PART III: Understanding The Situation

PART III: Understanding The Situation

"Before you can solve the problem, you have to understand the situation."

Case competitors have access to an enormous number of frameworks.

• SWOT.
• PESTLE.
• Porter's Five Forces.
• Value Chain.
• VRIO.
• Business Model Canvas.
• Stakeholder Analysis.

The challenge is not learning what each framework contains. The challenge is knowing when to use it, what question it can answer, and what to do with the insight it produces. This is where many teams go wrong. They select a familiar framework, fill in the boxes, and move on. The result may look analytical, but it isn't necessarily insightful.

A completed framework is not analysis. A completed framework is simply a starting point. The real work begins when you ask, "So what does this tell us?" And then: Why does it matter to the decision we have to make?

This is one of the central principles of Discover Your Mad Skills.

Use frameworks to discover insights, not to demonstrate that you know frameworks.

Chapter 12: Value Chain Analysis

Video: Value Chain Analysis: The Underused Tool That Reveals How to Improve Your Client's Operations

Learning Objectives

By the end of this chapter, you should be able to:

• identify the activities that create value
• identify sources of cost and differentiation
• recognise operational weaknesses
• connect activities to competitive advantage
• identify opportunities for improvement or redesign

Why This Matters: Organisationsdon't create value through one activity. They create value through a series of connected activities. For many businesses, these include:

• sourcing;
• operations;
• logistics;
• marketing;
• sales;
• service.

Support activities include areas such as:

• technology;
• human resources;
• procurement;
• infrastructure.

The value chain helps you see where value is created and where it is lost.

Discover Your Mad Skills Principle

Don’t ask only what the company does. Ask where the company creates value—and where it fails to.

Deciphering Case Characteristics

Value Chain is particularly useful when cases involve:

• operations;
• cost reduction;
• service quality;
• supply chain;
• differentiation;
• productivity;
• process redesign.

Finding the Problem

Suppose a company has high costs. Don't simply recommend: "Reduce costs." Use the value chain to identify:

• where costs originate;
• which activities create value;
• which activities don't;
• where duplication exists;
• where technology could improve performance;
• where outsourcing might make sense.

Now the recommendation becomes specific.

Coach's Lens

Value Chain analysis can also help identify core competencies. Use core competencies as capabilities that distinguish a company from competitors, and that can be surfaced using tools such as SWOT, PESTLE, and Value Chain analysis.

• Ask: What does this organisation do exceptionally well?
• Then: Is that capability important to customers?
• And: Can competitors easily replicate it?

Those questions move you from operational analysis toward competitive advantage.

Common Mistakes

• Treating Every Activity Equally
• Some activities create much more value than others.
• Focusing Only on Cost
• Value Chain isn't just a cost-reduction tool.
• Ignoring Connections
• Changing one activity can affect another.
• Forgetting the Customer
• An activity matters because of the value it ultimately creates.

Mad Skills Drill

Choose a company. Map its major activities. Identify:

• the activity creating the most customer value;
• the activity creating the greatest cost;
• the activity creating the greatest competitive advantage;
• the activity with the greatest opportunity for improvement.

Then ask: What would happen if we changed the most important activity?

Chapter Summary

Value Chain analysis helps you understand how the organisation creates value. It can reveal:

• cost advantages
• differentiation opportunities
• operational weaknesses
• core competencies
• strategic opportunities

Key Takeaways

✓ Value Chain Analysis examines how an organisation creates value for its customers by evaluating the activities that contribute to delivering products and services.

✓ Competitive advantage is created by performing value-creating activities more efficiently, more effectively, or in a more differentiated way than competitors.

Analyse both primary activities (inbound logistics, operations, outbound logistics, marketing and sales, and service) and support activities (infrastructure, human resources, technology development, and procurement) to understand how they work together.

✓ Focus on the connections between activities as well as the activities themselves. Improvements in one area often influence performance throughout the value chain.

✓ Look for bottlenecks, inefficiencies, unnecessary costs, and areas where customer value can be increased.

✓ Value Chain Analysis should identify opportunities to reduce costs, improve quality, enhance customer experience, strengthen differentiation, or increase operational efficiency.

✓ Consider whether certain activities should be strengthened, redesigned, outsourced, automated, or integrated to improve overall organisational performance.

✓ Value Chain Analysis is most effective when combined with tools such as Porter's Five Forces, VRIO, SWOT Analysis, Business Process Mapping, Customer Journey Mapping, and Financial Analysis to develop recommendations that create sustainable competitive advantage.

Looking Ahead

Value Chain helps identify capabilities. The next question is: Which capabilities actually create sustainable competitive advantage?

Chapter 13: VRIO and Core Competencies

Video: Core Competencies: The Most Underused Tool in Case Competitions

Video: Competitive Landscape Maps Visually Show Where Your Client Stands and Where It's Going

Learning Objectives

By the end of this chapter, you should be able to:

• identify organisational resources and capabilities
• distinguish resources from competencies
• evaluate capabilities as sources of competitive advantage
• recognise capabilities that are difficult to replicate
• use core competencies to make recommendations more organisation-specific

Why This Matters

One of the most common weaknesses in case competitions is a recommendation that could have been given to almost any company.

• “Invest in digital"
• "Improve marketing."
• "Expand internationally."
• "Develop a loyalty program."

These recommendations may be reasonable. But why is this company uniquely positioned to pursue them? That is where core competencies become important.

Discover Your Mad Skills Principle

The best strategy fits the organisation, not just the opportunity.

Your existing material defines core competencies as capabilities or advantages that distinguish the company from competitors and asks two important questions: "What does this company do best?" And "What does it need to succeed and make money?"

Understanding VRIO

VRIO evaluates resources and capabilities using four questions.

• Valuable: Does it help the organisation exploit opportunities or reduce threats?
• Rare: Do relatively few competitors possess it?
• Difficult to Imitate: Would it be difficult or expensive for competitors to copy
• Organised: Is the organisation capable of exploiting it?

The objective is not simply to identify resources. It is to determine whether they can support competitive advantage.

Deciphering Case Characteristics

VRIO is particularly valuable when the case asks:

• What should this company do?
• Where should the company compete?
• What creates competitive advantage?
• Which capabilities should the organisation invest in?
• Should the company build, buy, or partner?

Existing vs Required Capabilities

A particularly useful case-solving application is to compare: "What we have" with "What we need." If a capability is missing, the recommendation might involve:

• building it internally;
• acquiring it;
• partnering;
• outsourcing;
• developing talent;
• investing in technology.

Your existing Masterclass material emphasises exactly this application: identifying current competencies, determining what is required, and showing how missing capabilities will be acquired or developed.

Coach's Lens

This is one of the easiest ways to make a generic recommendation feel tailored. Instead of: "We recommend entering the premium market." say: "We recommend entering the premium market because the company's existing distribution network, brand reputation, and customer relationships provide capabilities that competitors would find difficult to replicate."

Now the recommendation feels like it belongs to the company.

Common Mistakes

• Confusing Resources With Competencies
• Owning an asset doesn't automatically create an advantage.
• Assuming Every Strength Is a Core Competency
• A strength must matter strategically.
• Ignoring the " Organised" Question
• A capability is useless if the organisation cannot exploit it.
• Mentioning Competencies Without Using Them
• The competency should influence the recommendation.

Mad Skills Drill

Identify five capabilities of a company. For each, ask:

• Valuable?
• Rare?
• Difficult to imitate
• OOrganised

Then identify: The one capability that should most influence the strategy.

Chapter Summary

Core competencies connect: "What the organisation has" to "What the organisation should do." That connection is critical to developing recommendations that are strategically appropriate rather than generic.

Key Takeawys

✓ VRIO Analysis helps determine whether aorganisation's's resources and capabilities can create and sustain a competitive advantage.

✓ Evaluate each resource by asking four questions: Is it Valuable? Is it Rare? Is it difficult to imitate? Is the Organization structured to capture its value?

✓ A resource must satisfy all four VRIO criteria to provide a sustainable competitive advantage.

✓ Valuable resources improve efficiency, reduce costs, increase customer value, or create strategic opportunities.

✓ Rare resources differentiate the organisation from its competitors and cannot be easily accessed by others.

✓ Resources that are costly to imitate often result from unique organisational culture, proprietary knowledge, strong brands, historical development, or complex capabilities.

✓ Even valuable and rare resources provide little advantage if the organisation lacks the structure, systems, leadership, or processes needed to leverage them effectively.

✓ VRIO Analysis is most effective when combined with Value Chain Analysis, SWOT Analysis, Porter's Five Forces, and financial analysis

Looking Ahead

So far, we've looked at the environment, industry, activities, and capabilities. Now let's step back and ask: How does the entire business fit together?

Chapter 14: Business Model Canvas

Video: Business Model Canvas & Lean Canvas: Visualise, Align, and Strengthen Your Case Solution

Learning Objectives

By the end of this chapter, you should be able to:

• understand how an organisation creates, delivers, and captures value
• identify relationships between customers, activities, resources, costs, and revenues
• identify gaps or inconsistencies in a business model
• use the Business Model Canvas to test a recommendation
• connect a proposed strategy to the broader business model

Why This Matters

Many teams jump directly to recommendations without understanding how the business actually works. The result is often a collection of initiatives that don't fit together. The Business Model Canvas provides a one-page view of the business model. Check out the existing Masterclass video to learn more about using it as a blueprint to show how a company creates, delivers, and captures value.

The Nine Building Blocks

• Key Partners: Who helps the organisation create and deliver value?
• Key Activities: What must the organisation do?
• Key Resources: What assets and capabilities are required?
• Value Proposition: What value does the organisation deliver?
• Customer Relationships: What relationship does each customer segment expect?
• Customer Segments: Who is the organisation serving?
• Channels: How does the organisation reach customers?
• Cost Structure: What are the major costs?
• Revenue Streams: How does the organisation make money?

Discover Your Mad Skills Principle

Everything must fit together logically.

A change in one part of the business model can affect several others. For example: A new premium customer segment may require:

• a new value proposition;
• different channels;
• different customer relationships;
• new resources;
• different activities;
• a different cost structure;
• new revenue streams.

That is why the Canvas is so useful for testing strategic coherence.

Deciphering Case Characteristics

The Business Model Canvas is particularly useful when cases involve:

•  startups;
•  business model innovation;
• digital transformation;
• new products;
• new customer segments;
• platform businesses;
• revenue model changes;
• strategic pivots.

Lean Canvas

For startup-oriented cases, a Lean Canvas can be useful and highlights elements such as:

• the problem;
• top customer problems;
• solution;
• unique value proposition;
• unfair advantage;
• early adopters;
• key metrics;
• channels;
• costs;
• revenue.

The important point is not which Canvas you choose. It is whether the Canvas helps you understand the business decision.

Coach's Lens

One of the best uses of the Business Model Canvas in a competition is to compare the Current Business Model with the Proposed Business Model.

• Ask: What changes?
• And then: What else must change because of that change?

Use the Canvas to test assumptions, identify gaps or inconsistencies, and connect the proposed solution to analysis, alternatives, and implementation.

Common Mistakes

• Filling in the Canvas Without Thinking
• The objective is understanding, not completion.
• Ignoring Relationships
• The blocks interact.
• Focusing Only on Revenue
• A revenue model cannot be separated from the value proposition and customer.
• Showing the Entire Canvas When It Isn't Necessary
• Use the parts that answer the case question.

Mad Skills Drill

Create a Business Model Canvas for a company. Then change only one element. For example: Change the customer segment. Now identify every other block that might need to change. How many connections did you discover?

Chapter Summary

The Business Model Canvas helps teams see the organisation as an integrated system. It is particularly powerful when the recommendation changes how the company creates, delivers, or captures value.

Key Takeawys

✓ The Business Model Canvas provides a holistic view of how an organisation creates, delivers, and captures value through nine interconnected building blocks.

Analyse the relationships between customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partnerships, and cost structure rather than viewing each element independently.

✓ A strong business model aligns customer needs with organisational capabilities while generating sustainable financial performance.

✓ Changes to one component of the Business Model Canvas often influence multiple other components, making it essential to consider the business model as an integrated system.

✓ Use the Business Model Canvas to identify gaps, inefficiencies, risks, and opportunities for innovation rather than simply describing the organisation's current operations.

✓ Evaluate whether the proposed recommendation strengthens the organisation's value proposition, improves customer experience, increases operational efficiency, or enhances long-term profitability.

✓ Consider how changing market conditions, emerging technologies, customer preferences, or competitive pressures may require the business model to evolve.

✓ The Business Model Canvas is most effective when combined with tools such as Value Chain Analysis, Customer Journey Mapping, Porter's Five Forces, SWOT Analysis, Financial Analysis, and Blue Ocean Strategy to develop integrated strategic recommendations.

Looking Ahead

The Business Model Canvas focuses on the business model, but businesses are also organisations made up of people, structures, systems, and cultures. The next tool helps us understand those internal organisational connections.

Chapter 15: McKinsey 7S

Video: New Video Coming

Video: Change Management in Case Solutions: How to Make Your Recommendation Actually Happen with People

Learning Objectives

By the end of this chapter, you should be able to:

• understand the major organisational elements that influence performance
• identify alignment problems
• evaluate whether an organisation is ready for change
• recognise the organisational implications of a recommendation
• connect strategy to implementation

Why This Matters

A strategy can be brilliant and still fail. Why? Because the organisation is not able to execute it. Perhaps:

• employees lack the necessary skills;
• leadership isn't aligned;
• systems don't support the strategy
• the organisational structure creates barriers;
• culture resists change.

The McKinsey 7S framework helps examine organisational alignment.

The Seven Elements

• Strategy: What is the organisation trying to accomplish?
• Structure: How is the organisation organised?
• Systems: What processes and systems support performance?
• Shared Values: What beliefs and principles shape behaviour?
• Skills: What capabilities exist?
• Style: How does leadership operate?
• Staff: Who works in the organisation?

Discover Your Mad Skills Principle

A strategy that doesn’t fit the organisation will struggle to become reality.

Deciphering Case Characteristics

7S is particularly useful when cases involve organisational

• Al change;
• transformation;
• restructuring;
• mergers;
• culture;
• leadership;
•  implementation challenges;
• digital transformation.

Coach's Lens

Don't use 7S to identify seven problems. Use it to identify alignment. If your strategy requires a highly innovative organisation but:

• leadership is risk-averse;
• incentives reward short-term performance;
• systems punish experimentation;
• skills are outdated;

then the strategy and organisation are misaligned. That is an implementation problem. Your recommendation should address it.

Common Mistakes

• Treating the Seven Elements as Independent
• They influence one another.
• Focusing Only on Hard Elements
• Strategy, structure, and systems are visible.
• Culture, leadership, skills, and staff can be equally important.
• Using 7S Without an Organisational Question
• Don't force it into a case where it doesn't add insight.

Mad Skills Drill

Take a proposed strategy. For each of the seven elements, ask: What must change for this strategy to succeed? Identify the two biggest gaps. How would you address them in implementation?

Chapter Summary

7S helps connect strategy to organisational reality. It reminds case competitors that: People, culture, systems, and structure can determine whether a strategy succeeds.

Key Takeaways

✓ The McKinsey 7S Framework evaluates whether an organisation is aligned internally to implement its strategy successfully.

✓ Effective organisations align all seven elements: Strategy, Structure, Systems, Shared Values, Style, Staff, and Skills.

✓ Organisational performance depends not only on having a strong strategy but also on ensuring that leadership, culture, people, processes, and capabilities support its execution.

✓ Changes to one element of the framework often require adjustments to several others. Organisational transformation is rarely achieved by changing only one component.

✓ Use the framework to identify organisational strengths, capability gaps, and barriers that may prevent successful implementation.

✓ Consider whether your recommendation requires changes to organisational structure, leadership style, employee capabilities, culture, or operating systems to succeed.

✓ The greatest implementation challenges are often organisational rather than strategic. The 7S Framework helps identify these hidden obstacles before they become barriers to execution.

✓ The McKinsey 7S Framework is most effective when combined with tools such as SWOT Analysis, Value Chain Analysis, VRIO, Business Model Canvas, Change Management frameworks, and Implementation Planning to ensure recommendations are both strategically sound and organizationally feasible.

Looking Ahead

Organisations don't operate only through internal systems. They operate through relationships with customers, employees, governments, suppliers, communities, investors, and many other stakeholders. The final chapter in this section explores those relationships.

Chapter 16: Stakeholder Analysis

Video: Stakeholder Analysis: The Often Ignored Tool That Makes Your Solution More Credible and Ethical

Learning Objectives

By the end of this chapter you should be able to:

• identify key stakeholders
• understand stakeholder interests and influence
• recognise competing priorities
• anticipate stakeholder reactions
• incorporate stakeholder considerations into recommendations and implementation

Why This Matters

A business decision rarely affects only the company. Consider a decision to automate operations. It could affect:

• customers;
•  employees;
• suppliers;
• investors;
• regulators;
• communities.

Each stakeholder may see the decision differently. A strategy that ignores these perspectives can encounter resistance during implementation.

Discover Your Mad Skills Principle

A stakeholder is not simply someone who is affected by your decision. A stakeholder can also influence whether your decision succeeds.

That distinction is important.

Identifying Stakeholders

Start by asking:

• Who is affected?
• Who has influence?
• Who has decision-making power?
• Who provides resources?
• Who could resist the change?
• Who needs to support implementation?

Stakeholder Mapping

A simple approach is to consider:

• Power: How much influence does the stakeholder have?
• Interest: How strongly does the stakeholder care about the decision?

This helps prioritise engagement. High-power, high-interest stakeholders generally require close attention. Low-power, low-interest stakeholders may require less intensive engagement; don't assume they are unimportant. Collective influence can change.

Deciphering Case Characteristics

Stakeholder analysis becomes especially important when cases involve:

• government;
• healthcare;
• education;
• nonprofits;
• sustainability;
• large organisational change;
•  community impact;
• employee relations;
• partnerships.

Coach's Lens

One of the biggest mistakes teams make is treating stakeholders as a list. They say: "Our stakeholders are customers, employees, suppliers, government, and shareholders." Fine.

• But what does that tell us?

The stronger question is: What does each stakeholder need from us for this strategy to succeed? Now stakeholder analysis becomes part of implementation.

Stakeholder Conflict

Stakeholders don't always want the same thing. For example:

• Shareholders may want higher returns.
• Employees may want job security.
• Customers may want lower prices.
• Suppliers may want higher prices.
• Government may prioritise public outcomes.

Your strategy must recognise these tensions.

Common Mistakes

• Treating All Stakeholders Equally
• Different stakeholders have different levels of influence.
• Ignoring Conflicting Interests
• Stakeholder interests can directly conflict.
• Identifying Without Acting
• Knowing who matters isn't enough.
• Forgetting Implementation
• Stakeholder engagement should influence how the strategy is executed.

Mad Skills Drill

Take a recommendation from a previous case. Identify:

• five stakeholders;
• what each wants;
• what each fears;
• how much influence each has;
• what you need from each stakeholder.

Then answer: Who could stop this recommendation from succeeding? That stakeholder deserves your attention.

Chapter Summary

Stakeholder analysis helps you move from: Who matters? To What do they need? To How will they respond? To How do we engage them? That makes your recommendation more realistic and your implementation plan more credible.

Key Takeaways

✓ Stakeholder Analysis identifies the individuals and groups who influence or are influenced by an organisation's decisions.

✓ Effective recommendations balance the needs of multiple stakeholders rather than focusing exclusively on shareholders or customers.

✓ Evaluate each stakeholder's interests, influence, expectations, and potential impact on the success of your recommendation.

✓ Stakeholders often have competing priorities. Recognise these trade-offs and explain how your recommendation addresses them.

✓ Consider both internal stakeholders (employees, managers, owners) and external stakeholders (customers, suppliers, governments, communities, investors, regulators, and partners).

✓ Strong stakeholder engagement improves implementation, reduces resistance to change, and strengthens long-terorganisationalal performance.

✓ Understanding stakeholder relationships helps identify risks, opportunities, and communication strategies that support successful execution.

✓ Stakeholder Analysis is most effective when combined with Ethical Analysis, Sustainability frameworks, Change Management models, Customer Journey Mapping, and Implementation Planning.

PART III CLOSING: From Frameworks to Insight

You now have a collection of powerful tools for understanding the situation. But remember: The objective was never to learn eight frameworks. The objective is to become better at understanding businesses.

• SWOT helps organise internal and external factors.
• PESTLE helps you understand the external environment.
• Porter's Five Forces helps you understand competitive pressure.
• Value Chain helps you understand how the organisation creates value.
• VRIO helps you understand capabilities and competitive advantage.The 
• Business Model Canvas helps you understand how the organisation creates, delivers, and captures value.
• McKinsey 7S helps you understand organisational alignment.
• Stakeholder Analysis helps you understand the people and groups who influence and are influenced by the decision.

These tools become much more powerful when you connect them. For example:

• PESTLE: What is changing outside? à
• Five Forces: How does that change competitive pressure? à
• Value Chain: Where does the organisation create or lose value? à
• VRIO: What capabilities can create advantage? à
• Business Model Canvas: How does the business model need to change? à
• 7S: What must change inside the organisation? à
• Stakeholders: Who must support the change? à
• Strategy: What should the organisation do?

That is the real purpose of frameworks. Not to produce more analysis. To create a clearer path from:

Understanding → Insight → Choice → Action

The Framework Selection Test

Before using any framework in a competition, ask five questions:

1. What question am I trying to answer? If you can't answer this, don't use the framework yet.
2. Is this the right tool for the question? Don't use a familiar framework simply because you know it.
3. What evidence do I have? A framework should be grounded in the case.
4. What insight does it produce? If you cannot identify the insight, the framework probably isn't helping.
5. How does the insight affect our decision? If the answer doesn't change the recommendation, ask whether the analysis is necessary.

 

The Mad Skills Framework Rule

Don't ask, "What framework can I use?"

Ask: "What do I need to understand?"

Then: "What tool will help me understand it?"

And finally: "What does that understanding allow me to do?"

That is the difference between using frameworks and thinking with frameworks.

Deciphering Case Characteristics

Every case is different.

• A growth case may require market and competitive analysis.
• A turnaround may require financial and operational analysis.
• A market-entry case may require PESTLE, Five Forces, market sizing, and capability analysis.
• A transformation case may require Business Model Canvas, 7S, stakeholder analysis, and implementation planning.
• An innovation case may require customer analysis, creative thinking, business model analysis, and a financial feasibility assessment.

There is no universal framework stack. The characteristics of the case should determine the tools you use. That is one of the most important Mad Skills you can develop.

Final Challenge

Take a case you have already solved. Without looking at your previous analysis, answer:

• What did we need to understand?
• Which frameworks did we use?
• Which frameworks actually created insight?
• Which frameworks were unnecessary?
• What important question did we fail to answer?
• If we were to solve the case again, which tools would we choose?

Finally ask yourself:

Did we use frameworks to understand the case or did we use the case to complete frameworks?

The answer tells you a lot about your team's analytical maturity.

PART III TAKEAWAY

Frameworks don't win case competitions. Insight does.

And insight comes from knowing:

what to look for, what to question, what to connect, and what matters.

That is the beginning of becoming a more sophisticated case solver.