PROBLEM SOLVING WITH THE MCKINSEY METHOD. MCKINSEY PROBLEM SOLVING APPROACH Intuition Data ProblemSolution Business Need Competitive Organizational Financial.

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  • PROBLEM SOLVING WITH THE MCKINSEY METHOD

  • MCKINSEY PROBLEM SOLVING APPROACHIntuitionDataProblemSolutionBusiness Need Competitive Organizational Financial OperationalAnalyzing Framing Designing Gathering InterpretingPresenting Structure Buy-inImplementation Dedication Reaction Completion IterationLeadership Vision Inspiration DelegationManaging Team Client SelfFocus of todays discussion

  • FRAMING THE PROBLEM KEY TIPSStart with structure, not dataBreak the problem into MECE parts (using issue trees)Form a sound hypothesis as to the answerIdentify what conditions are necessary and sufficient to prove the hypothesis (using hypothesis trees)

  • FRAMING THE PROBLEM ISSUE TREE EXAMPLEProblem: How can the Acme Widget Company increase profits from its existing business lines?

  • FRAMING THE PROBLEM ISSUE TREE EXAMPLEHow can Acme increase profits from existing business lines?

  • FRAMING THE PROBLEM ISSUE TREE EXAMPLEHow can Acme increase profits from existing business lines? From WidgetsFrom Thrum-mats From GrommetsWhich Business Lines?

  • FRAMING THE PROBLEM ISSUE TREE EXAMPLEHow can Acme increase profits from existing business lines? From WidgetsFrom Thrum-mats From GrommetsIncrease RevenuesDecrease ExpensesWhich Business Lines?

    How?

  • FRAMING THE PROBLEM ISSUE TREE EXAMPLEHow can Acme increase profits from existing business lines? From WidgetsFrom Thrum-mats From GrommetsIncrease RevenuesDecrease ExpensesDecrease raw material costsDecrease labor costsDecrease overhead costsWhich Business Lines?

    How?

    How?

  • FRAMING THE PROBLEM ISSUE TREE EXAMPLEHow can Acme increase profits from existing business lines? From WidgetsFrom Thrum-mats From GrommetsIncrease RevenuesDecrease ExpensesDecrease raw material costsDecrease labor costsDecrease overhead costsNegotiate wage concessionsImplement a labor-saving production processWhich Product Lines?

    How?

    How?

    How?Negotiate higher productivity quotas

  • FRAMING THE PROBLEM ISSUE TREE ASSIGNMENTProblem: How can I have more money at the end of each month without incurring debt?

  • ISSUE TREES VS. HYPOTHESIS TREESIssue 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 ideasHypothesis 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

  • FRAMING THE PROBLEM HYPOTHESIS TREE EXAMPLEHypothesis: We can increase the profitability of the Acme Widget Company through a streamlined production process for thrum-mats.

  • FRAMING THE PROBLEM HYPOTHESIS TREE EXAMPLEWe can increase thrum-mat profitability with the new production process.

  • FRAMING THE PROBLEM HYPOTHESIS TREE EXAMPLEWe can increase thrum-mat profitability with the new production process. It will reduce our costs.Our organization can implement the necessary changes.We can maintain product quality while implementing the process.Why?

  • FRAMING THE PROBLEM HYPOTHESIS TREE EXAMPLEWe can increase thrum-mat profitability with the new production process. It will reduce our costs.Our organization can implement the necessary changes.We can maintain product quality while implementing the process.The process does not require new facilities.The process does not require new skills.Why?Why?

  • FRAMING THE PROBLEM HYPOTHESIS TREE ASSIGNMENTHypothesis: The best way for me to have more money at the end of the month is to spend less through comparison shopping.

  • DESIGNING THE ANALYSIS KEY TIPSLay out the issues in a written workplan by priorityIdentify the essential analyses necessary to draw conclusions on each issueDisregard analyses that are interesting but not essential to prove/disprove the hypothesisAvoid time-consuming analyses designed for more precision than necessaryBegin each analysis with the end (specific end products and timing) in mind

  • DESIGNING THE ANALYSIS WORKPLAN EXAMPLEIssue/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? YesAnalyses

    Technical specificationsList of facilities that meet new criteria

    Map of facilities gap

    Sources of required facilities/equipmentCost to fill gaps

    Effect on project rate of return

    Data Sources

    Articles, interviews

    Facilities management, interviews

    Facilities management, thrum-mat line supervisors, interviewsOperations, trade publicationsOperations, contractors, interviewsFinance department, prior analysisEnd Product

    Chart

    List

    Chart

    List

    Table

    SpreadsheetResponsibility

    Tom

    Tom

    Belinda

    Belinda

    Belinda

    TerryDue dates

    3-Jun

    5-Jun

    7-Jun

    7-Jun

    10-Jun

    12-Jun

  • GATHERING THE DATA KEY TIPSUse the workplan to focus the searchSearch the web and other public sources for essential factsIdentify and interview experts to uncover hard-to-find facts and deeper insightsConduct primary research only if unavoidable

  • INTERPRETING THE RESULTS KEY TIPSLook for the 80/20 opportunitiesAlways ask, whats the so what?Perform sanity checksDraw a chart for each insightDont make the facts fit your hypothesisPull together the story

  • BACKUP

  • ISSUE TREE SAVING MONEY. . . How can I have more money at the end of each month without incurring a debt?Increase incomeReduce expensesReceive a windfallReceive more $ from investmentsReceive more $ from workPay less for same amount of itemsBuy lessLegallyIllegallyWork more hoursMake more per hourBuy lower quality itemsShop around for specialsFoodClothingUtensilsEntertainmentTravelOtherBetter paid industryHigher job levelAdditional jobOvertimeWin lotteryInherit

  • HYPOTHESIS-DRIVEN TREE SAVING MONEYThe best way for me to have more money at the end of the month is to spend less through comparison shoppingWhy?Why?Why?Which?Comparisonshopping is an interesting opportunityChanging my lifestyle is not an optionAdditional investments do not wipe out savingsSavings are feasibleTo compensate for demanding workload, I need to invest in weekly visits to the spa and the operaMy profession does not allow me to wear lower quality clothesTo balance the junk food I eat during the week, I need at least one three-course meal on the weekendSavings in $Opportunity cost of additional time taken up by comparison shoppingNew formats offer same quality at lower priceKey spending categories have competition in new formatsHypermarketsPrice ClubHome DepotAuto mall

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