Breaking into Product: Part 6 - Root Cause Analysis
Post #7
Hey there!
Welcome to “Breaking into Product” - post #7.
If you are planning to enter (or have recently entered) the Product space, you will love our posts! With this series, we aim to share exclusive content and insights on preparing for product management interviews, common Q&A, interview preparation strategies, etc to help you ace your interviews.
“Swiggy Instamart sales drastically decreased. Why do you think it happened?”
Root cause questions are usually very vague, like most other PM interview questions. You will be given a real-life problem statement, typically which is indicative of how a certain metric is going downhill and you are responsible to find why that is. It's difficult to try and find the starting point of this analysis because you have no clue and of course! The way to go about it is to ask questions. These questions are designed to test a candidate's ability to identify and address complex issues, make sound decisions, and think critically under pressure. While they can seem intimidating, with the right approach and mindset, you can tackle them with confidence and excel in your product management interviews.
The Preparation
Step 1 — Start Somewhere
When you have no clue as to where to begin, it's best to start somewhere, anywhere. Ask clarifying questions - since the problem statement is vague, drill into the question.
🧐 For example, if the interviewer asks you “Why do you think the profit has declined?”, the question can be broken down by asking Revenue, Costs, New customer, Conversion rate, etc.
Step 2 — Pinpoint the changing variable
Once you start asking questions, you will move from one question to the next and hence start finding some area of causality.
🧐 For example, Some common problems to look for while analyzing Profits decline and their causes are:
Falling profit results from a decline in revenue or an increase in costs.
Falling revenue results from a decrease in sales volume or a decrease in price. This could mean a shift in purchasing behavior across tiers of the product.
Falling sales volume results from a decline in new customers coming in or lower retention from existing customers.
Declining new customers results from a decline in traffic or in conversion rate. Either of these could come from repeat visitors versus new visitors to a website.
An increase in costs can be caused by an increase in fixed costs or an increase in marginal costs. These, in turn, can be caused by suppliers increasing their prices, a distributor changing their profit structure, a spike in the number of returns, or a variety of other aspects.
The decline in traffic can be the result of a decline in the number of new visitors, a decline in the number of returning visitors, or a decline in the engagement for either of those types of users.
The decline in new visitors can be the result of a decline in search traffic, a decline in referral traffic, or a decline in direct traffic
Step 3 — Diagnose the problem
This could be almost anything and totally depends on how your interviewer chooses to answer your clarifying questions but here are some problem statements to get you started:
How many product lines do we have? Has this happened in all our products?
Have competitors had similar issues, to the best of our knowledge?
Have other related products experienced the same effect?
Have we seen any seasonality?
Have we made any changes to our product line?
Have new competitors entered the market?
If we separate our customers by new vs. returning, what differences do we see?
How is customer retention?
What have customers been saying? Have we been getting more complaints recently?
Do we notice any changes in referral traffic?
Has this happened in all regions?
PS - Once you have diagnosed the problem you may be asked to resolve it and the steps below show you how to do it.
Step 4 — Prioritise and Choose a Solution
Based on the problem identified above, prepare a list of potential solutions. Prioritize the solution based on its impact and feasibility.
Consider the short-term and long-term implications of each solution, and choose the one that best addresses the root causes of the problem and aligns with the overall strategy and goals of the product or the company. Be prepared to explain and justify your choice with solid reasoning.
Step 5 — Develop an Action Plan
Outline a detailed action plan to implement your chosen solution. Specify the key steps, timelines, and resources required to execute the plan successfully.
Consider potential risks and challenges, and propose mitigation strategies. Be realistic and practical in your approach, and demonstrate your ability to think through the execution of your solution.
Step 6 — Communicate clearly
As a product manager, communication skills are crucial. Clearly articulate your thought process, assumptions, and recommendations in a concise and organized manner. Use data and evidence to support your arguments, and be prepared to defend your ideas if challenged. Demonstrate your ability to communicate effectively with stakeholders, such as engineers, designers, marketing teams, and executives.
We hope this helps you approach such questions better. Feel free to reach out at thehustlers2021@gmail.com for any questions or guidance.
Will come back with another interesting post. Bye!