Issue Tree: What It Is & How It Helps You Pass Case Interviews
- Last Updated February, 2024
Former McKinsey Consultant
One of the keys to nailing a case interview is to demonstrate that you can quickly structure your thoughts and that you’re a good communicator. In this article, we want to help you add another communication tool to your skill set: issue trees.
Definition: Issue trees are visual diagrams that you can use to break down a larger problem or question into several smaller questions. You can use the issue tree as a structure for your consulting case interview.
In this article, we’ll discuss:
Let’s get started!
Table of Contents
Issue trees, also known as decision trees, are used in consulting to help the team:
They look like a (horizontal) tree: they flow from the top of the tree on the left to smaller branches on the right. We’ll talk you through the process of putting the right questions at the top of the issues tree, and how to ask questions to get to the root causes on the right side of the page.
What about just using the simple outline structure you’ve been using to structure cases? Outlines are great. Issue trees are next level.
Outlines and issue trees both organize the questions you’re looking to address. Issue trees also help you communicate more effectively because they visually show relationships between the initial high-level questions and root cause questions.
When you’ve completed your issue tree, you should have a complete set of the most important areas to explore in order to answer your client’s questions.
In consulting, you’re going to be using a lot of visual frameworks to communicate ideas because it’s easier to communicate with clients and get them on board if there are visual cues for them to anchor on. In the case interview, using an issue tree is your chance to show the interviewer that you are comfortable using a visual framework.
The issue tree also allows the interviewer to feel confident that your thought process is well-structured, that you’ve covered all key aspects of the case, and that you understand how various components are related to the problem you’re trying to solve.
There’s another reason to use an issue tree in your cases. You can show off two of your skills in one structure
For example, in a consumer goods profitability case – let’s say the retail beer market – you obviously want to dig into the structure of revenue: price and volume.
That shows you know the profitability framework and revenue drivers.
But anyone can memorize revenue drivers.
You can show your own creativity and how you connect concepts to reality. For example, when discussing price, you can ask a few more detailed questions to show that you understand the underlying drivers of price:
These deeper layers are kind of common sense, but when you connect revenue to price to price drivers, it shows that you understand how to relate information back to price and ultimately back to revenue.
Now let’s look at how to build an issues tree.
There are many different types of issue trees and decision trees. The most common in case interviews include a series of questions that will help you answer your client’s main questions.
You can alternately frame the issue tree as a series of hypothesis statements. You typically won’t be able to do this as soon as you’re presented with the case question by your interviewer, but can ask questions during the opening section of the case that will help you identify hypotheses to test.
At this stage, we’re trying to understand the root causes of your client’s problem.
What’s a root cause? It’s the underlying reason why something has happened.
There are a few different ways to get to the underlying cause. In our issue trees, we use two types of questions:
In case interviews, it’s best to use hypothesis questions for the first 2 layers, if you can.
By the 3rd or 4th layer of your trees, it’s best to use open questions to encourage exploration and avoid closing yourself off from possible answers.
Now that we know how to build a tree, let’s look at how to use it in your consulting interview.
During your case interview, you should use your issue tree to organize your thinking and as a communication tool.
Nail the case & fit interview with strategies from former MBB Interviewers that have helped 89.6% of our clients pass the case interview.
Once you’ve confirmed the problem you’re trying to solve and asked any clarifying questions, you will want to structure the problem. This is the time to use an issue tree!
Spend some time – this could be even a few minutes – to organize your thoughts on paper as we described above. You have options for how to organize your issue tree:
Issue trees are communications tools, not a script. You should not read directly from your tree for five minutes.
Top tips on how to use your issue tree in a discussion:
Some cases, especially in second round interviews, don’t easily lend themselves to issues trees. Don’t sweat it – go back to the outline structure and knock your case out of the park.
When you use an issue tree, you’re demonstrating next-level communication skills.
Let’s dive into some examples
You can use them to examine almost any problem.
Let’s start with a traditional case question:
Your client manufactures tools for mechanics and auto services companies. They have experienced rising costs in their plant in Bulgaria, and are wondering if they should close the plant and move the production to one of their other facilities.
Our 1st layer of the tree is the client’s question:
Should our client shut down its only tool manufacturing plant in Bulgaria?
Our 2nd layer of the tree will have three boxes:
The hypothesis question we want to ask is:
Will the company be better off financially if they close the plant?
There are 5 key financial areas to explore in the 3rd layer:
The hypothesis question we want to ask is:
Could the company produce the tools elsewhere?
The hypothesis question we want to ask is:
Would the brand suffer if manufacturing was moved to another country?
There you have it, a complete issue tree for this case discussion!
Note how this issue tree is uneven. There are so many more branches to explore in the financial considerations section. That’s okay as long as you’ve covered each branch sufficiently.
As a way to recap your structure, you can even note to your interviewer that the final decision will mainly revolve on financial considerations, but they will be weighed against operational and brand considerations.
Let’s look at another case that might be more typical in a second round interview.
Sometimes in your second round interviews, partners can get bored with cases they’ve given a million times. So just like Law & Order, your case interview might be ripped from the headlines. Let’s take that approach for this example:
Why was there no toilet paper on the shelves of North American retailers during the first wave of the COVID-19 pandemic?
Let’s dive into an issue tree for this question.
If you’re lucky, like we are here, you can layer in a business framework.
Don’t force a framework if nothing comes to mind. You want to practice structuring enough cases that you’re not gonna miss an obvious framework like this one.
Our 1st level of the tree will include the question:
Was demand for toilet paper actually greater than supply in North America during the first wave of the COVID-19 pandemic?
Our 2nd layer of the tree will have two boxes:
The hypothesis question we want to ask is:
Was there a demand shock for toilet paper in North America?
There are three areas to explore in the 3rd layer:
When you look back at the above, you can see that residential toilet paper usage likely doubled, and purchases increased because of panic buying. Even though we don’t have hard data, we were able to ask the right set of questions and articulate that this probably was a demand shock.
Again – this is a partner-level case question. They want to see how you think but also be engaged in an interesting conversation.
There’s one more question to address on the demand side.
The answer is no, and this is a great way to transition to the supply chain.
Can we meet the increased demand by making changes in the supply chain? Let’s take a look at the supply chain for toilet paper.
The hypothesis question we want to ask is:
Was there a supply shortage for toilet paper in North America?
Let’s evaluate our options on the supply side. In the 3rd layer, we’re going to look at:
Looks like you’ve got a pretty comprehensive set of questions and hypotheses to explore. Let your interviewer guide you through the supply questions.
Now that you’ve learned about issue trees and reviewed these examples, what should you do next?
Let’s talk about how you can get good at issue trees.
So now we’ve covered all things related to issue trees! Let’s wrap it up with our top tips.
In this article, we’ve covered:
If you have more questions about creating issue trees, leave them in the comments below. One of My Consulting Offer’s case coaches will answer them.
Other people studying issue trees found the following pages helpful:
Nail the case & fit interview with strategies from former MBB Interviewers that have helped 89.6% of our clients pass the case interview.
5 thoughts on “Issue Tree: What It Is & How It Helps You Crack Case Interviews”
Ron,
Thanks so much! We’re glad the article was helpful!
Here are some thoughts on your questions.
1. Is an issue tree always about identifying root causes of a problem (as some call the Why Tree), or does it generally also include possible solutions (the How Tree)?
McKinsey thinks of Issue Trees as the breakdown of the root causes of a problem and Decision Trees as the possible solutions that should be examined to solve the problem. These are separate, but we didn’t want to write a book on it fearing we’d lose people, so we went with the term Issue Trees as an umbrella term for both.
The key issue is ensuring the mutually exclusive, collectively exhausting categorization in each.
2. If an Issue Tree is a combination of the Why and How trees, is there a one-to-one and MECE discipline between the root cause and solution options.
Another good question!
I’d say the Issue Tree covers the root causes and the Decision Tree the solutions if you want to be perfectly clear with your terms. There could be a one-to-one, MECE correspondence between the branches on your Issue Tree and Decision Tree, but there doesn’t have to be.
Example 1 – no correspondence:
Let’s consider our Issue Tree Example of the Plant Closure Case. Our high-level branches were:
• Will the company be better of financially if they close the plant?
• Could the company produce tools elsewhere?
• Will the brand suffer if manufacturing is moved to another country?
Imagine a team was tasked with answering these questions in order to determine if the plant should close, and then following up with a recommendation on the new location for tool production and creating a plan for the move.
You would not need a Decision Tree branch for the first bullet. Once you’ve done the financial calculation and determined that the company would be better off closing the plant, that branch of analysis is finished.
Your Decision Tree could have 2 branches corresponding to the remaining Issue Tree 2 branches:
• Where should the company relocate the productions from the closed plant. This might have sub-branches such as Plant A, Plant B, and Greenfield.
• How could the company minimize the negative impact of shutting the plant. This might include sub-branches such as severance packages for displaced employees, clear communication of the reasons behind the plant closure decision, and a new brand awareness campaign.
Example 2 – one-to-one correspondence:
Let’s try a different example. Imagine there was a need to reduce costs at a corporate level for NextGen Games, a software company, by 10%. Your Issue Tree could breakdown the cost reduction ideas by allocating the savings goal down to the business units and the corporate overhead.
• How can the PC gaming division save 10% or more in costs?
• How can the console gaming division save 10% or more in costs?
• How can the mobile phone gaming division save 10% or more in costs?
• How can the cloud gaming division save 10% or more in costs?
• How can 10% or more be saved in corporate overhead?
The Issue Tree diving into NextGen’s cost problem would have further detail on the cost reduction options that would allow each group to meet the target with the least disruption to its business. These could include a travel freeze, putting off capital expenditures, or even a headcount reduction.
The Decision Tree for implementing NextGen’s cost problem could have the same 1st level branches, a one-to-one correspondence. But the lower-level branches would focus on the savings ideas that were applicable to each part of the business.
I hope this helps!
Best of luck with your problem-solving!
Is there a specific software/app you find is best for creating issue trees?
Powerpoint’s hierarchy “smart chart” is a drag.
Ideally you’d have expand/collapse functionality.
Curious as to what you prefer
At MCO, we mostly hand draw issue trees because when you’re in a case interview (or coaching people for case interviews), “quick and dirty” is the only option.
When I was at McKinsey, we used PowerPoint, but to be fair, we had help with creating the slides. When I was editing slides myself, I’d pull a page from an old deck with an issue tree that had a similar scale. That way, I wouldn’t need to mess a lot with the number/size of boxes.
Do other readers have software they like better for issue trees? Let us know!
How can i create an issue tree for an insurance company that is restructuring and repositioning
Hi, Yusufu!
Great question! I’d start by asking what the goal of the restructuring is. For instance, if the goal was increased profitability because profits have been falling gradually over time, I might structure my issue tree around the profitability formula.
Profitability = revenues – costs = (price x quantity) – (fixed costs + variable costs)
Then I’d start digging down into each.
This would be a good direction if the problem was firm-wide, across products and business units. The company’s fixed costs might be getting bloated.
But if there’s a new competitor, a new product, or some big change in the market that’s hurting performance, I might break the issue tree down by product lines or business units, or even just focus on the one or two areas where the insurance company is having the biggest problem.
For instance, if the insurance company is facing rising costs due the change in climate/claims due to severity of storms, I’d focus in increased costs from storm-related damage in each product line or business unit.
I hope that helps! Good luck with your issue tree!