Thoughts on Consulting

October 26, 2015

Colorado College

DRAFT
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 Things to talk about

• Introductions

• The World of Management Consulting

• Strategy Segment

• Case Interviewing

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 2
 Introductions: Me, you and Bain

Dissatisfied
executive hears
about Bain

Engage Bain to
help identify
Execution
and achieve full
Leading to
David Harding potential of
Client
business
Success
• Two CC grads
• UC, HBS
• Consultant
• Author
• Investor Point of Point of
Arrival: Departure:
• Musician
What What is the
needs to Problem?
be done?

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 3
 The strategy consulting market has become quite
segmented

Strategy Firms

Functional Specialists

IT/BPO Specialists

Accounting Firms

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 4
4
 What is Strategy? … a common view

“Strategy: a plan designed to

achieve a particular long-term
aim… often contrasted with
tactics”

Oxford English Dictionary

This is unhelpful: a plan is merely an

aspiration

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 Bain definition of Strategy

• A proprietary set of
actions that drive
competitive
advantage

• The “science” of
allocating scarce
resources

This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 6
 Strategy is about what you do, everyday, to support your
target customer, demanding choices on where to excel

Portfolio mgmt M&A, JVs and Regulatory BU strategy and HR management

and finance partnering management driving priorities and culture
Management
capabilities

Supply chain Production and Development Customer

and logistics operations and innovation Go-to-market relationship
capabilities
Operating

Tangible Technology Tied customers

assets Scale and IP Brand network
Proprietary
assets

Back-office Customer facing

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 Your career path is designed for
continuous learning and development

Partner

Sponsorship
available
Transfers
Externships
Manager/
Principal
Experience

4-5 years

Graduate Consultant
School
~2-3 years

Senior
AC
~6 months– Direct
AC 1 year Promotion
~2 years

Time
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8
 A year as an AC

Sep Dec Feb Jun Aug

Candy Company:
Industrials Co: What

Vacation

Vacation
Telecom Co: How do How can we be Private
Case we acquire new
synergies are available to us,
more efficient in equity
experience customers?
given that we’ve recently
the way we make rotation
acquired a new company?
decisions?
Cape Cod
Boston

Formal
Boat
training cruise
with ACIs

Holiday
Bain Day party Summer
for Offsite
Office People Bain World
events Cup in
Amsterdam

Pro-bono consulting: Social Finance US (social enterprise)

“Extra Yale Recruiting Summer offsite videos Harvard Recruiting

10%”
B4 Box NE AC Fall Preez
Speakers - MIT 9
2009 FINAL

Excel training help for local non-profit 9

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 A ‘typical’ week as an AC at Bain

1
Crack the problem

Mon Tue Wed Thu Fri

09:00
Gather customer
survey responses Gather qualitative
and begin to cut data mapping online
data Segmentation results shopping process
from CIG analyzed Create blank deck
11:30 for next week’s client
update
Revise survey slides
to review with client
Begin inputting
2:00 survey data into
slides

Revise client deck

4:45

Finalize steering
Revise slides and committee update
send update to Finalize survey slides
manager of initial results
8:30

1
NE AC Fall Preez
Speakers - MIT
2009 FINAL
10
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 A ‘typical’ week as an AC at Bain

1 2
Crack the problem Meet with the client

Mon Tue Wed Thu Fri

09:00
Gather customer
survey responses Gather qualitative
and begin to cut data mapping online
data Client meeting to Segmentation results shopping process
discuss qualitative from CIG analyzed
research process Create blank deck
11:30 for next week’s client
update
Revise survey slides
to review with client
Begin inputting
2:00 survey data into Client pre-wire
slides Client steering
Client pre-wire committee update
Revise client deck

4:45

Finalize steering
Revise slides and committee update
send update to Finalize survey slides
manager of initial results
8:30

1
NE AC Fall Preez
Speakers - MIT
2009 FINAL
11
This information is confidential and was prepared by Bain & Company solely for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 11
 A ‘typical’ week as an AC at Bain

1 2 3
Crack the problem Meet with the client Discuss with the team

Mon Tue Wed Thu Fri

09:00
Phone call with Team brainstorm on
Gather customer Discuss survey slides
Customer Insights key initiative
survey responses with consultant Gather qualitative
Group recommendations
and begin to cut data mapping online
data Client meeting to Segmentation results shopping process
discuss qualitative from CIG analyzed
research process Create blank deck
11:30 Discuss initial results for next week’s client
Professional Yale recrutiing update
with consultant Development chat meeting
Revise survey slides with supervisor
to review with client
Begin inputting Discuss deck with
2:00 survey data into Client pre-wire consultant
slides Client steering
Client pre-wire committee update
Team meeting to Revise client deck
Discuss storyline and prepare for steering
edits with consultant Weekly case team committee update
meeting Weekly answer
4:45 brainstorm
Feedback from
client meeting with team
Finalize steering
Revise slides and committee update
send update to Finalize survey slides
manager of initial results Team dinner and
8:30 drinks

1
NE AC Fall Preez
Speakers - MIT
2009 FINAL
12
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 Case interview: BlueBerry Frozen Yogurt Shop

• A friend of yours is considering opening a

frozen yogurt shop in Brookline, MA
• She has enlisted your help to determine
whether or not this is a good idea

How do you set up the problem?

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 Step 1: Set up a framework and communicate it

Profit = Revenue – Cost

Cost = Fixed Cost + (Variable Cost *

Revenue = Quantity * Price
Quantity)

Quantity Price Fixed Cost Variable Cost

Not too complicated, right?

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 Step 2: Getting more specific

 Your friend knows that any successful business needs to

make a profit and likes the overall framework

 She wants to start on the revenue side, specifically, how big

the market is in order to start building an estimate of how
much frozen yogurt she can sell

 She knows that the market probably includes commuters,

etc. but for now, she is thinking of a neighborhood type
shop, and wants you to focus on Brookline residents

Discuss: How can we estimate

the size of the market?

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 Market sizing: two potential approaches

TOP DOWN BOTTOM UP

• Start with large number • Start with small number (e.g.

(e.g. total relevant number of frozen yogurts
population) and consumed per person per
progressively narrow down day) and progressively scale
up

 Exact numbers are not important

 Make assumptions that are reasonable, using round numbers
whenever possible
 i.e. don’t use Pi as a variable
 “Sanity Check”
 It is OK to go back and refine assumptions, especially if the
interviewer indicates that something might be off
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 Step 3: Getting specific around a frozen yogurt
shop market sizing ILLUSTRATIVE

TOP DOWN BOTTOM UP

• 120,000 people live in • Average Brookline person eats

Brookline frozen yogurt 0.5 times a
- 80% eat dessert = ~100,000 week (many have none)
people - 0.5 times a week * 50% of the
- Of those 50% go out for dessert time they chose frozen yogurt =
= 50,000 people 0.25 times per week
- *52 weeks per year = 13 frozen
- 75% of those people eat frozen
yogurts a year per person
yogurt an average of once per
week = 37,500 people - *120,000 people living in
Brookline = 1.6M frozen
- *50 weeks = 2M frozen yogurts a year
yogurts a year

Total market size is ~2M frozen yogurts per year

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 Step 3: “Oh snap, there’s a twist”

• Nice - you’ve made it this far. Feeling pretty good, hitting

your stride right? Well now it’s time to get serious…

• Your friend is getting excited. 2M frozen yogurts

sounds like a lot
• Before moving forward, however, she’d like you to
estimate the quantity she needs to break even in the
first year

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Your friend has researched start up & variable costs,
but wants your help estimating operating costs

• Start up costs for a frozen yogurt business are roughly

$300,000
• Variable cost per cup of frozen yogurt = $2

• What are some operating costs we must consider?

-Rent
-Utilities
-Employee Salaries
-Marketing/Advertising

-Let’s estimate total operating costs to run the

business at $300,000/year

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 Another breakeven technique

BREAKEVEN = FIXED COSTS / PROFIT PER YOGURT

Price per yogurt $4

Cost per yogurt $2

Profit per yogurt $2

Fixed costs $600K

Breakeven = $600K / $2 = 300K cups

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Should we recommend pursuing this business?

Breakeven volume: 300,000 cups per year

As we have seen above…

For Revenue > Costs, you need $4 * (x cups) >

$600k + $2 * (x cups)

So, need > 300k cups to make profit

Market estimate is 2M cups

Given these assumptions, this business can

make money

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 To discuss further…

• What other options might you consider to improve the probability of

success for this business?

• At the end of one year, your friend’s business is booming and she is
considering expanding her frozen yogurt shop outside of California.
She has once again asked your help in determining if this is a good
idea.

• What might be some things to consider when thinking about

expanding a business?

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 Key Tips For Success

• Listen carefully and make sure to answer the question you

were asked to evaluate (it’s really awkward for both of us if you answer
the wrong one)
• If confused, ask for clarification. It will be hard to rock the
case if you don’t understand the facts (interviewers will not dock you
points for this)
• Structure, structure, structure – use it, it will help you
(just please don’t bust out Porter’s 5-forces verbatim)
• Make sure you get to an answer (way more important than being
right)
• Always provide logical back-up to your answers. The thought
process is much more important than the actual answer
• Look for verbal and physical cues (we want you to succeed on the
case because you’re probably really nice, and its fun for us to see you nail our
case)
• Be yourself (believe it or not, we’re here to get to know you)
• Relax and have fun (the more relaxed you are, the more fun – and
fruitful – this will be)

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 Where are you going to go?

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 Never underestimate the role of luck in your career!!!

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 Each of the eight will contribute at least ~$1T to GDP

Advanced
economies
adjusting
to age

Developing
economies
catching up

1 2 3 4 5 6 7 8
Next Dev. Militar. Grow- Keeping Aging Same Next
billion… human follows ing… wealthy infra. but big
capital industr. inputs healthy nicer thing

How will you capitalize on these

8 macro themes?
Note:
This Allisnumbers
information rounded
confidential and up
was prepared by to
Bainthe nearest
& Company solely $1T
for the use of our client; it is not to be relied on by any 3rd party without Bain's prior written consent 27
Source: IMF; Euromonitor; SIPRI Yearbook 2010; WSJ; UN; EIA; IEA; Datamonitor; Lit searches; World Bank; EIU; Bain MTG analysis, 2011
 DRAFT
Bain Perspective: What makes for a winning strategy?

Robust fact base that Bold, inspiring, full

drives to strategic potential ambition that
and differentiated drives to sustained
insights and builds profitable growth
the case for change

Ambition

CHOICES

Clear choices on
Where how to win – what
How
to play are our differentiated
to win
capabilities and
assets the company
will leverage to win
supported by
Mobilize for resource allocation
Results Delivery
Clear choices on where
to play – which markets Flexible priorities
and segments the that follow the
company will pursue money even in
(and not pursue) turbulence and go
beyond “just
initiatives”

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