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PROBLEM SOLVING WITH THE MCKINSEY METHOD






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PROBLEM SOLVING WITH THE MCKINSEY METHOD. MCKINSEY PROBLEM SOLVING APPROACH. Focus of today’s discussion. Managing Team Client Self. Leadership Vision Inspiration Delegation. Business Need Competitive Organizational Financial Operational. Implementation Dedication
PROBLEM SOLVING WITH THE MCKINSEY METHOD

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Slide 1

PROBLEM SOLVING WITH THE MCKINSEY METHOD

Slide 2

MCKINSEYPROBLEM SOLVING APPROACH

Focus of today’s discussion

  • Managing

  • Team

  • Client

  • Self

  • Leadership

  • Vision

  • Inspiration

  • Delegation

  • Business Need

  • Competitive

  • Organizational

  • Financial

  • Operational

  • Implementation

  • Dedication

  • Reaction

  • Completion

  • Iteration

Problem

Intuition

Solution

Data

  • Analyzing

  • Framing

  • Designing

  • Gathering

  • Interpreting

  • Presenting

  • Structure

  • Buy-in

Slide 3

FRAMING THE PROBLEM – KEY TIPS

  • Start with structure, not data

  • Break the problem into “MECE” parts (using issue trees)

  • Form a sound hypothesis as to the answer

  • Identify what conditions are necessary and sufficient to prove the hypothesis (using hypothesis trees)

Slide 4

FRAMING THE PROBLEM – ISSUE TREE EXAMPLE

Problem: How can the Acme Widget Company increase profits from its existing business lines?

Slide 5

FRAMING THE PROBLEM – ISSUE TREE EXAMPLE

How can Acme increase profits from existing business lines?

Slide 6

FRAMING THE PROBLEM – ISSUE TREE EXAMPLE

Which Business Lines?

From Widgets

How can Acme increase profits from existing business lines?

From Thrum-mats

From Grommets

Slide 7

FRAMING THE PROBLEM – ISSUE TREE EXAMPLE

Which Business Lines?

How?

From Widgets

How can Acme increase profits from existing business lines?

Increase Revenues

From Thrum-mats

Decrease Expenses

From Grommets

Slide 8

FRAMING THE PROBLEM – ISSUE TREE EXAMPLE

Which Business Lines?

How?

How?

From Widgets

Decrease raw material costs

How can Acme increase profits from existing business lines?

Increase Revenues

From Thrum-mats

Decrease labor costs

Decrease Expenses

From Grommets

Decrease overhead costs

Slide 9

FRAMING THE PROBLEM – ISSUE TREE EXAMPLE

Which Product Lines?

How?

How?

How?

From Widgets

Decrease raw material costs

How can Acme increase profits from existing business lines?

Increase Revenues

Negotiate wage concessions

From Thrum-mats

Decrease labor costs

Decrease Expenses

Negotiate higher productivity quotas

Implement a labor-saving production process

From Grommets

Decrease overhead costs

Slide 10

FRAMING THE PROBLEM – ISSUE TREE ASSIGNMENT

Problem: How can I have more money at the end of each month without incurring debt?

Slide 11

ISSUE TREES VS. HYPOTHESIS TREES

  • Issue trees identify all potential ideas

    • Issue trees ask “How” we could meet a desired outcome

    • Issue trees are excellent for organizing ideas in a “MECE” manner

    • Complete issue trees uncover all potential ideas

  • Hypothesis trees focus and build up an argument or conclusion

    • Hypothesis trees ask “Why” we believe something to be true

    • Hypothesis trees are excellent for narrowing down investigation to essentials

    • Complete hypothesis trees build up a complete argument

    • Hypothesis trees focus on the “so what” of any data that is presented

Slide 12

FRAMING THE PROBLEM – HYPOTHESIS TREE EXAMPLE

Hypothesis: We can increase the profitability of the Acme Widget Company through a streamlined production process for thrum-mats.

Slide 13

FRAMING THE PROBLEM – HYPOTHESIS TREE EXAMPLE

We can increase thrum-mat profitability with the new production process.

Slide 14

FRAMING THE PROBLEM – HYPOTHESIS TREE EXAMPLE

Why?

It will reduce our costs.

We can increase thrum-mat profitability with the new production process.

Our organization can implement the necessary changes.

We can maintain product quality while implementing the process.

Slide 15

FRAMING THE PROBLEM – HYPOTHESIS TREE EXAMPLE

Why?

Why?

It will reduce our costs.

The process does not require new facilities.

We can increase thrum-mat profitability with the new production process.

Our organization can implement the necessary changes.

The process does not require new skills.

We can maintain product quality while implementing the process.

Slide 16

FRAMING THE PROBLEM – HYPOTHESIS TREE ASSIGNMENT

Hypothesis: The best way for me to have more money at the end of the month is to spend less through comparison shopping.

Slide 17

DESIGNING THE ANALYSIS – KEY TIPS

  • Lay out the issues in a written workplan by priority

  • Identify the essential analyses necessary to draw conclusions on each issue

  • Disregard analyses that are “interesting” but not essential to prove/disprove the hypothesis

  • Avoid time-consuming analyses designed for more precision than necessary

  • Begin each analysis with the end (specific end products and timing) in mind

Slide 18

DESIGNING THE ANALYSIS – WORKPLAN EXAMPLE

Responsibility

Tom

Tom

Belinda

Belinda

Belinda

Terry

Due dates

3-Jun

5-Jun

7-Jun

7-Jun

10-Jun

12-Jun

Issue/Hypothesis

Can we implement the new production process? Yes

Does the process require new facilities? No

If it does require new facilities, can we acquire them economically? Yes

Analyses

Technical specifications

List of facilities that meet new criteria

Map of “facilities gap”

Sources of required facilities/equipment

Cost to fill gaps

Effect on project rate of return

Data Sources

Articles, interviews

Facilities management, interviews

Facilities management, thrum-mat line supervisors, interviews

Operations, trade publications

Operations, contractors, interviews

Finance department, prior analysis

End Product

Chart

List

Chart

List

Table

Spreadsheet

Slide 19

GATHERING THE DATA – KEY TIPS

  • Use the workplan to focus the search

  • Search the web and other public sources for essential facts

  • Identify and interview experts to uncover hard-to-find facts and deeper insights

  • Conduct primary research only if unavoidable

Slide 20

INTERPRETING THE RESULTS – KEY TIPS

  • Look for the 80/20 opportunities

  • Always ask, “what’s the so what?”

  • Perform sanity checks

  • Draw a chart for each insight

  • Don’t make the facts fit your hypothesis

  • Pull together “the story”

Slide 21

BACKUP

Slide 22

How?

How?

How?

How?

ISSUE TREE – SAVING MONEY

Inherit

. . .

Legally

Receive a windfall

Win lottery

Illegally

Overtime

Receive more $ from investments

Increase income

Work more hours

Additional job

Receive more $ from work

How can I have more money at the end of each month without incurring a debt?

Higher job level

Make more per hour

Better paid industry

Pay less for same amount of items

Buy lower quality items

Reduce expenses

Shop around for specials

Buy less

  • Food

  • Clothing

  • Utensils

  • Entertainment

  • Travel

  • Other

Slide 23

HYPOTHESIS-DRIVEN – TREE SAVING MONEY

Why?

Why?

Why?

Which?

Hypermarkets

Key spending categories have competition in new formats

Price Club

Home Depot

Savings

are feasible

Auto mall

New formats offer same quality at lower price

Comparison

shopping is

an interesting opportunity

Opportunity cost of additional time taken up by comparison shopping

The best way for me to have more money at the end of the month is to spend less through comparison shopping

Additional investments do not wipe out savings

Savings in $

Changing my lifestyle is not an option

To compensate for demanding workload, I need to invest in weekly visits to the spa and the opera

My profession does not allow me to wear lower quality clothes

To balance the junk food I eat during the week, I need at least one three-course meal on the weekend


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