the sector teams would want.

The tutorials DO NOT assume knowledge of business. All those concepts we discuss in the tutorials are typically difficult the first time someone with no business background sees them.

Either way, you would need to demonstrate the core problem solving skills so that you could work in any sector. You are not allowed to specialize until later, unless you actually join as a specialist.

The tutorials DO NOT assume knowledge of business. All those concepts we discuss in the tutorials are typically difficult the first time someone with no business background sees them. However, I can assure you that with training and reading the correct material you will be well prepared you for the case interviews. All candidates, business and non-business, are expected to go through the same cases as the ones in our tutorials. They are easy, and fun, once you learn the techniques. So to answer your first question – Yes, all candidates go through these questions.

To get into the leading firms, you will need the following:

• Excellent cover letter.

• Resume in, preferably, the Harvard format.

• Coaching on the overall experience.

• Ability to answer all five types of case questions.

• Ability to handle the FIT/PEI cases.

The first three mean nothing if you fail the cases. McKinsey will, and regularly, turns down many Harvard MBA’s who fail the case interviews, and plenty do not even get an interview. It is all about demonstrated competency. Some lesser firms will be impressed with a great resume, but the top firms want you to prove your problem solving ability.

The first three are relatively easier to do. The fourth and fifth area are more important. You need to learn this.

About the book: I would urge you to get it. Simply because it introduces you to a day-in-the-life of a McKinsey consultant through a real project and was written to teach you about all the concepts they use. It is also written in an entertaining format so you can really understand the issues and problems at a client. It has been a very popular book and we are building more around this. We wrote the book because we know we would have appreciated someone giving us a book like this when we worked at BCG and the like. It has proven to be popular and will give you a real-project overview.

To Summarize:

Summary: Yes, you still have a shot; provided your grades are good and you are starting out in your field. However, age is working against you. The more elapsed time since graduate studies equals fewer excuses for not succeeding at your chosen career or notching up more accomplishments. Ironically, the greater your success here raises questions about why you want to leave and your ability to learn the consulting techniques.

Next Steps: Polish your résumé and you need to apply as early as possible. However, if your grades are not good, you may want to consider getting an MBA to improve your chances, though a very weak undergraduate GPA is not easy to overcome for anyone, unless you graduate extraordinarily well. This is why I ask undergraduates to really take their time during their studies and finish well. You need to really prepare for the case interviews, speak to consultants in these firms and learn the soft skills to impress the interviewer.

Throughout these analyzes, we will refer to a model we use to analyze clients. It may be useful to scroll down to the very last section to read an overview of the model.

Big trends

A big trend in this cycle was the outflow of traditional US-targeting clients going after foreign offices. This was a huge shift from last year. Fully, 67% of our successful clients placed in foreign offices. In fact, clients declined by a U.S. office were applying to Johannesburg, Dubai, Korea, Singapore, etc. and securing interviews, and ultimately offers. We are not saying foreign offices have necessarily an easier interview process, but the supply of quality candidates is lower. The PhD’s were a much larger group here.

The number of females was sharply higher in our Sep/Oct client group.

• Of the successful placements, 53% were female.

• Unlike male PhD’s and male MBA clients, females were predominantly from the traditionally strong placement schools like Yale, Princeton, Harvard, Wharton, Stanford etc.

• 76% of the 53% successful female placements originated from these schools.

• That said, the majority possessed undergraduate degrees from largely unknown schools, to us, or foreign schools.

Foreign students studying in the US dominated this group.

PhD performance

We fully expected and prepared for a weaker showing in the PhD group. We were wrong of course, but spent a long time analyzing the numbers and figuring out why our PhD clients did so much better when we expected worse results.

We have a good hypothesis.

Our belief is that because we expected PhD clients to fare worse, we dramatically over compensated for this expectation, and this over compensation gave them an advantage.

For many PhD clients we hoped for the best, but planned for the worst. We expected weaker results and were counselling clients well into their final rounds that if things did not work out, there was always next year, or if a different office was an option, then just a 4-6 month delay if they knew how to navigate the system.

Our belief is that because we expected PhD clients to fare worse, we dramatically over compensated for this expectation, and this over compensation gave them an advantage.

This is an important point worth explaining. The U.S.A. churns out PhDs like a McDonalds restaurant’s first week of opening in an emerging market. Knowing this, we were significantly tougher on PhD’s writing resumes, cover letters and networking. We treated master’s students – non-MBA – and experienced hires in the same way. So when we say PhDs, we refer to this group as well.

Given the long networking lead time, we insisted most PhD clients create a 3-6 month preparation window with us.

Let’s explain this in another way. We felt PhD’s would do worse and gave them more work and lead times. When we inputted these variables into the model, we expected the model to say, “Yes”, they will do worse. However, the model says, based on historical patterns, stripping out emotion, the way we prepared PhD candidates means they would do better, not worse.

In hindsight this makes perfect sense. Since the model looks at past performance, it looks at a current client’s attributes and assigns them to a bucket of performance. The model does not know longer lead times will lead to a poorer performance unless we tell the model that it does. And of course, the “telling the model” part comes from past data which told it something else entirely.

The other surprise among PhD candidates was the strong showing of California. We normally do not expect California-based clients to dominate the final results. They did. 22% of successful PhD candidates were from California schools.

We personally do not see this as the rise of any underlying trend. Given the way we work, heavily referral-based, we typically expect a spike in a region a few months after a few successful placements the year before – clients unfortunately talk to others.

That said, the sheer number of PhD candidates on the East Coast and the increase in hiring, will mean that all other things being equal, California-based client placements as a percentage of the total will drop next year.

Great results without exceptional resumes

We have Rhodes Scholars, Marshall Scholars, and Fulbright Scholars etc. in our program. None of them were in the group which placed well. Every one of that group had their application dates or interviews pushed back for a variety of reasons.

That means the group which placed highly did not have extraordinary profiles. They were good, but not exceptionally so on paper. This is an important observation which the model supports and which we can concur through our placement and general client observations.

Clients with extraordinary backgrounds, like Rhodes scholars etc., fit into a binary pattern. They either come across extraordinarily well or extraordinarily poorly. There is very little “average” performance. This is a consistent trait we find.

Therefore when screening candidates with superb paper credentials we don’t worry about the positive outliers, unless they are arrogant, which will also not go down well with partners, but more about those who either struggle to mirror their paper profile or struggle to communicate.

The communication hurdle is a huge problem and much harder to overcome.

Differences between candidates on their second attempt at MBB

Between 37% and 56% of our clients were on their second attempt at McKinsey et al, though their first time working with us. The range exists purely based on how you define the first attempt: failed PST, failed first round, failed final round etc. We do notice that candidates, who already have their first strike, if you really want to keep the California theme going, tend to be more disciplined and “mature” about the process.

You tend to have a uniformly bleak view of the world when you are 32, sitting in a lab, earning $50K/annum or less, and you just have one shot with McKinsey.

There is a deeper and profound sense of urgency in most cases. I am not saying it is uniform, but someone who believes they can reapply in the future tends to assume failure is just temporary and should be shrugged off. This is supported by both the model and our own observations.

Again, this theme is far more pronounced among PhD’s and experienced hires versus MBA’s.

Causality is far easier to explain here.

A second-attempt for a PhD is going to be for someone who is 27, at the minimum, and possibly 38, at the upper limit. The majority sit at around 32 years which means there is far more at stake.

You tend to have a uniformly bleak view of the world when you are 32, sitting in a lab, earning $50K/annum or less, and you just have one shot with McKinsey.

The urgency arrives.

The same applies if you are in industry, have a family and have reached a career ceiling.

Negative trends in candidates

However, too much urgency quickly devolves into 4 trends which both the model and our own experience quickly validate.

Candidates who think they have only one chance or a small chance tend to believe there is some magical advice ricocheting through the corridors of their school or the dark alleys of their friendships.

The first negative trend is the inability to deduce what is important advice, and by default, creates the tendency to follow any and all advice. Of the candidates who do not get offers, about 50%, in our opinion, fall into this trap.

The model predicts a full 72% fell into trap. I would say here the model is probably more accurate since this is a common problem. Candidates who think they have only one chance or a small chance tend to believe there is some magical advice ricocheting through the corridors of their school or the dark alleys of their friendships.

They make every effort to find this advice, which is a tiring and confusing process of networking as heavily as possible, not filtering the advice received and then trying to follow all the advice even when it conflicting.

A common example of this is the MBA student who feels it is their patriotic duty, no, their family obligation, to partake in every mock interview offered in the day. Our advice on this is clear. If you have not been trained yet, you are not practicing; you are simply learning, and learning from people who should not be teaching – the blind following the blind.

Candidates end up tired – it is draining to do 3 cases with unprepared people – and confused since we have not explained even 1/10 of what they faced in those poorly managed sessions. There are many other examples of this, but if all advice is treated like special advice then no advice is truly special.

The second negative trend is too much pandering in the system. When a client refers to any of our coaches as “sir” or “madam” that sets off an immediate warning bell in the system.

This is a simple one and the model also tends to be quite accurate here. Consulting firms are not looking for people who do not have the confidence to build relationships at a peer level. When clients act like this with our partners, they tend to replicate this behaviour with interviewers.

Understandably, culture may be the reason. While that reason is valid, and should be respected, it does not change the outcome.

That means clients who lack confidence put themselves into worse positions, which breed greater desperation, generating less confidence and leading to more desperate behaviour which only worsens the situation.

This leads to the third trend. Confidence is seen through every little thing you do or say. Our defining rule is never to look desperate. There is never an appropriate time when a strategy of desperation will work.

We can preach this as much as possible, but a full 90% of clients who do not make it exhibit this characteristic in one form or another. And here is a tip, being confident in 99 of your actions in an interview and showing lack of confidence in just 1, is usually enough, since it shows inconsistency.

The problem with confidence is that it is a cumulative degradation.

That means clients who lack confidence put themselves into worse positions, which breed greater desperation, generating less confidence and leading to more desperate behaviour which only worsens the situation.

The classic example: emailing a partner and asking if you are a fit for the firm and attaching your resume. 99% of clients seem pleased when the partner responds. You should not be. Asking if you deserve to be there implies you do not think you deserve to be there.

If you want to generate a conversation, do it in a way which does not sabotage your later plans.

The fourth trend here is a stunningly high number of people in the program, about 89% of those who do not make it seem to think that you need the poise and theatrical skills of a “movie star.” Consulting partners do not speak like this. We are not theatrical. We are analytical and professional.

If you want to work on communication focus on saying what you mean and meaning what you say: getting that part right is more important than merely sounding right.

New joiners to McKinsey et al need to show superior analytical skills and the ability to communicate in a simple manner. That means knowing what you want to say, and then figuring out how to say it.

Actors and actresses get told what to say and then do about 20 takes to get it right. The entire conversation is staged and scripted. You will not be like them and I dare you to find a partner who speaks like that.

Sounding good is not the same as being good. You need to work far more heavily on coming across naturally, but emphasizing strengths, versus being someone totally new.

The time needed to prepare

The model shows that clients who take 3 months or more to prepare have a 57% higher probability of getting an offer. Anecdotally, that makes perfect sense. Looking at the strong showing of PhD candidates, the vast majority were working with us between 3 to 9 months. Just one worked with us for 4 weeks, though she did get an offer at BCG.

Candidates who start early with us can regroup when things go wrong – and things go wrong often.The planned interview does not materialize, the PST is a hurdle too much, an office is not hiring, or the candidate becomes ill, gets married or has a kid. The more time you have, the easier it is to side-step these obstacles without taking desperate measures like emailing a partner and asking if you are a good fit etc.

The causality is very easy to outline here as well. Our strategy is always to create multiple paths for candidates. We call this having “options.” In our view, a candidate with just one or a few options is begging for disappointment. There are far too many variables outside our control to rely on a single option/path to an offer.

Candidates who start early with us can regroup when things go wrong – and things go wrong often.

The planned interview does not materialize, the PST is a hurdle too much, an office is not hiring, or the candidate becomes ill, gets married or has a kid. The more time you have, the easier it is to side-step these obstacles without taking desperate measures like emailing a partner and asking if you are a good fit etc.

Linked to this, candidates have more time to review lesson plans, listen to recordings, practice and share ideas with us. None of this is possible when the preparation timeline is short. We were personally happy when so many MBA clients signed up 6 months before interviews. That joy quickly dissipated when they only made themselves available 2 months before the interview, or did not allocate sufficient quality time when they did make themselves available.

You cannot predict the length of the figurative runway you need to prepare. Expect it to always be longer than needed.

The importance of rewriting the resume

The next lead indicator is linked to preparing early but still important to mention. The model shows those who made large changes to their resume, and made material improvements did better. However, the causal relationship is not what most would think. The improved resume helped, in some cases, it changed a smirk from the recruiter to “you must apply.”

Clients jumping straight into the coaching really struggle to understand the expectations we have of them, and the intensity of the program. The resume rewriting process leaves no doubts about the level of detail expected and the way we tackle things.

However, the main benefit is because it allowed us to get to know a candidate very well before the coaching began and this helped them know what to expect when the sessions actually began.

Clients jumping straight into the coaching really struggle to understand the expectations we have of them, and the intensity of the program. The resume rewriting process leaves no doubts about the level of detail expected and the way we tackle things.

The model again shows this, and I believe this is one area where the model tends to be quite accurate. Though, the curve is far from normal. There are outliers, who are confident, and do well immediately in the coaching, but they are a minority.

Again a related lead indicator which the model shows to be heavily correlated to successful placements has to do with flexibility from the client with regard to coaching dates and times. This one is again easy to explain. Clients who start early have flexibility and those rushing do not. It is that simple. I don’t think we needed a model to tell us that, but we needed to know the relationship to model its impact on the final result.

Too many practice sessions do not help

Here is the most interesting finding in the model. The probability of getting an offer is inversely correlated to the number of coaching sessions and practice sessions done.

Anecdotally, the causal relationship is again quite easy to understand. A candidate, who does not grasp the core consulting principles from the first six lessons, is then entering the next six sessions with a weak foundation. It is like building a huge mansion on a sink hole.

We find that candidates who have done more than 40-70 practice cases before we have trained them have reached a tipping point because they have learned too many bad habits. This is a statistically significant relationship.

Anecdotally, the causal relationship is again quite easy to understand. A candidate, who does not grasp the core consulting principles from the first six lessons, is then entering the next six sessions with a weak foundation. It is like building a huge mansion on a sink hole.

It’s not going to play out as we intended. Moreover, a client unable to understand the approach from the 12 sessions and the library of training videos is usually performing poorly due to weak study habits and basically inattentiveness.

Doing more sessions does not fix this problem. In fact, it makes the problem worse. It comes down to moral hazard. A client who believes they have a large supply of lessons or practice sessions will usually not develop the appropriate skills to extract all the lessons from the sessions they do have. We deliberately insist clients begin practicing soon and wean many off lessons.

No one likes it but it can only help them in the long term. This relationship was initially surprising from the model but the evidence clearly supports it. That said, some clients do benefit from longer sessions, provided they prepare well. They are easily the minority.

Wistia (the application hosting our files) generates a tonne of data for us on video usage. Again, the model and reality intersect well here. Clients who have access to the videos and do not use them well, almost always do not place well. This result in the model is almost perfectly correlated with reality.

However, this flag is not cast in stone. The videos are well explained, can be replayed countless times and clients who do not take the time or do not have the ability to understand them will fare poorly. In the latter case, they either just not attentive enough to put in the time or are unwilling to understand and use this competitive advantage.

Whenever a client enters a session unprepared we always try to understand why they were unprepared. The answer is almost always in the same areas: a) They watched the video a long time ago; b) They did not properly watch the videos which mean they typically skimmed through key parts or just looked at the structures, or c) they did not take the time to research and understand key ideas.

When a client enters a session without preparing appropriately, it indicates a problem outside of competence. It is a question of their focus, attitude and dedication. This is one of the largest red flags in the system.

This group who do not use the videos well can be broken down even further. Some clients are not sure how to regroup after a few weak starts. They end up doing badly. Another sub-group struggles, but takes the feedback and regroups well. A lot of PhDs fall into this group, even those who placed well. Therefore, poor use of the videos is not a bad sign if you can take feedback, go back and prepare. It requires more work and is not an easy route, but needs to be done.

Corporate finance clients

That said, one group is consistently strong on videos and their placement rates. Corporate finance clients have the highest video engagement numbers of any group and the single highest placement rate we have.

Though, we should caution this is a smaller group and this will ultimately normalize over time.

Moreover, this group has the highest referral score of all clients and corporate finance tends to be very technical so video guidance is required. That said, someone not understanding business would have the same relative deficit on general consulting issues and would need the general videos as well. Therefore, we still think it comes down to the attitude of this group. Fully 84% of corporate finance clients are referred which probably leads to like referring like. Corporate finance clients do however have the highest GPA’s of any client group, as well.

Over time we will refine the model and constantly update the data we extract from clients. As the relationships become clearer or sub-relationships are found, we hope to model that as well. That said, the model is not expected to replace human judgement but help us get a general feel of the bigger picture. Even where the model and our experience correlate perfectly, we still do not use the model output to draw unnecessary conclusions. It is simply an early warning device.

Understanding the model we built with client data:

Clients who worked with us know we ask for a lot of information throughout the interaction. We ask that every interaction be shared with us, and preferably a copy of any networking emails sent, be mailed to us as well. Basically, we want to know as much as the candidate.

We have now assembled all the data into one statistical model.

We track a significant amount of client data in this model, which allows us to run some very interesting statistical simulations.

We first track the easy-to-measure variables like:

• age,

• school,

• grades,

• GMAT,

• nationality,

• ethnicity,

• offices pursued,

• interviews secured,

• companies employed at,

• number of coaching sessions,

• performance in coaching sessions,

• length of coaching program,

• time before interviews,

• number of resume rewrites,

• number of cover letter rewrites,

• quality of rewrites,

• offices declined,

• types of emails received from offices,

• number of networking sessions,

• types of networking sessions,

• length of networking sessions,

• topic of networking sessions,

• level networked at,

• % leading to referrals,

• referrals leading to interviews, and

• the time before interviews etc.

We also track many smaller, but more important variables. All our coaching sessions are recorded and transcribed to text using Wistia. In many cases, clients also load practice sessions to Wistia. This is also transcribed to text. Wistia has some very interesting capabilities. Therefore, from the transcripts of each session can we can also electronically measure:

• the time to answer each question,

• number of mistakes made,

• type of mistakes made,

• language used,

• preparation of candidate,

• tone and energy of the call,

• number of questions asked,

• type of questions asked,

• length of time spent on training videos in the library,

• which sections of the videos were watched

• and how often parts of a video were skipped,

• podcasts listened to,

• how many times each podcast was listened to,

• Parts of podcasts skipped.

Finally we track administrative items, albeit subjectively, which provide vital clues to a candidate’s motivation:

• number of sessions a week,

• location of sessions,

• flexibility of sessions,

• decisiveness of decision making,

• comfort with decisions made,

• ability to take notes,

• quality of notes,

• ability to take and process feedback,

• number of additional sessions requested,

• tone in which requests are made,

• time to respond to emails,

• precision of communication,

• time set aside for practicing,

• quality of feedback from self-practicing etc.

We track many more variables. The point is that we now have what we consider to be a very interesting model to extract correlations between successful and less successful students. We admit it is far from perfect, but it is the most detailed database we have ever seen since we know each candidate personally and can verify all the data provided.

That is the most vital point, getting quality data.

Moreover, since all the recordings remain in our system, and we continue to track a candidate’s movement through the system well after the official coaching ends, the quality of the database can only improve as it collects more data.

We have looked at key variables which tend to have the greatest impact on obtaining an offer and tried to understand the nature of the relationship. We admit this is not an exact science and we constantly tweak the list of variables and the nature of the relationship. We have to go through substantial work to normalize the data, remove outliers etc.

Basically, it is the typical process to set up any social-science experiment.

That said, once we think the nature of the relationship is representative of the data, we can model a distribution curve for each variable, and they are not normal distributions at all. We then set limits to the distribution curves and determine the correlations between each distribution curve and the base variable.

We have determined the base variable to be a weighted average of grades and what we call a confidence index which we generate from data in the screening calls, and several other factors described below. So everything in the model is correlated back to these base variables.

We use a standard Monte Carlo “random” generator. As an aside, random is in inverted commas because the system is far from random. The point is that if we made the system random, the output would be spurious – statistical speak for wrong.

We remove the randomness by not using normal distributions/curves and also different limits for each curve we choose.

In simple terms the model works as follows. Let’s assume the base variables for one client is a GMAT score of 720, GPA of 3.80, from Princeton in economics, confidence index of 6/10 and just 3 weeks to go before interviews. The system then says, “Okay” the candidate now has 3 options, for example. They can prepare their cover letter and resume, ignore that step and move straight to an application or defer their application. Based on the candidates profile and past history of similar candidates in the database, it assigns a probability to each option and runs the simulation about 10,000 times. Overall, every possible path, even the lowest probability path, is modeled.

Assuming the model picked “moving straight to application” as the most probable option, it then lists the candidate’s exhaustive list of options at this stage. There can be anywhere from 3 to 8 mutually exclusive and collectively exhaustive options. Some steps can have 15 options. It repeats the process of assigning probabilities and choosing an option. Eventually, the model works its way down this chain of options, a very large decision-tree if you may, and arrives at a list of likely outcomes and their probabilities.

Obviously, as we move down each stage of the process with a candidate, we can compare their actual results with the simulated results. The model works well for clients who tend towards a mean, the average candidate, but less so for outliers. This is expected. We need to use judgment to manage the outliers, not assume they do not exist.

By now, you can probably figure out it is a rather large model consisting of 251 data sets – client files – of which 187 are complete, since we started collecting detailed data much later and we have to make some assumptions on the early clients for whom we do not have all data. For each data set, client, there are 233 variables measured with the majority collected in the coaching session and via Wistia which analyses the coaching session transcripts for patterns and trends.

We used this model to test different phenotypes – observable characteristics or variables if you want to use that word – of a client. So each time a candidate applies to join or a client joins the program, we would run the model. The model was only completed in late August so we used it less them we would have liked to. And as a model, which is not perfect, we could not rely on it too much. The key was to see if the model output matched reality.

So we ran the distribution curves we found and have attempted to explain the causality. Where the correlation existed and causality was missing, or we just could not rationally explain it, we left it out since it was interesting but not necessarily insightful.

In summary, the model predicted an unusual result in late August. It predicted an unusually high placement rate among PhDs. The highest we have ever had.

We eventually did have a very high placement rate among PhDs. That does not mean the model is correct. For all we know, it is possible that since we built the model, and obviously know each client personally, we could accurately judge their performance and expected them to do well, thereby building in correlations which reflected this reality. The test will come if the model, without any major tweaks, is run for a new group of clients whom we have not yet coached, and then fairly accurately predicts their performance.

Personally, we would be surprised if any model could do that. There are just too many random variables at play which we could never know and compensate for. So, my hypothesis is there must be some measure of bias which we cannot compensate for, because we cannot understand the complete nature of the bias.

For the stats majors, I am not going to get into a discussion on auto-correlations, stripping out seasonality, adjusting @Risk, the hundreds of assumptions documented or even the challenges of listing every single permutation and combination of options at each step.

That said the results are still very interesting and very useful for us to map out and plan a strategy for each client before they begin with us. Just knowing all their options and the probabilities gives us a major advantage. It allows us to institutionalize all the learning’s from working with previous clients.

For example, as coaches, we always knew that clients who don’t watch the videos or watch them sporadically do much worse than those who do. Yet, keeping track of such relationships in our heads is not a good way to use that knowledge, nor is it sustainable.

It is just not possible to login and check all this information – over 200 variables – for each client before each session. That would be an inefficient use of time even if it were possible. And if we did it, how could we know what the impact of the relationships is?

Aggregating all this data means we can rely on our historical lessons to a greater extent and, hopefully, not repeat as many mistakes.

That can only be an improvement.

In just 2 weeks, Firmsconsulting has seen six clients withdraw from the interview process to accept lucrative energy industry offers. Three had written offers in hand from BCG, Bain and McKinsey. The geographical scope of the offers, range of degrees affected and that such poaching has happened since at least June 2011 warranted us discussing this trend in more detail.

Consulting firms are, therefore, even more desperate to find oil and gas talent since they are losing so many consultants, candidates in the interview process and interested profiles.

For context, since mid-2011, a client has withdrawn from our program every single month to accept an energy industry offer. That our clients span over 60 countries and the trend keeps increasing indicates the energy sector is far from its peak in hiring. All degrees have been positively affected, though MBA’s with heavy construction and/or energy experience and PhD’s with energy backgrounds are the dominant group.

Consulting firms are, therefore, even more desperate to find oil and gas talent since they are losing so many consultants, candidates in the interview process and interested profiles.

We can easily see why this is happening. In just 4 short years, the energy sector has become a dramatically segmented sector with each of the segments showing steep growth with even more room to grow. This is not about splintering of a finite sector, but the expansion of 4 major sub-sectors.

In our recent travels across Asia, we have seen first-hand the impact of energy development. Previously struggling regions like Mongolia, Azerbaijan, Kazakhstan etc. are swimming in cash, jobs and opportunities. Mongolia alone, posted a 17% GDP growth rate last year, though it is currently driven more by mining, though export coal is a major business.

Gas

Gas which was always big, is gaining new life via major finds in Brazil, Israel and perennial producers, the Central Asian Republics. Fracking, has completely transformed parts of North Dakota, Pennsylvania etc. and these are just for the well-known Bakken and Marcellus sedimentary formations. Many other formations are under development, and some are potentially larger. Australia is laying the groundwork to develop the massive Gorgon gas fields off the North-West coast and needs people. Angola, Indonesia and Vietnam are all working to develop potentially lucrative fields. Consulting firms are developing new offices in at least Vietnam and Indonesia, while Angola tends to be served from Portugal and Brazil.

Consulting firms are developing new offices in at least Vietnam and Indonesia, while Angola tends to be served from Portugal and Brazil.

Aging state-owned or state influenced facilities in Mexico – Pemex – and Russia – Gazprom – stand out as well for another reason. Here, it is not about new fields, but fixing aging assets. Although Russia has proven gas deposits that will last for at least 80 years, the conventional fields are depleting and investments are needed just to maintain production lost on a sieve-like pipeline network. Most pipelines are relics of the Soviet era and at least 18 years old. That equates to lots of leaks to plug.

Oil

Oil is also seeing a revival. Previously underperforming oil fields in Angola, Nigeria and Iraq are all seeing tremendous growth. Shell is on the verge of gaining permission to drill in the barren coasts of Alaska and the Norwegians and Russians are bound to get involved as well. Russia alone expects to spend billions of dollars to develop its fields.

Coal

Coal is the dark horse. Barely mentioned in all the fracking excitement, it is not dead thanks to some unusual technology developed but never perfected, thankfully, by Hitler. Fischer-Tropsch technology, perfected by Sasol, could open up huge untapped low grade coal reserves in Central Asia and likely see the development of a new >$2B industrial complex in the heart of South Africa. Qatar, China and Turkey are all looking to use the technology to generate oil-from-coal and oil-from-gas. Not to be outdone, Chevron and Exxon are also exploring this area.

Carbon Sequestration

Carbon sequestration is the unlikely 4th leg here. All those carbon emissions have to go somewhere and firms like BCG and McKinsey in particular have built a concerted strategy around developing analyses and ideas on carbon sequestration best-practices and the economics of achieving them. This is an innovative strategy since such engagements afford access to local, state, and provincial governments as well as the major energy players – in other words, it gets the right type of attention.

All those carbon emissions have to go somewhere and firms like BCG and McKinsey in particular have built a concerted strategy around developing analyses and ideas on carbon sequestration best-practices and the economics of achieving them.

In this space we have also seen engineering consultancies like Schlumberger, SNC Lavalin, Parsons, and Mott etc all vying for more influence by either partnering with the major consulting firms or bidding against them. In more than one case, the engineering consulting firms have won. It is unlikely they could do the work as well, but that will have to be proven out.

***

These four energy sub-segments are driving up property prices in some interesting parts of the world.

Calgary

Calgary in Alberta, Canada is one such place. In Canada, if you cannot find gainful employment in Toronto, Montreal or Vancouver, you can head to cowboy territory where the Premier’s office expects the population to increase 40% in the next 10 years. Salaries are high and there is not enough talent to go around. Rental vacancies sit at a scary 4% and there is a lot of construction underway to close this gap, including redeveloping the downtown area. McKinsey runs an office out of Calgary and BCG is planning an office shortly. Canada is deeply searching for oil and gas skills and the region is immigrant friendly. We have found it easier to place clients here, but much easier if they are Canadian or American, or at least with strong international experience.

Perth

The tiny city of Perth in Australia continues to gain, probably needed, attention. This is the home of McKinsey’s implementation group and the center of their oil and gas work in the region. Moreover, BCG’s efforts in carbon sequestration are based here as well, having done work for both the federal and state government. Australia is the mirror image of Canada when comparing skills shortages and immigration policies. It has better weather too.

Central Asia

We are not going to pick anyone place in Central Asia to highlight. They are all growing with a scary shortage of skills. If you have talent in oil and gas and want to make money, this is the place to be. The culture is nice, people are friendly and the natural tourism opportunities are rarely discussed but can easily rival any major destination – though as a consultant you will not get much opportunities to travel. From Baku to Astana to Ulan Bator we are seeing a huge commodities driven development cycle. Beyond Mongolia, the rest are mainly energy driven. We regularly receive questions from candidates we have placed asking our advice on pursuing engagements in these regions.

Definitely an exciting place to be, but a fair amount of operations work, not to mention public sector work since many energy assets are state-owned and run.

Definitely an exciting place to be, but a fair amount of operations work, not to mention public sector work since many energy assets are state-owned and run. Consultants serving these regions are most likely to be staffed from London or Moscow, and sometimes the Middle East. Speaking Russian tends to be an important, but not a critical requirement. We have placed clients into these regions as a result of their technical backgrounds, even with weak Russian. We do believe that candidates must, however, have a good understanding of the region, sector and possess strong reasons to work here. This is an important criterion that we need check carefully.

Brazil

Bain’s operations in Brazil employ about 200 consultants. That is a large number of consultants, and they are gunning for more work at Petrobras – as is everyone else. McKinsey, BCG, Deloitte, ATK, Booz, Roland Berger etc. are all hoping to either work at Vale or Petrobras. The crown jewels of Brazil. The nice thing about Brazil is you can work out of major centers while serving these clients. At the moment, McKinsey is by far the dominant firm at Petrobras, while the Deloitte Oil and Gas team has built what is probably the most comprehensive analytical database on oil and gas fields worldwide. I am just not sure how they will use it. Brazil has always been easier to place clients given the huge skills shortage we see.

Secunda

Sasolburg and Secunda must be some of the most interesting towns in South Africa. One is named after one of the world’s most innovative and successful energy companies, though both the town looks like time left them behind. Restaurants close at 9pm on Saturday’s and there are just a few bars in town. That said, this region attracts most of Africa’s top engineering talent, and great minds from around the world. The region cannot find enough engineers and 4 of our previous clients left consulting positions to take up management positions at Sasol – usually in business development or engineering management – small town, a little boring and great salary. Until recently South Africa was tough to place clients since only McKinsey had a presence. ATK closed down some time ago while Booz and Roland Berger never had a permanent presence – Booz did have a satellite team advising on the early privatizations which took place. This has now changed with both Bain and BCG opening offices and searching for talent in a country with severe skills shortages. Getting a visa is easy if the relevant “special” skills requirements are met, though McKinsey is now trying to only hire local South Africans. BCG and Bain are still in the phase of hiring mainly foreign degree consultants to impress local businessman.

Iraq

Iraq is back. We were on a call yesterday discussing the merits for a previous client to take up an engagement which would see her travelling into Iraq to benchmark operations. She did not seem happy about this at first. The country recently surpassed Iran in oil production and there is a huge demand for operations skills. At the moment, engineering firms have an advantage over the traditional consulting firms since they were there first. That is changing. The client did take the project and I received some interesting photos in my inbox. Who would have guessed that Saddam’s presidential palace would one day come to life as a hotel for Hugo Boss wearing Ivy League graduates? No one is hiring for Iraq though. Based on recent discussions with various partners, I believe that will change in the next 6 months. An office is still some time away, but flying in teams is already happening.

I have left out other regions like China, Mexico, Nigeria etc since they are growing, but not at the rate of the regions briefly profiled above.

***

Candidates have been receiving generous offers to leave their consulting dreams; high base salaries which easily exceed a Bain package by about 40% to 70% in some cases. We have seen huge signing bonuses and in a few cases they have been tax free. Relocation packages have been offered as well as guaranteed bonuses for meeting time commitment targets in specific regions. I suppose anyone would need a bonus to brave the harsh north-Alaskan winter – and maybe summer as well.

All of our clients who were approached, or whom we helped approach an energy company, had unique knowledge which allowed them to immediately deploy this skill to further a multi-billion dollar energy investment. Having a McKinsey or BCG offer certainly impressed the oil companies. Just being in the process of interviews was enough in some cases.

In several cases, packages for children’s education and travelling allowances, to visit family, have been offered. In my 11 years as management consultant, I have never seen any consulting firm be this generous. The packages cannot be matched.

So which candidates are getting these offers?

All of our clients who were approached, or whom we helped approach an energy company, had unique knowledge which allowed them to immediately deploy this skill to further a multi-billion dollar energy investment. Having a McKinsey or BCG offer certainly impressed the oil companies. Just being in the process of interviews was enough in some cases.

A client from McKinsey spent just a few months at the firm before leaving to join a state-owned energy concern. Her unique knowledge; working for a few years previously in the office of the national energy regulator.

Another client was scooped right out of his PhD due to his unique knowledge about shale gas and its impact on Asian development. He withdrew from his consulting interviews.

A very young client declined an existing BCG offer to return and joined a Chinese multinational exploring for gas in Uzbekistan. His unique knowledge; in his MBA internship he developed the business case for a western oil major to partner with a Chinese state-owned oil major. When the deal went through, it was the Chinese firm who made him an offer on the last day of the negotiations.

The most important skill was that these clients could hold a deep and well-structured discussion on the subject. In other words, they did not merely rely on their resumes to secure the offer. I can recall many, many conversations asking them to go back and rethink their achievement stories, leadership stories and points-of-view on key trends in the sector. All were smart, but needed help on getting their message across.

For consultant, even a partner, the Holy Grail is one day obtaining a P&L and becoming CEO. Preferably of a Fortune 500 company. If this path gets them there sooner, it could be a better choice.

It comes down to the candidate when deciding among offers. It is very hard to turn down offers which exceed consulting counter-offers by up to 100% in some cases, and large parts of the bonus are guaranteed. In some ways, maybe it is the best choice. We have trained them to think in a deeply analytical and structured way, and this can only set them apart from their industry peers. As well, a talented person can succeed anywhere. They might as well be paid well to work in a sector they enjoy. The holy grail of management consulting is not the partnership. The same way you do not go to university to be the best final-year student. It is just a stepping stone. For consultant, even a partner, the Holy Grail is one day obtaining a P&L and becoming CEO. Preferably of a Fortune 500 company. If this path gets them there sooner, it could be a better choice.

Everyone is different and clients need to think carefully about the choices they make and the consequences. In several cases, where we felt the offer would not help a candidate, we have strongly encouraged them to accept their consulting offers. In you understand the time-value-of-money concept, a few tens of thousands of dollars is not going to matter in the long term. And your career should be a long-term play.

Consulting Group Case Interview: What to Expect and How to Prepare

As you probably know, the leading consulting firms use case interviews to evaluate job applicants before extending offers. Some consulting firms use a group case interview as part of the evaluation process. If you have a group case interview coming up you are probably thinking, “How can I set myself up to do well?” In this article, we provide some advice on how to succeed in a group case interview.

What is a group case interview?

A group case interview includes a few candidates being interviewed simultaneously within the same room, with the same interview and with the same case problem. Candidates are usually given copies of the case to read. A group case interview usually takes place after initial 1-on-1 evaluations are completed, like resume screening and the PST. So only the best candidates would generally be attending a group case interview.

For example, if you are going through consulting case interview recruitment process during an MBA, consulting firms will usually do first-round interviews on campus. This will allow firms to select the best few candidates to invite for second-round interviews, which may include a group case interview. Some firms may do the opposite and some regions within firms may do things differently. For example, in the US the group interview usually is the first interview.

The case usually includes a business scenario where a client is facing a problem. Reading of the case may be followed by a group discussion or by group discussion and a solution presentation.

Why do consulting firms use group case interviews?

So, why do consulting firms use group case interviews. The same as 1-on-1 case interviews, a group case interview helps consulting firms assess critical thinking, analytic skill, and communication skills. However, in addition, a group case interview also helps firms assess team work and leadership skills.

Firms also tend to be believe some degree paths de-emphasize teamwork and communication. They use the group case interview to test for these skills. The group case interview is testing to see how a case would be solved while managing conflicting opinions and strong personalities.

The most important advice: treat candidates like teammates

Now, the most important advice we can give you for a group case interview is to treat the other candidates like your teammates. In other words, interact with other candidates as you would with your colleagues on a real consulting engagement.

One of the key things to understand is that a group case interview is not a zero-sum game. You should not be competing against other candidates. During a group case interview, the interviewer will be evaluating how you will work with your colleagues and clients, so keep this in mind as you interact with other candidates during a group discussion.

This is one of the most common mistakes we see candidates make during a group case interview. Candidates often view it as a competition and, as a result, interviewers view such candidates as a bad fit and someone who can’t be a good team player. Your goal should be to help the team solve the case, help include opinions from all members, build on what has been said and find ways to help the team. If you solve the case and the whole team fails and ends up looking poorly, it is not a good reflection on you.

If someone says something incorrect or something you think is stupid respond in a way you would respond if you already joined the firm and were working on a real project with other consultants at the firm. Be professional, respectful and watch out for the best interests of the firm and the client. On the other hand, if someone says something spot-on, be the first to point group’s attention to it and build on it. If you say something that turns out to be wrong, acknowledge your mistake and move on.

WHAT IS NEXT?

Now, if you would like to fast track your case interview preparation and maximize your chances of getting an offer from McKinsey, BCG, Bain, Deloitte etc, we welcome you to train with us. The Consulting Offer program, which is a part of Premium membership, was designed specifically for this purpose.

There is nowhere else in the world where you can see real candidates trained by former partners from major consulting firms.

You will see the candidate’s progression through each step of the case interview preparation process, including a group case interview example led by Kevin P. Coyne, ex-McKinsey worldwide strategy practice co-leader and director. And you will see candidates receiving real offers from McKinsey, BCG, Bain, Deloitte etc.

group case interview

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DO YOU HAVE ANY GROUP CASE INTERVIEW QUESTIONS?

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