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McKinsey Problem Solving: Six steps to solve any problem and tell a…
McKinsey Problem Solving: Six steps to solve any problem and tell a persuasive story
Step #1: School is over, stop worrying about “what” to make and worry about the process, or the “how”
Step #2: Thinking like a consultant requires a mindset shift
There are two pre-requisites to thinking like a consultant. Without these two traits you will struggle:
A healthy obsession looking for a “better way” to do things
Being open minded to shifting ideas and other approaches
Key point: Creating an effective and persuasive consulting like presentation requires a comfort with uncertainty combined with a slightly delusional belief that you can figure anything out.
Step #3: Define the problem and make sure you are not solving a symptom
Before doing the work, time should be spent on defining the actual problem. Too often, people are solutions focused when they think about fixing something. Let’s say a company is struggling with profitability. Someone might define the problem as “we do not have enough growth.” This is jumping ahead to solutions — the goal may be to drive more growth, but this is not the actual issue. It is a symptom of a deeper problem.
Consider the following information:
Costs have remained relatively constant and are actually below industry average so revenue must be the issue
Revenue has been increasing, but at a slowing rate
This company sells widgets and have had no slowdown on the number of units it has sold over the last five years
However, the price per widget is actually below where it was five years ago
There have been new entrants in the market in the last three years that have been backed by Venture Capital money and are aggressively pricing their products below costs
In a real-life project there will definitely be much more information and a team may take a full week coming up with a problem statement. Given the information above, we may come up with the following problem statement:
Problem Statement: The company is struggling to increase profitability due to decreasing prices driven by new entrants in the market. The company does not have a clear strategy to respond to the price pressure from competitors and lacks an overall product strategy to compete in this marke
Step 4: Dive in, make hypotheses and try to figure out how to “solve” the problem
2 approaches
First is top-down. This is what you should start with, especially for a newer “consultant.” This involves taking the problem statement and structuring an approach. This means developing multiple hypotheses — key questions you can either prove or disprove.
Given our problem statement, you may develop the following three hypotheses:
Company X has room to improve its pricing strategy to increase profitability
Company X can explore new market opportunities unlocked by new entrants
Company X can explore new business models or operating models due to advances in technology
Once you establish the structure you you may shift to the second type of analysis: a
bottom-up approach
. This involves doing deep research around your problem statement, testing your hypotheses, running different analysis and continuing to ask more questions. As you do the analysis, you will begin to see different patterns that may unlock new questions, change your thinking or even confirm your existing hypotheses. You may need to tweak your hypotheses and structure as you learn new information.
Step 5: Make a slides like a consultant
Data matters, but stories change hearts and minds
Tip #1 — Format, format, format
Tip #2 — Titles are the takeaway
Tip #3 — Have “MECE” Ideas for max persuasion
Tip #4 — Leveraging the Pyramid Principle
https://strategyu.co/structure-your-ideas-pyramid-principle-part-1/
Step 6: The only way to improve is to get feedback and continue to practice
https://strategyu.co/mckinsey-structured-problem-solving-secrets/
Problem
Hypothesis
Analysis & research
Recommendations
8 Steps to Problem-Solving from McKinsey
Solve at the first meeting with a hypothesis
Typically, the problem-solving process would involve defining the boundaries of the problem and then breaking it down into its component elements.
MECE
Intuition is as important as facts
Do your research but don’t reinvent the wheel
When doing your research, you don’t want to get as much information as possible, you want to get the most important information as quickly as possible.
Tell the story behind the data
Prewire
Start with the conclusion
Hit singles
Respect your time