Correct the misunderstanding once you recognize it. Continuing to solve the wrong problem usually creates a larger issue than briefly resetting.

State what you now understand the objective to be, confirm it with the interviewer and explain how that changes the direction of your analysis. You do not need to restart every piece of work from zero.

For example: "I realize I framed this as a revenue-growth question, but the client is actually trying to improve profit. I would keep the demand analysis we have, but now add cost drivers and margins."

The goal is to recover transparently and efficiently. Strong candidates adjust when the problem changes or when they discover their own misread. For more detail, see the case interview guide.

I'd rather reset the objective than spend another ten minutes solving the wrong problem.