McKinsey 7 Step Problem Solving Process - an overview
If you haven't, please read my Why Structured Problem Solving? post before digging into this one.
So who or what is “McKinsey”? McKinsey & Company is a global strategy consulting firm. McKinsey assists organisations like Fortune 500’s in solving really complex strategic problems. McKinsey’s model does not rely on great expertise. McKinsey generally hires generalists with good problem solving intrinsics and arms them with methodologies, knowledge, structures and networks of experts to go out and assist companies on their strategic opportunities and issues. McKinsey is consistently ranked as one of the top companies to work for by ivy league business school students.
McKinsey has developed and generated a wealth of well known concepts and frameworks over the years. McKinsey publishes McKinsey Insights and the McKinsey Quarterly to publicise its current thinking on strategic topics.
The 7 Step Problem Solving Framework
As discussed in my Problem Solving Overview article, using a good problem solving methodology can greatly enhance the effectiveness of collaboration and the robustness of a holistic solution. The McKinsey 7 Step Framework is a relatively simple but effective methodology to employ to get the most out of your problem solving process. Although it is quite simple, mastery of the tools and concepts takes a lot of experience and practice.
This article aims to introduce the 7 steps in a little more detail and provide a quick overview of the philosophy behind each step in the process. My individual articles on the individual steps go into more detail on the tools commonly used, some personal advice and criteria for success.
Before I go into the individual steps, it is important to remember that this process is iterative. The 7 steps are a structured way to diverge and converge in the problem solving process. As you explore different and new areas of the problem, analyse more (step 5) and generate more insights (step 6 and 7), you refine your thinking and may find other better ways to structure the problem and new areas to analyse.
There is no right or wrong way to apply the steps or the tools. Considering the philosophy of each step – I generally ask myself the question “What is helpful in this step of the process to push the problem solving further and gain greater insight into the problem and solution space?”.
Here is an overview of the framework taken directly from a freely available McKinsey paper. The paper contains a wealth of information. The articles I publish aim to add more flavour and tips and tricks to the paper’s comprehensive explanations.
STEP 0: COLLABORATE, COLLABORATE, COLLABORATE
As discussed in my overview article, the value of the process is only as valuable as the participants and contributors to the process. The little “COMMUNICATIONS” ribbon in the diagram reinforces this.
Make sure you have the right people on the team to bring sufficient knowledge, discipline, structure and creativity to the problem solving process – then use the right tools to help the team work together effectively!
Taken from freely available http://www.scribd.com/doc/44545144/727940-the-McKinsey-Approach-to-Problem-Solving-df
STEP 1: DEFINING THE PROBLEM
I have been involved in numerous situations where a group of people have met on an issue, left the meeting to do further problem solving, come back a week later and realised that each individual was on a different page regarding what the problem was or what was to be done about it. Jumping into solution mode or chasing unsound hypotheses is a massive waste of organisational time.
Defining the problem is a structured step in the problem solving process to make sure everyone is, literally, on the same page.
The Problem Statement is a specific statement developed by the team that captures the essence of the problem, as it is understood at the outset. This statement become the guiding beacon for the team on their quest to understand the problem and the solution space.
A lot of work needs to go into defining a SMART problem statement – a statement which is:
Realistic and Relevant
As part of developing the Problem Statement, the team should explore some underlying aspects to create an aligned view of the problem within the team. These aspects include:
- Context and existing perspectives on the nature of the problem
- Criteria for success – what impact or change is desired
- Stakeholders and sources of information
- Scope of solution space and if anything should be explicitly removed from exploration up front
- Barriers to implementation that may significantly hamper an effective solution or a sub-set of the solution space
Underlying philosophy: The value of the Problem Definition step in the process is the rigorous exploration and discussion of the nature of the problem, symptoms observed, criteria for success. Having the perfect problem statement is secondary to having an aligned view on the team of what is really supposed to be solved and why solving it is important.
STEP 2: STRUCTURING THE PROBLEM
Making sense of a big, hairy strategic problem requires breaking the problem down. Structuring the problem is a critical step both conceptually and analytically. Breaking the problem down into relevant parts that can be analysed intuitively is an important outcome. Equally important is the conceptual exercise of making sure the team is considering all aspects of the problem and potential solution space.
Structuring the problem is an important divergent step in the process. The d.school concept of “Yes, and…” is extremely applicable in this step. We want to add components, aspects and perspectives on the problem and solution space in this step. It is imperative to suspend judgement in this phase of the process. Prioritisation and analysis will come later.
The most difficult part of this step is the bread of the divergence. I often see people structuring a very narrow view of a problem into very neat and analytical chunks. That’s 50% of the objective. It is equally important to employ tools and discipline to sufficiently expand the conceptual understanding of the problem. McKinsey consultants have a very large hammer called MECE that they employ in this step.
MECE stands for Mutually Exclusive and Collectively Exhaustive – no gaps and no overlaps.
No overlaps so that aspects of the problem can be prioritised and elegantly analysed without confounding other areas of the problem.
No gaps so that all possible aspects of the problem are accounted for and, hence, all potential solutions are considered.
Obviously this is academic and impossible to scientifically apply in practice. However, it is an important fundamental philosophy of this step in the process and every effort should be made to be as MECE as possible.
Note: Traditional mind mapping with coloured pens and artistic flair IS NOT structuring the problem. Mind mapping, in my experience, is artistic listing.
Underlying philosophy: Conceptually and analytically mapping out the different aspects of the problem (breaking the problem down) in a structured way helps us explore all areas of the problem and possible solutions in a logical way. Make every effort to be as MECE as is helpful.
STEP 3: PRIORITISE AREAS FOR DEEPER EXPLORATION
There are only 24 hours in a day. And we seldom have decades to solve a problem. Hell, we seldom have half as much time as we would like to solve a problem. Time is money – especially when we are dealing with strategic opportunities and threats! Prioritising which trees the team is going to bark up, who is doing the barking and how they are going to bark is critical to an efficient problem solving process and resource leverage.
Prioritising strategic issues is inherently difficult as there is a fair amount of art and judgement required to do so.
REMEMBER that the process is iterative. If we happen to bark up the wrong tree and don’t find any cats, we can come back to this step with those learnings and select another tree to bark up (with a more educated opinion). Using the right judgement and “quick and dirty” analytics, we can significantly increase the existence of a cat in the first tree we bark up.
Underlying philosophy: Time is money. Many aspects of the problem may not be completely foreign to us. Employing the right levels of judgement and experience can help us develop hypotheses and prioritise the aspects of the problem that we get the team to analyse first – to speed up the process and identify high-impact quick-wins.
STEP 4: WORKPLANNING
“In preparing for battle, I have always found that plans are useless, but planning is indispensible.”
This quote by Dwight D. Eisenhower is often attributed to Napoleon (with whom I share both a personality type and height challenge). Whoever said it is irrelevant. The philosophy is gold. Going in unprepared is inefficient and silly. However, being married to plans is equally insane. Things change. Shit happens (Forrest Gump). So be dynamic.
Workplanning is a fundamental step often overlooked. I have had many analysts hate me when I forced them to give me workplans which were inevitably inaccurate immediately after the next progress review.
With limited time and limited resources it is very worthwhile problem solving around:
· what analyses should be done,
· how they should be done,
· to what level of detail they should be done and
· who should do them!
The workplan takes into account project or business milestones and allows the team to determine the maximum amount of analysis ground they can cover with the resources at hand.
To determine the potential impact of Nike changing their signature swoosh to something else: Consider the significant difference between running a statistically significant number of focus groups and surveys, versus calling up 5 different brand experts from around the world for an opinion.
Yes, each approach has a different resulting angle on the problem and level of accuracy. However, if expert opinions would be good enough to tick off a hypothesis, I would rather have the debate and determine whether significant resources in people and money goes into a comprehensive consumer assessment before my marketing launches off into the sunset and wastes said time and resources.
Underlying philosophy: Some things we will want to understand in great detail. Some things we only want to spend a little time on to inform the solution. Make sure you debate the difference and your resources know exactly what is expected of them to go and work on. Define the analysis, the time investment, the end products (the so what’s we need on the chart or the hypothesis to be (dis)proved), sources of information, levels of accuracy and deadlines for the analysis.
STEP 6: CONDUCT ANALYSES
Now is the time to be looking at data, looking for correlations, asking experts what they think the answer is, delving into case studies, building models and developing prototypes. This is the step that we are most familiar with as we spend all of our waking hours in the first 20 - 30 years of our lives doing analysis. From science experiments to correlations in data to history reports on the fall of the Roman Empire, and analyse stuff and draw conclusions.
Two of the most powerful tools I have found in strategic problem solving analysis are:
· The ability to work with building scenarios and analysing strategic trade offs
Read Clem Sunter’s Mind of the Fox
· Developing scenarios based on “what do you have to believe?”
For example, if you are looking at doubling sales in the next 3 months, you need to believe that the organisation can double its sales force in the same time (recruit more people and have management systems and capacity in place to handle double the people). You also need to believe that marketing can raise awareness in twice the current number of people (if there is no latent demand)
Underlying Philosophy: In my opinion, great strategic analyses start by asking the right question. Using the issue analysis and developing the right hypotheses and workplan makes analysis the easiest step of all.
STEP 6: SYNTHESIZE
We interrupt this broadcast to show you this image of Klaus Shulze and his synthesizer…
Back to step 7… Old man Oxford tells me that:
Summerize means to give a brief statement of the main points of something
Synthesize means to combine a number of things into a coherent whole
According to vocabulary.com: When you synthesize, you combine two or more things to create something more complex
According to me, a synthesis is made by adding summary and insight – synthesis is pulling out the so whats! Taking all the bits and bobs of what your analyses have taught you, adding some logic, experience, judgement and wisdom and then packaging this into a solution or proposal.
Underlying philosophy: This is arguably the hardest and most important part of the problem solving process. The ability to determine what is important from your analyses and considerations thus far.
To cut through the noise and determine the essence of a problem and potential solutions.
To determine the overarching so whats that answer your problem statement in the most impactful way.
STEP 7: DEVELOP RECOMMENDATIONS
Great analyses make terrible presentations. How are you going to engage your audience(s) on the insights and proposal? What are the change management aspects and considerations? Whats next? Whats the implementation and monitoring plan? What are the leading indicators to know whether we are, indeed, on the right path (this is strategy after all and Microsoft hasn’t developed the “crystal ball” plug in for Excel yet!)
I seldom have constructive engagements around an excel spreadsheet – unless significant time and effort has been made to make the excel spreadsheet useful as an engagement tool.
This step of the process is to apply your and your teams minds to the engagement process around the proposed solution. You ought to have been engaging with key stakeholders throughout the process so this isn’t the first time to start using words like “buy in” and “whats in it for me”. However, this is the part to help the team think through who is going to see what when. How do we want to generate excitement or urgency around this solution and proposal. Who may be threatened? Who is going to be seeing this for the first time? After all, it is very difficult to engage the entire organisation on strategic issues (both from a practicality and an appropriateness stand point).
Underlying philosophy: Good analyses do not make good communication media. Take the time to determine how the overarching insights and proposals are going to be packaged and delivered to the various stakeholders – determine how best to drive the solution into the organisation to have the ultimate impact.
So there you have it: a brief overview of the McKinsey 7 steps from my perspective and experience. On a side note, I have seen many people in and out of McKinsey ignore these principles and philosophies at their own peril. When used effectively, the result is amazingly impactful, creative solutions - and equally amazing work-life balance in developing these solutions!