Cracking your next PM Interview: Business understanding

Even though most companies will not conduct a separate “business understanding” interview round, almost all will test you on this muscle. This part of the interview process is also called by other names such as “strategic insights” or “product strategy” and you are likely to be tested on following aspects…

Think broad for strategy!

1. Analytical skills
2. Strategic thinking
3. Understanding of the markets
4. Understanding of key business terms
5. Understanding of the company you are interviewing for

Sample questions that get asked in this interview round…

If you are category manager for kids category and are tracking the performance of your category through a dashboard — how would you like that dashboard to look like?

Should an e-commerce company like ours enter a business of appliances servicing?

Why do you think a walmart acquired flipkart and why did flipkart agree to be acquired?

What should Netflix do in India to make it successful?

How to prepare for this round?

As I have repeated this line through out this series, no one is actually looking for a right answer. They are looking to see how do you approach this problem? what are the assumptions you are taking? Do you understand the market well? Do you understand the changing user behaviours?

You cannot prepare for this kind of round in a week or month. You need sustained readings on business and product over the period of time. Here are some key readings/podcasts/videos I suggest

1. Stratechery by Ben Thomson
2. Planet money a podcast on Macro/Micro economy
3. Earning call transcripts of the company — here is a sample
4. Google strategy tear down
5. Paul Grahams essays
6. How I built this by GuyRaz
7. Strategy tear downs

In the interview…

Start with why: Before you start answering the question, ask yourself what would be the objective that the problem, when solved, will achieve. For eg., if you were a category manager trying to build a dashboard what are the problems you are looking to solve with that dashboard? Growth, churn etc.

Core business: Have a strong understanding of the core business of the company. What is the vision? What is the mission? know about concepts like market share, cannibalisation, network effects, pricing strategies etc

Don’t forget your Porter: Its important to look at the problem posed from the industry POV and apply the Porter 5 forces. For eg., analyse the food delivery business from an industry point of view before you get to the specifics of the company.

Know your balance sheet: While you are not expected to know all the terms of the business, but you should have an understanding of what are the contributors of cost, etc.

Know the markets: Increasingly products are being launched with specific markets in mind, so its important to have an understanding of challenges and constraints of different markets. For eg., Privacy is a bigger concern in the developed markets than in developing markets which tend to focus more on the cost challenges.

Important tips

1. Don’t hold back on your big ideas. They might sound crazy but if you are prepared to explain the rationale, these might help you stand out from other people vying for the same role.
2. Its good to know the technologies that are changing the future (Bitcoin, metaverse etc), but be sure to not throw in jargons. You will be in a rabbit hole before you know it.
3. While you don’t have to remember and recite the actual numbers, be close them than being far away. For eg., revenue, profit, market share etc.
4. If you are discussing about a failed strategy, be respectful in your thoughts. You don’t have the full context.
5. If the interviewer is making corrections or leading you to another direction, give it due importance. Take a pause and rethink.
6. If you are not aware of any terms that the interviewer used or any news that interviewer is talking about — don’t be afraid to clarify.