Consulting and

Advisory Services

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 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

• At the most abstract level, McKinsey develops

solutions to clients’ strategic problems.

• Aids in the implementation of those

solutions.

• There is a Central triangle of McKinsey

problem-solving process

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 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

Analyzing
- Framing
- Designing
- Gathering
- Interpreting

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 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

Presenting
- Structure
- Buy-in

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 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

Implementation
- Dedication
- Reaction
- Completion
- Iteration

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 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

Leadership
- Vision
- Inspiration
- Delegation
 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

Managing
- Team
- Client
- Self
 PROBLEM-SOLVING PROCESS:
McKINSEY WAY
Managing Leadership
• Team • Vision
• Client • Inspiration
Business Need • Self • Delegation
• Competitive
Implementation
• Organizational
• Dedication
• Financial
• Reaction
• Operational Problem Problem • Completion
Intuition
• Iteration

Data
Analyzing Presenting
• Framing • Structure
• Designing • Buy-in
• Gathering
• Interpreting
Strategic Problem-Solving Model 8
 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

Business Need
• A need on the part of the client.

Competitive
Organizational Business
Financial Need

Operational

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 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

Analyzing
• An initial hypothesis as to the solution
• Designing the analysis,
• Determining the analysis that must be done to
prove the hypothesis,
• Gathering the data needed for the analyses.
• Interpreting the results of those analyses to
see whether they prove or disprove the
hypothesis and to develop a course of action
for the client

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 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

Presenting
 A solution has to be communicated to and
accepted by the client.
 For that to happen, one must structure a
presentation so that it communicates your
ideas clearly and concisely and generates buy-
in for your solution.

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 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

Managing
• The success of the problem-solving process
requires good management at several levels.
• The problem-solving team must be properly
assembled, motivated, and developed.
• The client must be kept informed, involved,
and inspired by both the problem-solving
process and the solution.
• The individual team members must strike a
balance between life and career that allows
them to meet the expectations of the client
and the team while not “burning out.” 12
 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

Implementation
• Implementation requires the dedication of
sufficient resources within the organization
• The timely reaction of the organization to any
stumbling blocks that may arise during
implementation
• The focus of the organization on completion of
the tasks necessary for full implementation.

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 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

Implementation
• A process of iteration that leads to continual
improvement.
• That process requires reassessing
implementation and rededication the
organization to make additional changes
identified during reassessment.

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 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

Leadership
• At the nexus of solution and implementation
comes leadership.
• Those at the helm of the organization must
have conceive a strategic vision for the
organization.
• They must also provide inspiration for those in
the organization who will do the hands-on
work of implementation.
• Finally, they must make the right judgements
regarding delegation of authority in
overseeing implementation. 15
 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

Client
• In the context of McKinsy-style consulting, the
meaning of client is obvious: it’s the
organization for which we are solving a
problem.

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 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

The McKinsey Way

Feel free to be MECE
• Structure is vital to McKinsey’s fact-based
problem-solving process.
• Mutually Exclusive, Collectively Exhaustive
• Problem solving means separating a problem
into distinct, non-overlapping issues while
making sure that no issues relevant to the
problem have been overlooked.

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 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

The McKinsey Way

Don’t reinvent the wheel
• McKinsey has leveraged its experience with
structured problem solving through numerous
frameworks that help its consultants rapidly
visualize the outlines of many common
business situations.
• Develop your own problem-solving tool kit
based on your analysis.

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 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

The McKinsey Way

Every client is unique
• Frameworks are not magic bullets.
• McKinsey-ites know that every client is
unique.
• Without structure, ideas won’t stand up.
• Use structure to strengthen thinking.

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 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

The McKinsey Way

Without structure, ideas won’t stand up
• We are not blessed from birth with the ability
to think in a rigorous, structured manner; we
have to learn how.

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 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

The McKinsey Way

Use structure to strengthen your thinking
• The most common tool McKinsey-ites use to
break problems apart is the logic tree, a
hierarchical listing of all the components of a
problem, starting at the “20,000-foot view”
and moving progressively downward.
• As an illustration, let’s look at that fine old
blue-chip firm Acme Widgets.
• Let’s suppose that Acme’s board has called
your team in to help answer the basic
question “How can we increase our profits?” 21
 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

The McKinsey Way

Use structure to strengthen your thinking
• Ask: Where do your profits come from?
• The board answers, “From our three core
business units : widgets, grommets, and
thrum-mats

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 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

The McKinsey Way

Use structure to strengthen your thinking
• That is the first level of our logic tree for this
problem.
• You could then proceed down another level by
breaking apart the income streams of each
business unit, most basically into “Revenues”
and “Expenses,” and then into progressively
smaller components as you move further
down the tree

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 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

The McKinsey Way

Use structure to strengthen your thinking
• Finally you have a detailed, MECE map of
Acme Widgets’ business system, along the
lines of Figure in next slide.

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 PROBLEM-SOLVING PROCESS:
McKINSEY WAY
North
America

Widget
Europe
Sales

Grommets

Widget Asia
Revenue Leasing

Acme Widgets
Widgets Widget
Service

Expenses

Thrum-mats

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 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

From Logic Tree to Issue Tree : Hypothesis

- A hypothesis provides a road-map
- Limited Facts Draw conclusions
- Read Press articles

- Annual Reports

- Meet Your team mates

- Construct a hypothesis

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 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

From Logic Tree to Issue Tree : Hypothesis

- Which questions to ask?
- The Issue Tree – a derivative of logic tree
- Each branch is an issue or question
- A bridge between ‘structure’ and ‘hypothesis’

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 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

From Logic Tree to Issue Tree : Hypothesis

- Every Issue be divided into sub-issues
- Issues and sub-issues converge into MECE
progression.

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 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

From Logic Tree to Issue Tree : Hypothesis

Proper prior preparation
- Brainstorming to develop and test initial
hypotheses.
- Brainstorming requires that all the team
members come to the meeting prepared,
having absorbed all the facts currently known
to the team and having spent some time
thinking about their implications.

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 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

From Logic Tree to Issue Tree : Hypothesis

In a white room
- Brainstorming is about generating new ideas.
- Check your preconceptions at the door.
- Everyone in the meeting must be able to
speak his mind and share his knowledge

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 PROBLEM-SOLVING PROCESS:
McKINSEY WAY
From Logic Tree to Issue Tree : Hypothesis
In a white room
- For brainstorming sessions to succeed, follow
these rules.
- First, there are no bad ideas.

- Second, there are no dumb questions

- Third, be prepared to “kill your babies” (i.e., to

see your ideas get shot down, and to pull the

trigger yourself if necessary)
- Fourth, know when to say when; don’t let

brainstorming drag on past the point of

diminishing returns. Last and most important,
get it down on paper 31
 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

From Logic Tree to Issue Tree : Hypothesis

The problem is not always the problem
- Every consultant faces the temptation of
taking the client’s diagnosis of his problem at
face value.
- Resist this temptation.
- Just as a patient is not always aware of the
meaning of his symptoms, so are managers
sometimes incorrect in their diagnoses of what
ails their organization.

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 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

From Logic Tree to Issue Tree : Hypothesis

The problem is not always the problem
- The only way to determine whether the
problem you have been given is the real
problem is to dig deeper, ask questions, and
get the facts.
- A little skepticism early on in the problem-
solving process could save you a lot of
frustration further down the road.

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 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

From Logic Tree to Issue Tree : Hypothesis

- Hypothesis-based decision making has proved
extremely portable.
- It doesn’t require a lot of resources to
implement; it can be done in teams but, if
need be, also on one’s own; and it is
applicable across a wide spectrum of
problems.

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 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

From Logic Tree to Issue Tree : Hypothesis

An initial hypothesis will save you time
- Most people, when faced with a complex
problem, will start at the beginning and wade
through all the data until they come the end –
the solution.
- This is sometimes referred to as the deductive
approach: if A, then B; if B, then C; .. If Y,
then Z.
- When you form an initial hypothesis, you leap
all the way to Z, and it’s sometimes easier to
work backward from Z to A. 35
 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

From Logic Tree to Issue Tree : Hypothesis

An initial hypothesis will make your
decision making more effective
- Not only does the hypothesis-driven approach
make problem solving faster and more
efficient, it allows to assess multiple options
quickly.
- As a result, decision making becomes more
flexible and therefore more effective.

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 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

Sub issue: Will it

reduce our costs?

Issue: Can we
Sub issue: Can our
increase thrum-mat
organization
profitability with the
implement the
new production
necessary changes?
process?

Sub issue: Can we

maintain product
quality while
implementing the
process?

Issue Tree for Acme Widgets 37

 PROBLEM-SOLVING PROCESS:
McKINSEY WAY

Sub issue: Will it

reduce our costs?

Does the
process
Issue: Can we require
Sub issue: Can our special
increase thrum-
organization facilities?
mat profitability
implement the
with the new
necessary
production
changes?
process?
Does the
process
require special
skills?
Sub issue: Can we
maintain product
quality while
implementing the
process?

Issue Tree for Acme Widgets with Sub issues38

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