key consulting skill #1 part 3 framing complex...

Key Consulting Skill #1 – Part 3

Framing Complex Problems Issues Analysis & Logic Trees

© K.E. Homa

Proprietary Material

Preliminary Discussion Draft Incomplete Without Extensive Oral Elaboration

Professor Ken Homa Georgetown University

5 Key Consulting Skills

1. Frame complex problems

2. Generate testable hypotheses

3. Gather and analyze facts efficiently

4. Craft creative, practical solutions

5. Syndicate support and mobilize



• Grasp the context … quickly !

• Identify the key question

• Drill down to pivotal sub-issues

How to do it …

Some General Principles …

1. Frame complex problems – Issues

When confronted with a complex, hard-to-solve

problem, break it down into a structured set of

simpler, easier-to-solve questions.


General Principle – Issue Analysis




Generally called “decomposing a problem”.






Consultants call this process “issue analysis”.






Consultants call this process “issue analysis”.

An issue analysis identifies the specific questions

that need to be resolved to answer the case’s key

question (from the SCQ Analysis)*



* For details, see: Framing Complex Problems Part 2 - SCQ Analysis

When drilling down, consultants try to define

issues at a parallel level of abstraction.


General Principle – Parallel Structure



That is, start at a high, panoramic level of

abstraction across the entirety of a problem…

… and then go progressively deeper and get

more granular across all pivotal issues.





That is, start at a high, panoramic level of

abstraction across the entirety of a problem…

… and then go progressively deeper and get

more granular across all pivotal issues.

The process is called “analytical zooming” (also called “zooming in” or “drilling down”)



Start at a high level of abstraction, then get

progressively more granular

Keep thinking at the same level of granularity

across all issues, i.e. maintain a parallel

structure

Eventually, go as deep into the details as is

necessary for the most pivotal issues


General Process – Analytical Zooming

Analytical Zooming Some Analogies

1. State

2. City

3. Block

4. Street

5. House

6. Room

7. Chair

1. Panorama

2. Area

3. Surface

4. Shallow water

5. Deep water

6. Ocean bottom

7. Sub-strata

1. Fly over in an airplane

2. Hover in a helicopter

3. Skim surface in a boat

4. Submerge … snorkel

5. Dive deep … scuba

6. View bottom w/ submarine

7. Penetrate with drill

Google Maps Ocean View Ocean Exploration

In consultant-speak, the set of identified issues (or

sub-issues) should be MECE … mutually exclusive

(no overlaps) and collectively exhaustive (no

omissions).


General Principle - MECE




omissions).

That is, there should be no redundancies that might

result in duplicated analytical effort …






omissions).

That is, there should be no redundancies that might

result in duplicated analytical effort …

… and, the set of issues should be sufficiently

comprehensive that answering them do, in fact,

answer the bigger question.



An alternative to MECE …


MECE

Oft repeated consulting mantra.

MECE

Mutually Exclusive

No overlaps

MECE

Mutually Exclusive Collectively Exhaustive

No overlaps No omissions

Consider a more practical,

more real world variant …

MECE MICS

MICS

Mutually Independent

MICS


Minimized overlaps

Think: analytical tasks

MICS


Assign “chunks” of work with

no duplicated (wasted) effort.

Minimized overlaps


MICS

Mutually Independent Collectively Sufficient

Minimized overlaps


MICS

Mutually Independent Collectively Sufficient

If these questions are answered,

will the key question, in fact, be

answered?

Minimized overlaps


Warning • MECE is common consulting jargon

• MICS is a “Homa-ism’ that reflects

personal observations

• Both ME vs. MI and CE vs. CS are

conceptually debatable :

– “Doesn’t MI tolerate overlap among issues?”

Answer: Yes -- but it’s impossible to eliminate all overlaps

– “Doesn’t CS allow some issues to be ignored?”

Answer: Yes -- but only ones that don’t matter

Bottom line: It’s practical to think MICS, but

always speak MECE (especially in interviews)

Summary: Key Concepts …


• Issues Analysis … break a complex problem into a related

set of simpler questions (i.e. decompose the problem)

• Analytical Zooming (a.k.a. “drilling down”, “zooming in”)

start at a high level of abstraction, then get progressively

more granular across the range of identified issues

• Parallel Structure … think about issues at the same level

of abstraction until pivotal issues are identified … then go as

deep as necessary on them

• MECE … identify issues that are mutually exclusive (no

overlaps) and collectively exhaustive (no omissions).


Key Concepts

So, how to do an Issues Analysis?


A fundamental analytical method:

The 5 Whys


• Generally credited to Toyota … part of their industry-leading

Total Quality (later 6-Sigma) initiatives


Analytical Method - The 5 Whys



• A sequential question-asking technique used to drill down

on the cause-and-effect relationships underlying a particular

problem.







problem.

• Simply stated: Keep asking “why?” until the stream of

thinking is exhausted … then ask “why?” one more time.







problem.



• Conventional wisdom is that 5 is the magic number of

drill-downs typically required to get to the root of a complex

problem.



Examples =>

Problem: The car won’t start.

Why? - The battery is dead.

Why? - The alternator is not functioning.

Why? - The alternator belt has broken.

Why? - The alternator belt was well beyond its

useful service life and not replaced.

Why? - The vehicle was not maintained according

to the recommended service schedule.

Why? - Replacement parts are not available because

the car is too old (root cause)

Solution - Find a creative source for replacement parts.

Salvage from junk yard? Make one? Work-around?


Analytical Method - The 5 Whys - Example

Source

http://en.wikipedia.org/wiki/5_Whys



Source Karn Bulsuk

http://www.bulsuk.com/2009/03/5-why-finding-root-causes.html



© Karn G. Bulsuk click for a detailed walk-thru of this example

http://www.bulsuk.com/2009/07/5-why-analysis-using-table.html

The 5 Whys – Analytical Tools …


Method: Spreadsheet Tables



Analytical Method - The 5 Whys - Tools

© Karn G. Bulsuk

5 Whys Spreadsheet

• Detailed Walk-thru of prior example Discussion Spreadsheet

• Excel Template for doing a 5 Whys Spreadsheet

http://www.bulsuk.com/2009/07/5-why-analysis-using-table.html

https://sites.google.com/site/karnblog/5why/5-whyTableAnalysis-Step-by-Step.xlsx?attredirects=0

https://sites.google.com/site/karnblog/5why/5-whyTemplate.xlsx?attredirects=0

Method: Fishbone Diagram


• Originally developed by Kaoru Ishikawa to visualize the

causes of a specific problem

• Sometimes called an Ishikawa or Cause & Effect Diagram

• Used to examine why something happened or might

happen by breaking an issue into smaller, more easily

understandable categories.

• In essence, a visual representation of a 5 Whys Analysis

• Called Fishbone Diagrams because a completed diagram

ends up looking like a fish's skeleton


Analytical Method – Fishbone Diagram

Example => click for a walk-thru of

the Fishbone methodology

http://www.bulsuk.com/2009/08/using-fishbone-diagram-to-perform-5-why.html



Analytical Method - The 5 Whys - Tools

© Karn G. Bulsuk

click for a walk-thru

of this example

5 Whys Fishbone

Enlarged view =>


5 Whys – Fishbone Diagram

Summary: 5 Whys & Fishbone Diagrams


• An sequential question-asking technique used to drill

down on the cause-and-effect relationships underlying a

particular problem.





particular problem.







particular problem.



• Two main analytical devices to facilitate:

– Spreadsheet Tables

– Fishbone Charts



Analytical Method: Logic Trees


• Logic Trees are close cousins to Fishbone diagrams

… sometimes called Issue Trees or ROI Trees.

• Logic Trees are foundational to consulting:

“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.”

McKinsey Mind

• Sometimes, logic trees are explicitly documented in

writing or digitally … other times, they are just part of a

consultant’s mindset.


Analytical Method – Logic Trees

• Front-end of the problem solving process

• Systematic drill down from an “aggregate” Visual depiction of text outlines … with analytical rules

• Key factors, components & relationships Structuring Options: Parts, Cause & Effect, Groups

• Many variations … and permutations Descriptive …. what?

Diagnostic ..… why?

Prescriptive … how?



When using logic trees, the trick is finding

or crafting one that is applicable to the

specific situation …



The quintessential logic tree

is the ROI-Profitability Tree …



• Useful for analytically dissecting profitability

• Isolates key variables and specifies links

• Provides framework for financial modeling

• Many variations and permutations *

• Again, the trick is finding or crafting one that is

applicable to the specific situation


Analytical Method – ROI Trees

Basic ROI Tree=> * See FMC Toolkit: ROI Trees for

more information & examples

ROI

Profit

Investment

Revenue

Cost

Price

Volume

Var.Cost

Per Unit

Variable

Cost

Fixed

Cost

.

Capacity

Basic ROI Tree

Some variants of the

basic ROI Tree…

How can

Acme

increase

profits from

existing

business

lines?

From

Widgets

From

Thrummats

From

Grommets

Increase

Revenues

Decrease

Expenses

Decrease

raw

material

costs

Decrease

labor

costs

Decrease

overhead

costs

Negotiate wage concessions

Implement a labor-saving

production process

Which Product Lines?

How?

How?

How?

Negotiate higher productivity

quotas

Source: McKinsey Mind

ROI Tree Example

Profit Improvement

Let’s personalize an ROI Tree

to be sure it hits home…

Issue Tree Example

Saving Money

How? How?

. . .

How? How?

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

Increase income

Reduce expenses

Receive a windfall

Receive more $ from investments

Receive more $ from work

Pay less for same amount of items

Buy less

Legally

Illegally

Work more hours

Make more per hour

Buy lower quality items

Shop around for specials

• Food • Clothing • Utensils • Entertainment • Travel • Other

Better paid industry

Higher job level

Additional job

Overtime

Win lottery

Inherit

Issue Tree Example

Saving Money

How? How?

. . .

How? How?


Increase income

Reduce expenses

Receive a windfall




Buy less

Legally

Illegally

Work more hours

Make more per hour





Higher job level

Additional job

Overtime

Win lottery

Inherit

.

Issue Tree Example

Saving Money

How? How?

. . .

How? How?


Increase income

Reduce expenses

Receive a windfall




Buy less

Legally

Illegally

Work more hours

Make more per hour





Higher job level

Additional job

Overtime

Win lottery

Inherit

Issue Trees address “how” questions,

Hypothesis Trees conjecture “why?”

General Principle

82

The best way for

me to have more

money at the end of

the month is to

spend less through

comparison

shopping

Why? Why?

Why? Which?

Comparison

shopping is

an interesting

opportunity

Changing

my lifestyle

is not an

option

Additional

investments

do not wipe

out savings

Savings

are feasible

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

Savings in $

Opportunity cost of

additional time

taken up by comparison

shopping

New formats offer

same quality at

lower price

Key spending

categories have

competition in

new formats

Hypermarkets

Price Club

Home Depot

Auto mall

Hypthesis Tree Example

Saving Money

Logic Trees aren’t restricted to just

financial analyses … they’re also

used to structure strategic ideas.

General Principle

Source: Minto, Pyramid Principle

Logic Tree Example

Strategic Options

Another Strategic Logic Tree example:

Growing a business from its core …

Start with the first level:

‘adjacency categories”

Then expand each adjacency

category into sub-categories

Logic Trees: Tricks of the trade …

• Note that many frameworks are, in essence,

logic trees that have been codified for re-use.



• Also note that logic trees are simply visual

depictions of traditional hierarchal outlines



Conclusion I. Big Idea #1

A. Sub Point #1 1. Detail Point #1

2. Detail Point #2

3. Detail Point #3

B. Sub Point #2

C. Sub Point #3

II. Big Idea #2

III. Big Idea #3

If you’re more comfortable with words than pictures, just use outline format Note: More people ‘process’ visuals (pictures) better than semantics (words)

• Finally, note that logic trees are a useful device for crafting presentations … i.e., for organizing ideas into a storyline prior to “ghosting” a presentation.



Conclusion I. Big Idea #1

A. Sub Point #1 1. Detail Point #1

2. Detail Point #2

3. Detail Point #3

B. Sub Point #2

C. Sub Point #3

II. Big Idea #2

III. Big Idea #3

Outline Logic Tree “Ghost” Deck*

* A Ghost Deck is a preliminary draft of a presentation with headers & footers

that lay out the storyline … and representations of likely supporting charts.

For example, here’s a Logic Tree

used to develop this slide deck …


Analytical Method: Mind Mapping … a technique for creating Logic Trees


Mind Mapping is a technique for analysts who

work more effectively with visuals (pictures) than

semantics (words) …

The preceding visual representations of the typical

matrix format and of the traditional outline format

are examples of Mind Maps


Analytical Method – Mind Mapping

The basic Mind Mapping method:

1. Brainstorm a ‘laundry list’ of ideas (e.g. on a whiteboard)

2. Group ideas into logical categories, i.e. connect related ideas (e.g. chronological sequence, by category, by function)

3. Order the categories in a logical arrangement and order the ideas

within each category

4. Eliminate duplicate ideas, consolidate small ideas into bigger ideas,

5. Draw a visual layout of the ideas … a Mind Map

6. Inspect the Map for completeness (no gaps), parallel structure (same

levels of abstraction), and logical relationships (e.g. cause & effect)

7. Iteratively revise the Mind Map as necessary to make it right !



• Laundry List Field of Vision (8-1/2 x 11, whiteboard)

Shorthand entries

Loosely structured

(Obvious categories, misc.)

• Scan & Sort Clear the debris

Connect the dots

Iterate and refine

• Logic Tree

For details, view online

tutorial: Mind Mapping


Good News

There are apps and software packages that

facilitate the Mind Mapping process …



Good News

There are apps and software packages that

facilitate the Mind Mapping process …



Really Good News

Highly functional apps are available FREE !

Get this for your iPad and start

playing with it … it’s free!

Once you become a believer

… also free, more functionality

Mind Mapping’s conceptual leader … and the

gold standard in functionality and price (~$500)

What we’ve covered …


• Issues Analysis

• Drilling Down

• Analytical Zooming

• Parallel Structure

• MECE


Key Concepts

• Issues Analysis

• Drilling Down

• Analytical Zooming

• Parallel Structure

• MECE


Key Concepts

• The 5 Whys

• Fishbone Diagrams

• Logic Trees

• ROI Trees

• Mind Mapping

Methods

Putting everything back into context …




2. Generate testable hypotheses

3. Gather and analyze facts efficiently

4. Craft creative, practical solutions

5. Syndicate support and mobilize



• Grasp the context … quickly !

• Identify the key question

• Drill down to pivotal sub-issues

How to do it …

Key Issues Analysis (KIA) identifies and

documents important sub-issues, related

hypotheses and required analyses …




hypotheses and required analyses.

• Drill down from the SCQ Question

• MECE: Mutually Exclusive (no overlaps),

Collectively Exhaustive (no gaps)

• Several supportive methods, including

“5 Whys” and Logic Trees (Mind Maps)

Issues Hypotheses Analyses

Key Issues Analysis (KIA)

Key Question:

• For efficiency, consultants’ problem solving

methodology is generally hypothesis-driven

• That is, they conjecture likely answers and

then try to validate or refute them

• Hypotheses are subject to iterative revision

as facts and insights become available.

• Process focuses analytical efforts (versus

broad scope exploratory investigations)

Minto, Pyramid Principle



Key Question:

• Goal: proving or disproving hypotheses

• Fact-gathering via info searches, interviews

and raw data collection.

• Extensive data set “mashing” and “cutting

the data” … e.g. clustering

• Continual 80-20 re-focusing for efficiency

• Mindset: insights, not just calculations



Key Question:

KIA: Boiling it down …




If you could only ask a vital few questions

(say, 4 to 6 of them), what would they be?

Sufficient …




If you could only ask a vital few questions

(say, 4 to 6 of them), what would they be?

If those questions are answered, will you

have a certain answer to the Key Question?

Quality checking a KIA …

Key Issues Analysis Good KIAs are …

• High Level … client and case-specific

Don’t get too deep into the weeds until the need arises

… think at an appropriately high level of abstraction.

Note: Eventually, as a study progresses, it becomes

appropriate to work at the tactical or operational

levels of abstraction, i.e. to dive deeper

• High Level … client and case specific

• Parallel … hierarchal logic structure

Issues should all be at approximately the same level of abstraction.

Extreme example: “Should we be in this business?” and “Where should

we locate the factory?” are at radically different levels of abstraction.




• Answerable … yes or no, or a number


Common guidance: The answer to an

issue should always be “yes” or “no”

More practically, it just shouldn’t be open-ended.

Often, the answer is a number, or a range of

numbers, e.g. “what’s the breakeven point?”




• Sequential … if “no”, rest of Qs are irrelevant

Issues should ordered so that disqualifying issues are considered first.

For example: Generally, if a market is unattractive, it doesn’t matter if the

company has a capability to serve the market … so the company’s capability

doesn’t need to be analyzed






• Assignable … tied to analytical tasks

Keep in mind that the KIA ties directly to work planning.

So, issues should be “chunked” into analytical tasks.






• Assignable … tied to analytical tasks

And, Collectively Sufficient to answer the

Key Question (and-or the client’s question)


Closing one more loop …


Flashback

The pivotal case Question from the SCQ Analysis

is a direct linkage to, and the starting point for,

the Key Issues Analysis (KIA) …

And, the Key Issues Analysis (KIA) is often

the basis for clarifying or redirecting the

SCQ’s pivotal case question …

Also, the Key Issues Analysis (KIA) is

the basis for the case’s work plan …

Key Consulting Skill #1 – Part 3

Framing Complex Problems Issues Analysis & Logic Trees

© K.E. Homa

Proprietary Material

Preliminary Discussion Draft Incomplete Without Extensive Oral Elaboration

Professor Ken Homa Georgetown University

key consulting skill #1 part 3 framing complex...

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