Consulting, simply put, is offering advice to any individual or organization on a problem. Whenever one advises a friend on which laptop to buy or which movie to watch, one is acting as a consultant. Management consulting as expected has a more formal definition: The outsourcing of an organization’s problem solving requirements pertaining to a specific issue or group of issues (both current and in the future), to an external group, with a view to increase profitability, reduce costs or in any other way increase profitability. The global consulting industry has witnessed tremendous growth over the past decade, with revenues hitting $ 345 Billion in 2010. In an Indian context, NASSCOM forecasts the revenues of the Indian outsourcing and consulting industry to grow to $ 175 Billion by 2020. The emergence of consulting as an important cog in the corporate wheel is partly due to the ease and versatility that it offers. Any sort of problem can be handed over to a consultant, who then tries to deconstruct and solve it under certain constraints put forth by the client.
When given such an assignment, Consultants are typically expected to analyze situations objectively and arrive at an answer which presents the maximum benefit to the client. The foundations of problem solving lie in problem definition, definition of scope and choice of problem solving approach. Over the years, many tools have been developed to make the problem solving process simpler and more effective. Two of the most widely used tools are Issue Trees and the MECE framework and these are discussed here.
Template of an issue tree
The concept of issue trees is fairly straightforward. An issue tree is a substitute for a set of written statements. Writing is nothing but the conversion of thoughts into linear statements where one idea follows another. In a problem solving scenario, statements do always work well due to their limitation of linearity. Thoughts most often connect in branches, and a single idea might have multiple branches which in turn may branch further into multiple sub-ideas. This is where issues trees come in, with ideas and issues being arranged in a format which is similar to the flow of ideas from one’s mind. The major function of an issue tree is to identify the key question to be answered, and then deconstruct it to arrive at possible solution(s).
Perhaps the most difficult part of constructing an issue tree is where to start. It is extremely important to define the scope of the tree. The starting point should be wide enough to encompass all possibilities but should also exclude data which is not relevant to the problem in question. After the starting point has been decided, the next layer should consist of questions regarding how to best answer the problem above. The answer to these sub-level questions should provide the answer to the main problem. To find the answers to the sub-questions, they are further divided into more questions and possibilities until each one is satisfactorily and exhaustively answered.
Some key points to be kept in mind while drawing issue trees are :
- Deciding whether the issue is one-sided or two-sided. A one-sided issue has no objections and no arguments while two-sided issues are mostly evaluation of choices where there are arguments for and against a particular choice.
- Keeping choices, actions and arguments short helps in the readability of the tree
- Paths should never overlap as each answer results from a unique question. Even if two questions have the same answer, they should be listed separately.
After the tree is drawn, the possible solutions are assessed on the basis of the criterion given by the client. It is then the job of the consultant to pick one or more solutions which will solve the problem in the best manner possible.
MECE- Mutually Exclusive and Collectively Exhaustive.
A concept purported by McKinsey, it is the framework which many consultants use in the initial stages of solving a problem. It is often used in conjunction with the concept of Issue trees which has been discussed in paragraphs above. MECE is a principle which is used to organize information such that is mutually exclusive and collectively exhaustive. What that means is that the information is divided into categories in such a way that no two categories overlap and all categories added together exhaust all possible options. Examples include categorizing people by gender. No person can belong to more than one gender and must belong to one gender. Therefore, all options are exhausted without any overlap.
According to Ethan Rasiel, the author of ‘The McKinsey Way’, a major issues list using the MECE framework should contain no less than 2 major issues and no more than 5 major issues. This acts a broad indicator for a consultant on how to categorize information.
Mutually exclusive means that the occurrence of one event effectively precludes the occurrence of another. Continuing with the example of gender, a person cannot be both male and female at the same time. Mutual exclusivity prevents duplicity of efforts and also forces one to consider all the details to determine the differences between options which make them mutually exclusive
Collective Exhaustion means that all possible options are listed at least once. It is imperative to have complete information on a problem in order to solve it optimally and hence collective exhaustion is extremely important.
MECE thinking is perhaps the most important concept in problem solving and is the basis on which most consultants build their solutions. MECE thinking enables one to look at the big picture while being aware of the finer details at the same time.
Example of Problem solving using Issue Trees and MECE Framework
To illustrate the concepts discussed above, consider an example of a company which manufactures and sells widgets. The issue which the company wants to address is that it wants to increase its profitability. Therefore the problem statement is quite simple, “How can we increase our profitability?”.
The following issue tree solves the problem using the MECE framework
Notice how each option is listed so as to completely exhaust all possibilities. Also there are no overlaps anywhere in the whole of the issue tree.
These concepts therefore are powerful tools which enable consultants to solve problems in a time-efficient manner and reach the optimal solution which satisfies the client.
Authored by Venkat Bhargav Sreedhara, PGP01046