Analytical and consulting roles have always tested structured thinking, but we are finding that more and more roles in finance are expected to answer Fermi-style questions at the interview stage. With these questions, interviewees are expected to tell hiring managers the steps they took to reach their response, showing them how they think rather than what they know.
What structured thinking is
Structured thinking requires us to solve problems in stages. We often rely on it without realising: Whenever you have needed to break a large project into components, or prioritise, you will likely have used a form of structured thinking. At your interview, you will be expected to present your reasoning clearly.
The finance industry thrives on uncertainty. Interviewers want to see whether you can create a rigorous structure around that uncertainty before reaching your conclusions. This is why questions that test structured thinking are so popular; the process is a necessary skill for a range of specialist areas, from communication and commercial understanding to analysis and numerical confidence. Everyone needs logic and clarity in their approach, and to be able to defend their thinking.
Example questions that test structured thinking
Questions that test structured thinking assess how you organise information, if you can ask relevant clarifying questions, your comfort in making assumptions about the data given to you, and how much logic you use in reaching a solution. Depending on the role, interview questions that test structured thinking can be:
- Estimate how many cups of tea are sold in the City of London every day
- Explain how you would value a business with limited information
- Estimate how many tennis balls would fill a tennis court
- Walk me through how you’d build a financial forecast
As you can see, a broad range of questions can test structured thinking, so we cannot prep for one alone! What we can do instead is prep for the steps you should take before reaching your solution.
The best framework for finance problem-solving
First, be aware that interviewers will expect you to ask clarifying questions before you get started. Use this time to gather as much data your interviewers are prepared to give. If you are looking at valuing a business, you would want to consider the company’s revenue drivers, growth prospects, competitive position, industry dynamics, and so on.
Once you have the data, clarify your assumptions. This is often the moment when interviewees panic! But a good estimation means making reasonable assumptions. If you were solving the cups of tea question, you’ll want to estimate the number of people who work in the City, and how many of those people are tea drinkers, then estimate how many people are likely to purchase a cup of tea from a cafe rather than make one in the office or at home. Explain every one of these assumptions, and remember that an unusual approach or insight is a great way to impress your interviewer! If you know something based on experience, don’t be afraid to tell them!
Prioritise the steps you need to make. Which information impacts the others? Outline these steps logically and carefully. The key here is that your interviewers can follow and understand the logic behind the steps you’re taking.
Finally, you should be able to plug your data into the steps you outlined. Make your calculations and summarise your findings to the hiring manager. At this point, we highly recommend making a recommendation as well! Ask yourself what business purpose might have been behind the question. The answer may be obvious for a question that concerns evaluating a company, but for the “cups of tea” question you might put yourself in the shoes of someone looking to open a tea shop, and make a recommendation on where or when to open based on your findings.
So, to recap:
- Ask clarifying questions and gather your data
- State your assumptions
- Prioritise your steps
- Summarise your findings
- End with a recommendation
What not to do when answering these questions
“Structured” is right there in the name, so try not to jump straight to conclusions! This is not the time to hide your thought process, either: assume your hiring manager is interested! Explain everything, even if you think you’re over-explaining. Avoid chasing the right answer and focus instead on the journey towards it.
Another point to consider: These questions require deep thinking, so hiring managers fully expect you will need time before responding. Good interviewees pause to think! Don’t jump straight in with an answer, if only to fill the silence.
How to practice structured thinking
Technically, you are practising structured thinking every day! The key is to be conscious about the steps you take. Why do you always make your breakfast that way; are your steps logical or based on something else? What caused you to make the assumptions you did when starting a new business project? What route do you take home from work, and why?
Business communications writers are trained to write clearly and logically, often interpreting difficult or technical ideas for a wider audience. So, we think some of the best ways to train yourself to think in structured ways is to read annual reports and business case studies. These tend to explain the steps taken to reach a consensus, and they provide the method used to do so. Explaining concepts to someone who might not know your field is another trick that great communications consultants use to make sure their message stays clear and logical to a broad audience.
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For hiring managers, showing evidence of structured thinking is a strong signal of how you will perform in the future, so make sure you practice! If you are looking for more help with preparing for an interview, follow us on LinkedIn and Instagram, and take that one extra step towards securing the career you have always wanted.