Effortlessly Create a Milk Bill Format for NPOs

Milk bill format for NPOs

all right so why should you listen to some guy standing in front of a whiteboard with a white T-shirt on my name is Matt I'm a current strategy and operations associate at Google prior to that was a Management Consultant at BCG and today I'm going to walk you through yet another McKenzie style case the reason why I'm making this video is because I've made similar walkthroughs in the past and you guys have really liked it and so without further Ado let's get right into it all right so the case we're going to do today is called deona so the buillt in Melinda Gates Foundation is a private organization with vast Ambitions one of its goals is to reduce extreme poverty worldwide the foundation has asked Mackenzie to design a basic Financial Services offering for residents in remote communities in Mexico the majority of Mexico's rural population is relatively poor relying in part on government benefits for their livelihood since they do not have bank accounts they usually collect those benefits in cash from a limited number of state-owned Bank branches these branches are often a long way from where the recipients live so it can take a lot of time and effort to collect benefits in addition while traveling to the branches people can be at risk of falling victim to Crime so the Mexican Government also owns and operates a chain of 22,000 stores throughout Mexico called deona which provide basic food clothes and other essential Goods to rural populations these stores are supplied through a network of Central and Regional warehouses and several thousand delivery trucks and so McKenzie has been asked to investigate and assess the possibility of using the Duna Network to provide a set of basic Financial Services to supplement The Limited number of state-owned Bank branches this would start with dispensing benefit payments and would gradually grow to include savings accounts bill payments insurance loans and other Financial products so the first thing we always want to do when we are starting a case and we're hearing the prompt is we want to be taking notes and so obviously I wasn't taking notes while I was reading it but I'm going to write a few things down right now okay so I just wrote down a few quick notes right here and so I've written down that we have Deans which is a set of 22,000 stores throughout Mexico there's a Mexican government program that looks to fund rural communities throughout Mexico and so the question at hand today is should we distribute the funds and other Financial products via this network of 22,000 stores versus what we've been just doing which has just been distribution through state-owned banks where the distribution might not be as efficient or easy for the recipients to access and so what I'm going to do next is I'm going to brainstorm just a few clarifying questions and the reason why you always want to brainstorm at least two or three clarifying questions after hearing the prompt is you want to demonstrate to the interviewer that you're paying attention and also it can help you to potentially identify New pieces of information that might be useful for you if anything it just helps to deepen your understanding of the context and it never hurts to show the interviewer that you're thinking thoughtfully about the prompt all right so what I've done right here is I've just quickly drafted out three clarifying questions that you could potentially ask now I want to caveat that you do not have to ask the questions that I came up with these are simply the ones that came to mind for me but as long as you just think about two or three clarifying questions I think this works just fine and so I'll walk you through what I've brainstormed here so the first clarifying question is how will fun funds actually be distributed in the program and the reason why I asked this is because right now I also want to understand is the fund flow process still going to be government Bank to State Bank to deona or is it going to go straight from government to deona and the reason why I'm curious about that is because I'm thinking about the time that it's going to take to distribute funds to the stores and I'm thinking about the efficiency and how many steps it's going to take now I don't know a ton about how the Mexican Financial system works and so this would be an area to understand a little bit deeper but potentially my interviewer might tell me that oh so right now we have a government Central Bank that distributes to State Banks and if we were to use the deona program we would still distribute to State Banks and then have them distribute to deona and so that would give me a little bit of a better understanding of what we're working with and that okay we are going to still have to have two steps to this process but anyway the second question that I asked was do we have majority support and I'm talking about support within the Mexican Government because again like any sort of initiative or new bill or legislature assuming of course we're talking about a democratic country we are going to need at least majority support in the political system in order to get this program even approved and so this is an important question to ask now the third question that I want to ask is how secure are the deona stores and this is important because again we're dealing with money here and so obviously Bank security is really really high but once you start Distributing Financial products and cash to basically convenience stores then the likelihood that one these stores could get robbed or two the recipients could get their funds and then get robbed pretty quickly after that is quite high in my mind and so I really want to understand how secure these stores are or whether or not there are some sort of security measures that are planned to account for the risk of theft all right but basically after you ask your clarifying questions the interviewer will give you some feedback related to those questions and and so oftentimes they will either tell you that no we don't have any information on this yet but this is why we've hired you or they'll give you some pieces of additional detail additional information that might help you to think a little bit deeper about the prompt but after you do that what you want to do immediately after is you want to move into developing your framework and so the way you do this is you ask the interviewer for some time in order to develop it and so I would say okay great this sounds really interesting to me can I take a minute or two to structure my thoughts and they will always say yes and this is your cue to go ahead and think through putting together a framework and for those of you who don't know what a framework is a framework is just a fancy word for a set of key buckets that you would explore in order to better understand a problem or situation and it's a very important part of structured thinking which is something that you're being tested on in case interviews and so I'm going to put together a quick framework right now all right so what I've done right here is I've just put together a quick framework and just before I walk you through it I do want to say today what I've done is I have used a value chain framework and this simply means it's a framework where you look at every single person or entity involved in the quote unquote value chain and you look at all the considerations that each party has to think about related to this program and so I've listed out four buckets here with each of the four main key players in the value chain and so the first one is the Mexican Government the second is the state- known Banks the third is the deona network stores themselves and then the fourth is the recipients the families that are actually receiving this Aid and so basically the way you want to walk your interviewer through the framework is you always want to start by saying okay great so I've taken some time to think through a framework and broadly speaking there are four buckets that I would want to explore to get a better understanding of the situation and think through a recommendation and so the first is going to be related to The Mexican government the second the state own Banks the third the deona network stores and then the fourth the actual recipients of the aid and within each bucket I've thought through some benefits and considerations related to each party so that we can think holistically about the pros and cons of this program but now to walk you through the first bucket which is the Mexican Government here on the benefit side what I can see as the immediate benefits for the Mexican Government to implement this program are one if the program is successful and say they are able to actually speed up the process of getting Aid to these families and the families like it then they're going to get a lot of positive PR and positive support at least from that population and so for example the policy makers that might be backing this initiative would want to see that happen similarly You could argue that there is some sort of economic impact here because I would imagine that say for example if I am someone who walks into a deona store and I'm going there to get one thing which is my funds I might also pick up some other Goods while I'm there right I don't know about you guys but for me whenever I say that I'm going to get milk at the grocery store I almost always end up walking out with two or three other things and so there is some impact I don't know how big it is but potentially we could estimate an economic impact to the Mexican economy driven by higher foot traffic to these stores but let's switch to the considerations and on the consideration side I would say that political opposition is going to be a big potential risk to this program even getting through in the first place because not everybody May support this program but assuming we even do get this approved there was a significant amount of execution risk as well execution risk simply being like how do we actually get it done right someone is going to have to think about okay which stores do we want to involve in this program maybe we want to start out with some sort of pilot where we only use a small set of stores first to test out whether this is going to be successful before we roll it out to all 22,000 and even within that pilot how do we actually initiate it how do we handle the logistics of even sending the money to these stores is the Mexican Government going to handle this is the state-owned banks going to handle it how do we manage the security concerns around it there's a whole set of execution risks involved with successfully handling this program but moving to the second bucket which is our state loan Banks here on the benefit side I would say the state loan Banks probably don't have as many benefits to gain from the fact that we're now going to distribute funds through this network of stores as opposed to only their Banks but you could say higher efficiency and more predictability around their funds flowing out of the bank is going to be a benefit because now if you know for example that every month you're going to have to send 100,000 pesos to a network of 22,000 stores then you're going to be able to factor in that outflow of funds in a very predictable manner versus how it used to be in the past where maybe 100,000 people would come to your Banks but that amount would fluctuate each month maybe some months certain people didn't come in other months more people than you expected came in and so it was a little bit difficult to predict how much funds you needed and so that's going to be the most immediate benefit in my mind to the state Lo Banks but on the consideration side they're obviously going to now get less foot traffic and so less foot traffic could potentially mean less business right because now instead of 10,000 people coming into your bank every year maybe it's going to be cut in half and you'll only have 5,000 people coming into the bank and so these are potential customers that could have maybe signed up for some other products at your bank there was a detail in the prompt that mentioned the eventual plan for the Decon Network would be to move to other Financial products not just cash payments and so there is potentially still a benefit here for the state owned Banks but still something to consider and also less Capital to potentially use for other things Banks make money based off of the fact that they take one person's deposits and then they use those funds to lend to other people and then earn interest on those loans and so if for example we are sending a significant amount amount of money out to these stores then the bank itself is going to have less money to hold on to to potentially invest in other things but now if we move to the third bucket which is the deona network here I would say the benefits are going to be the fact that these stores are now going to get much more foot traffic with people coming in to get their deposits or maybe sign up for other Financial products and in addition to that they'll probably also pick up other Goods again whenever I say I'm going to go to the store to buy milk or eggs I always end up coming out with at least a bag full of things and so for the stores at least there is probably going to be some sort of uplift in their sales because people are going to just be buying more things assuming that your conversion rate aka the percentage of people that come into your store that actually buy something stays the same then if your foot traffic increases then your revenue is going to increase but then of course we have to talk about the considerations and here's where I think it gets interesting because the number one thing we have to remember is this is money here that we're transporting and going to be storing at basically a convenience store and when people find out that there is going to be a lot more money being stored within the DCA stores than there is going to be obviously a higher risk of crime and so I think the biggest consideration here is going to be security related and how specifically are we going to mitigate the risk that criminals will come in Rob the store break into the safe and steal a bunch of money finally to round it out with the recipients of the aid themselves Mexican families what are they going to benefit from theoretically convenience because they're going to be able to get their funds quicker they don't have to travel as far and therefore they also save on Transportation costs and so it would be convenience plus I'll put dollar sign for money because you're supposed to save money in practice I don't know if that's actually what's going to happen but on the consideration side again security is going to be the biggest one because again if I walk out of the grocery store with like $5,000 in cash in my back pocket and the grocery store is in a kind of shady area then there's a high risk that I'm going to get mucked and so how are we actually going to mitigate that and then secondarily I've written down is it actually better now in theory it's going to be quicker right and it's going to be more convenient but I would argue we have to think about is this actually going to be more beneficial because speed is one thing but when we're talking about financial products a lot of people don't understand Financial products very well and so customer support I would argue is actually pretty important right and there are a lot of people out there who won't open up a new bank account or a new checking or or credit card without actually talking to like an agent at the bank and so the stores are not going to have that same level of customer support and who's going to feel the pain of that lack of customer support well it's going to be the recipients okay so that was the framework and so basically after you walk your interviewer through the framework you want to invite them to give you some feedback and so you want to say something along the lines of blah blah blah and so these are the four buckets that I would want to consider but would love to hear your thoughts as well I have a few ideas in mind of where I think would be interesting to explore but just want to get your thoughts as well and so this is a way that you can ask them subtly for feedback and maybe they'll tell you that oh this sounds really great let's Dive Right In or they'll give you a little bit more detail about one particular bucket but in this case because this is a Mackenzie style case it is interviewer Le which means that the interviewer will guide you to the next question which is the team has estimated that it currently costs a family 50 pesos per month in transportation and food to make the journey to collect benefit payments the team also estimates that if benefits were available for collection at local deona stores the cost could be reduced by 30% 20% of Mexican's population is rural and of that number half currently receives state benefits you can assume that Mexico has a population of 100 million you can also assume that families in Mexico have an average of four members and that this does not vary by region so if every family could collect state benefits at their local deona stores how much in total per year would be saved across all Mexican Ral families receiving state benefits okay so basically this next question is a quantitative portion of the case and this is quite normal usually the second part of the case interview is quantitative in nature and so they've given us a bunch of information here which I will now write down really quickly all right so what I've done here is I've literally just listed out the details that we were given for this Quant portion we know that the cost per family is 50 p a month to get the funds and there's a projected 30% cost reduction if we do begin using the deona network to distribute this Aid the Mexican population we've been given some demographic info we know is 100 million people there's roughly four people per family on average and we know that of this entire population 20% lives in rural locations of which half AKA 10% are currently receiving aid and so the question at hand that we're trying to answer is how much can we actually save what would be the actual quantitative impact of this network and so basically to walk you through the logic of how I'm going to do this I'm going to start by calculating the status quo cost so what does it cost people right now and then I'm going to apply a 30% haircut or discount to that cost number to get us to our cost savings okay and so the structure of the math would be as follows we would start with our total population and then we would divide by the number of people per family to basically get us to how many families are in all of Mexico then we would multiply it by the 20% of families that currently live in rural areas and then split that in half basically multiplying by 50% to get to the amount that are currently receiving aid so that's our relevant number of families and then we're just going to multiply by how much it costs them so 50 pesos per month times 12 pesos a year to get to our status quo total cost number so I'm going to do the math really quickly we have 100 million families we divide by four people per family which is about 25 million families take 20% of that AKA divided by 5 so that's 5 million families that are living in rural places take half of that that are receiving aid so 2.5 million families that are actually receiving aid and then 50 pesos time 12 months per year that's 600 pesos a year which means that right now cost them roughly 1.5 billion pesos per year pretty small down there but this is just the total cost and what we're trying to get to is how much we can actually save and we've been given that there's a estimated 30% cost reduction if we use the deona network so what is 30% of 1.5 billion well 30% of 1.5 billion is the same as basically 3 * 150 million which is the same as 450 million pesos so that's our final number which is that if we use the deona network we could hypothetically save 450 million pesos per year for these families and so after you get to this number you should stop and take a step back and think about what this number even means in the context of the case and sometimes your interviewer will press you to think about what this number even means and so they might ask you something like okay great so how does this number make you feel and sometimes it's not that they're looking for a yes or no answer it's simply that they want to understand that you know that okay a number like 450 million is really large but without any context or anything to compare it to it doesn't really have as much meaning as it could if you had for example another number to Benchmark it off of but as always make sure to walk the interviewer through your entire thought process think aloud and do what I did and talk through the structure of the math first before you actually do it that way they can potentially correct you or give you guidance if you are a little bit lost and once you've done all your math immediately go into thinking about okay what does this actually mean in the context of the case but anyway this brings us to the third question which is that the team conducted a survey on a sample of the rural population in three different regions in Mexico participants were shown several statements about the concept of collecting benefits at their nearest deona store and asked how much they agreed with each statement the average response to some of the questions in each region is shown below and so they've given us this exhibit which basically shows us the results of a rural population survey and whenever you are given a exhibit in a case what you always want to do is you want to talk aloud and just give your initial observation because not only does this show the interviewer what you're thinking but it also buys you time to actually think through what the results even mean because some times when you're given a bunch of information or data you might not have any sort of insight to explain to the interviewer immediately and so this allows you to show them your thought process but also to digest the information a little bit slowly so that you can come up with some key insights and so basically the question that the interviewer will posos to you is what are your observations regarding this information and how would you explain these Trends and so this section of the case is going to be a little bit more conversational just because they're giving you an exhibit and they're basically just asking you to explain the trends and so I want to caveat that there's really no right or wrong answer in this situation but there are better answers and there are worse answers and so as long as you have a rationale behind why the results turned out a certain way and you can back it up logically and with sound reasoning then you should be okay here and so basically there were six dimensions that were tested in this survey one was are you happy to receive your benefits another was how secure do you feel receiving your benefits and then there was trust so do I trust that I will receive my benefits do I think that the cost will be lower because of this program and do I think that it'll be faster as well so the way I would walk through this with my interviewer is again I would say okay so it looks like across the board Everyone likes speed and thinks that speed is going to be a big benefit of this program but that said it looks like there are some significant differences when it comes to something like security because region B seems to rate much lower than regions A and C when it comes to believing that they will feel secure about receiving their payments and so this leads me to believe that there's something about region B that makes people feel not safe so maybe it's more crime or perhaps the deona stores are located in areas that are a little bit more dangerous and so people don't necessarily feel more secure even though they believe that of course it's convenient like yes it's down the street but also I might get mugged now what does this mean for us well maybe it means that if we are to rule this out then we need to implement additional security measures here right so you want to extrapolate Beyond just the first order insight and you want to go beyond to a second or third level so you want to say yes I've observed this and I think that it is because of this but that leads me to believe that maybe a way to mitigate it would be to do this so you go multiple layers deep to demonstrate to the interviewer that you are not just looking at the data and understanding it but you're also thinking about okay what does this actually mean and what can we actually recommend to the client to either mitigate this or improve the situation and so similarly to security trust is also the lowest in region and so I think this we can also assume is due to the fact that they're probably in a higher crime region and so they just don't believe as confidently that they will actually receive their benefits which is valid but what is also interesting is they actually have the lowest in terms of cost as well when it comes to the regions which indicates something interesting to me because of course security and Trust are sort of related so I can understand that if this is a high crime area they will have the least amount of security and Trust in the program but how does that translate into the fact that people in Regent B felt that they did not believe it would cost less to receive their benefits well I think there's multiple factors here that could contribute to that one could be just overall perception in that they could be factoring in oh I might get robbed as a potential cost but another possibility could be that maybe region B just happens to have less deona stores in general or maybe the deona stores are actually further from some of these recipients than say their state-owned bank branch and so counterintuitively it might actually cost them more to go to the store than to actually go to the local bank but anyways I've just brainstormed a few reasons here why these results might be the case in an actual case scenario you want to just come up with as many reasons as you possibly can and have a thorough discussion with your interviewer it is again less about getting the right answer and more about whether or not you can actually back up your answer with sound rationale and logic behind why you think something is the case because at the end of the day in Consulting you want to be hypothesis driven and so you always want to go into a situation with basically a problem statement that you want to either prove or disprove and it is totally okay if your hypothesis gets disproved Based on data that you find I think what's most important here is just to be presentable and to demonstrate to your interviewer that you can think logically and have a bit of business sense when it comes to thinking about different options and What might explain the results but anyway that brings us to the fourth question which is in a subsequent meeting representatives from the state-owned bank Express concern about how challenging it will be to offer basic Financial products to the rural population one of the representatives mentions that these are regions where people have minimal education and are unfamiliar with banking products there is also a significant crime and fraud he asks for the team's thoughts about how the bank could sell these Services effectively to the population given these challenges okay so this is again another brainstorming section basically you're just going to try to come up with as many ideas as possible for how you can basically educate your consumers on these Financial products and so I just also want to say before any sort of brainstorming section feel free to ask your interviewer for like 30 seconds to come up with a few ideas if you don't have any that immediately come to mind I think it's always better to ask for a bit of time and have more thought out answers than to just dive into something that you're not totally prepared to talk about because that's always just a bad look and so I'm just going to take a few seconds right now to write down a few ideas all right so I've just thrown together a few quick ideas here for how we can better educate the population on these Financial products and overall just increase their familiarity with what we are offering and so the first bucket is just what I call inore events and so this is super easy for the stores to do they can basically go ahead and plan out maybe once a week or once a month or once every couple months an event that they can throw in the store where there are different activities but also the main goal of the event is to of course educate the customers that come through about what the new products are what they offer and how you can sign up for them and so I think the store managers themselves can decide how they want to run these but if the government wants they can also chip in and provide funding or assistance with planning and running these events the second thing is you want to educate your employees because if you're employees don't know how these products even work then there's very low likelihood that they're going to promote these to the customers and so if you can first maybe set up seminars or webinars to educate the employees at the stores of what the offerings are how they should be teaching people about them and just get them familiar first then it'll be easier to implement some sort of incentive programs for your employees to say introduce more customers to the different banking products offered through this program but finally we also have Partnerships and other promotions and this will be things like partnering with another company in the region that is very popular another brand that people are familiar with some sort of household name and running a promotion where for example maybe someone who gets into your store maybe if they buy bread from a brand that they really like they also happen to get a discount on opening up a bank account or a new checking account on the reverse side you could also do something similar where you basically say hey if you open up a new checking or savings account then you can get a 5% off on your next purchase with this particular brand that you really really like but finally this brings us to the end of the case which is going to involve your recommendation and synthesis and I always tell people to take a few seconds to come up with the recommendation instead of just jumping right into it the typical way that the question is posed by the interviewer will be that hey so and so say Bill Gates or The Mexican government is walking down the hall and they're about to come into the conference room where you and your team have been working for the past couple days and ask for a status update what would you tell them about what you've learned and so the structure that I always recommend people follow is one you start with restating the context two you give your recommendation three you talk about risks and then four you talk about next steps and what you always want to do before you actually give the recommendation is you want to look back on your paper and you want to think about all of the things that you've learned today all the different insights any numbers anything that you've learned that might be informative to the recommendation because you want to use them in your explanation and so the way I would give the recommendation is I would say awesome thanks so much for joining us today as you know we've been working really hard to think about the considerations related to launching the deona Network to support this aid program for families in Mexico and after all of our research we would recommend going through with utilizing the deona network to distribute the funds to families throughout Mexico we think that there's a lot of benefit to this in fact through our analysis we've actually found that there is going to be a roughly 450 million peso savings impact that we think can be reasonably achieved as long as we have a solid execution plan in place now that said there are obviously a number of considerations most notably being the fact that there are a lot of concerns around security and Trust and safety which is what we found based on our consumer survey and so we would recommend as a next step further looking into how we might want to increase the security around the deona network and really make our customers feel safe receiving their aid at these stores instead of a state run bank and we think a big part of this is also going to be education and so we'd also recommend looking into educational initiatives to just increase overall awareness about our different Financial products going forward but anyways that was the case and if you are currently struggling on case interviewing or you think you would benefit from a little bit of assistance I do also offer one-on-one coaching where I can better tailor my advice towards your situation and help you really improve your casing abilities if that sounds interesting to you then check out the link in my description below but with that thanks again for stopping by and I'll see you guys in the next one peace