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“# of hires” * “Cost per hire” = “Hiring Costs”. Notice how these structures are like an equation. What do you see? Which structure is better and why? Here are two structures for the same problem: a company’s hiring costs are going up.

Go a level further – why are we hiring more people? What drives hiring costs? You’re not being hired to simply find the right formula. When using this type of structure, the more number-oriented candidates tend to just focus on the numbers and ignore reality. If hiring costs have gone up is 100% of the effect coming from more hires? Or did we just hired 20% more people and our cost per hire has soared abruptly? Algebra equations are a great way to structure a numerical problem, but you gotta be mindful. Another pro of this technique is that you can quantify how much effect comes from which source. You can check for MECE using simple high school-level dimensional analysis. Hiring costs = “# of people hired * cost per hire”.Īlgebraic structures guarantee MECEness because a formula has to yield the target metric. Customer evasion = “Customers we ourselves stopped serving + customers who moved to competition + customers who stopped using this type of service”. Profits would be either “Revenues – Costs” or “Revenues * % Margin”. If your case revolves around a specific metric, you can break it down into the algebraic components. Each of these could be the goal of an executive. Profits, Revenues, Costs, Market share, Customer evasion rates, Production efficiency, Literacy rate, you name it. Many case interviews are about an executive trying to improve a particular metric. Most organizations use numbers to measure their performance, and these metrics are often tied to the performance of the executives who run these organizations. And when they do, they’re suddenly not relying on any stars anymore. But many candidates never realize they can use this to structure other types of problems as well. That’s the quickest way to test this skill. No wonder consulting firms use estimation cases so much (yes, even MBB). If you’re not fluent at this, you’re gonna have to wait until the stars align before you get your job offer. Doing this is vital for consulting work as well as case interviews. Not x’s and y’s, but “revenues per customer” and “hiring costs”. You can structure any numerical problem by breaking it down into an equation with real variables. That’s exactly what Algebraic structures are: applied algebra.

What if I told you basic high school algebra is one of the keys to always have a custom MECE structure for just about any problem? Crazy, right?

(This article is part 3 of the series “The 5 ways to be MECE”, to go back to part 2, click here.

Beware planet earth back to basics insane