All of these rely heavily on case studies and this article examines one of the big mistakes consultants make when they rely on case studies. People who work in corporate environments also make the same mistake when looking at case studies of competitors.
A case study research is a process in which detailed consideration is given to a particular case (e.g. an organization, a person, events or actions). It is used in business, including management consulting, but also in psychology, clinical science, sociology, anthropology and many other fields.
For example, in the social and life sciences case study research involves a detailed, in-depth examination of a particular subject. For instance, in medicine, it may involve examining a specific patient a doctor treated.
Case studies outside of management consulting/business are often produced by following a formal research method. Such case studies are likely to be published in formal research publications and usually peer-reviewed. Case study research can include quantitative and qualitative research methods.
A business case study usually examines the development of a particular organization over a period of time. While, corporate strategy case study research, a type of business case study research, looks specifically at the corporate strategy aspects when analyzing a case.
A type of business case studies called case methods or casebook methods are heavily used by some business schools, to help students analyze a specific real-life situation or scenario and learn to make managerial and other company-related decisions. Students are required to analyze a prescribed case study and present their solutions and decisions, supported by the line of reasoning employed. Business school faculty generally develop case studies with particular learning objectives in mind. For example, a strategy professor will use case studies with the goal to teach students strategy skills, while a marketing professor will select marketing case studies with a goal to teach students marketing skills. Case study heavy business school’s include Harvard Business School and Ivey Business School in Canada. Those are the big two case study-based schools.
A case study approach is also used by organizations to showcase how an organization’s products or services were used by other clients effectively. It goes beyond simple testimonials by showing how a client used a product or service to accomplish their goals. An example of this type of case study can be found here.
Case study research is also used in case competitions and in consulting case interviews (consulting job interviews) by firms such as McKinsey & Company, Boston Consulting Group, Deloitte etc., in which candidates are required to develop a solution for a case under time pressure. You can view many case study examples on our YouTube channel. Subscribe here. And, of course, we go in depth on teaching how to solve consulting case interview cases in The Consulting Offer, a part of our Premium membership.
Case study research is also used by consulting firms like McKinsey, BCG, Bain, Deloitte, PwC etc. to understand best practices, emerging trends and other information within a particular industry or region. Consulting engagements often involve presenting the client with case studies of competitors, or potential competitors if, for example, a company wants to enter a new market. It can also be a case study of other organizations, events or activities. For example, if a client wants to introduce more innovation, case studies may include a list of the most innovative companies and their best practices.
It is often little known that consulting firms such as McKinsey, BCG and so on rely on specialist firms when they need to conduct a study in a certain area. These specialist firms will have access to network of resources and people. For instance, suppose a major consulting firm wants to do a case study on retail banking in Peru. In such a case, it will contact a specialist firm and ask for best practices in retail banking in Latin America in countries such as Peru and Colombia and would then ask for a specialist (e.g. a senior VP at a bank) who can help with such a project. There is big business supplying consulting firms with these experts.
The consulting firm will identify the three best retail banks in Peru. The specialist firm would find 3 senior experts who understand these banks and they will speak to the consulting firm for an hour or two at an agreed upon hourly rate. The consulting firm will use the advice of the specialist to arrive at a set of recommendations and best practices that they can use to guide their consulting engagement or use them as a set of recommendations for the client.
Now, one of the things we have found over the years is that a lot of companies that claim to be successful at certain things are actually not that successful at what they do.
For instance, during the LAB study, a lot of experts suggested companies that seemed to be the ‘hottest’ topic among consulting firms. In that the firms were conducting case studies about them. If you were to Google these suggested companies or read their annual reports you would have found that they were indeed profitable. Now, since Google, annual reports and other people have told you that these companies are successful, one is more inclined to believe the claim. And one of the biggest mistakes you can make is follow that information without checking if it is in fact true.
What you have to learn is that you must not rely on experts. When you speak to any so-called expert, don’t ask them what are the successful companies in my area. Don’t ask them what makes the company successful. Instead, get a shortlist of companies and determine whether they are successful or not.
The meaning here is that when you do case study research, your starting question should be is this company actually successful at what it should be successful at? And if the answer is yes, then the next question becomes under what conditions are they successful?
For example, we were advised to conduct case studies on Grameen bank and so on because many experts said that these companies were successful. As a lead partner, Michael (one of FIRMSconsulting partners) responded by saying something along the lines of, “I don’t want you to tell me why they are successful. I want you, since you are in the case study stream, to tell me if they are successful.”
That actually shocks people because people mostly are not trained to ask deep questions. Instead, we are trained to just create some glossy reports and extract some best practices.
Case studies only work if they are truly interrogated to identify the real insight and true impact on the client.
You have to ask yourself what is success and how do we define success? In the LAB study, success was defined as being able to profitably offer micro loans to a market in a sustainable way and scale that business. And what we found was that every single company or bank that people said was successful at micro-finance was not actually successful, which is quite shocking.
Although those micro-finance banks were successful and profitable, they were not successful and profitable at micro-finance.
Microfinance, as you probably know, is the provision of small-scale loans to lenders. These banks, although they originally started with this goal of providing small-scale loans to micro-finance lenders, over time realized that was unsustainable so they started drifting into offering loans to medium and large-sized borrowers. These micro-finance banks were very profitable and successful but they’re not very profitable nor successful at issuing loans to micro-finance borrowers. This is the key distinction to make.
Herein lies the importance of strategic thinking and asking the right questions. If one was to ask the question which are the successful micro-finance banks, the experts would have given our team a list of five banks and he/she would have then gone ahead and figured out why they were successful. But if you flip the question around and ask, are these banks successful and what are they successful at, you would have realized that micro-finance banks are not necessarily successful at micro-finance.
The one bank that was found to be successful at micro-finance was Grameen Bank. However, it doesn’t have a banking license in the United States. This means that if it had a banking license, the Federal Reserve would ask it to keep a capital reserve on its balance sheet. And if Grameen Bank did that, they would basically become insolvent. That is another finding of the team.
Another issue is with Grameen Bank’s model. They give you just enough money to survive through things versus growing you into the middle-class/upper class. Of course, people who read about them and like them will deny that this is true. But if you were to actually analyze them and speak to the operations manager, former CFO etc., you’ll understand that is their strategy, no matter what they say in the glossy brochures. And yet another finding of the team.
This is the key lesson when it comes to doing case studies. Make sure you ask the right questions in a case study as it is easy to ask the wrong ones. If you were to think about the micro-finance banks not being successful at micro-finance despite their profitability, you would realize that this is a deep insight. This is because now we know that we can’t actually take much lessons from these banks except the lesson that they have never been able to crack the code for sustainably offering loans of a very small size.
We then had to figure out why they were not successful. One of the results of the study was that it’s not about delinquencies and it’s not about default rates. It’s about the size of the loan and the interest rate cap. We had to model this relationship and improve the economics of the product.
In summary, when conducting business case study research don’t fall for the trap of just asking a few experts about the best companies in the sector. Instead, figure this information out yourself by asking the right questions and benchmarking their practices. You have got to really figure if they truly are the best. And about nine times out of ten you will be surprised to realize that people and companies that are recommended as being the best are actually pretty bad at what they do. Also, make sure that the company and the practice you are highlighting as successful is actually successful for its intended purpose.
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