Problem-solving in addition to decision-making !

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Problem-solving in addition to decision-making !

Gaines, Jennifer, Contributing Editor has reference to this Academic Journal, PHwiki organized this Journal Problem-solving in addition to decision-making This report is solely as long as the use of client personnel. No part of it may be circulated, quoted, or reproduced as long as distribution outside the client organisation without prior written approval from McKinsey & Company. This material was used by McKinsey & Company during an oral presentation; it is not a complete record of the discussion. July, 2011 Importance of good problem-solving in addition to decision-making Get to answers faster Use time in addition to resources more efficiently Have greater impact on the business Free up time to do other things Objectives in addition to approach as long as session Objectives Introduce an approach/tools you can add to your toolkit of skills in addition to use as long as many types of problem solving Approach Learn key elements of approach through plenary lecture in addition to discussion

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McKinsey’s problem solving approach C R E A T I V E T H I N K I N G Logical problem solving Impact-driven Focused Fact-based IMPACT The problem-solving cycle Synthesis Analysis Problem definition Problem structuring Prioritisation Issue analysis in addition to work plan Problem Recom- mend- ations © McKinsey & Company Think next iteration: what are the team’s next priorities Step 1: Define the problem Recom-menda-tions Synthesis Problem definition Struc-turing Priori-tising Issue analysis Analysis C O M M U N I C A T I O N ! Problem Impact Think IMPACT: What is the question you are trying to answer

What is a good problem definition What are characteristics of a good problem definition What are “must-have” elements to Ensure we get to the best answer Ensure our answer is practical in addition to implementable What are the common pitfalls A ‘problem definition’ is a way to frame a problem so that we are clear up front on what we are trying to solve, in addition to what success will look like Problem statements help sharpen your thinking about the problem What are we trying to achieve Focuses the work in addition to ensures that findings can be acted on. The more specific the statement the better, provided that it is not so narrow that the “wrong” problem is addressed. Background in addition to context Potential challenges Comments on the “situation” in addition to “complication” facing the key decision-maker (e.g., industry trends, relative position in the industry). Indicates what will not be included in the project (e.g., international markets, R&D activities). Also defines the limits to the set of solutions that can be considered, including degree of accuracy of analysis (i.e, 80/20 rule vs. 90/10). 1 4 What is success Stakeholders Refers to the basis on which the key decision-maker will decide whether to act on the recommendations (e.g.,financial returns, effect on staff, market share growth). Identifies primary decision makers (e.g., CEO, Division Manager) as well as internal in addition to external parties who can affect implementation (e.g., shareholders) 2 3 Where will we find in as long as mation in addition to help Describes implementation challenges (e.g., labour relations, communication practices, risk aversion) that must be addressed to change beliefs in addition to behaviors 5 One idea of what a good problem definition looks like

Problem statement Characteristics of good problem statement Specific Measurable Action-oriented Relevant (to the key problem) Time-bound Example problem statement: Oilco refinery The Oilco refinery is suffering from poor profitability despite a strong market niche position Should the Oilco refinery improve its deteriorating position Can the Oilco refinery be managed differently to increase profitability Too general Not disputable Statement of fact Good problem solving: Oilco refinery What opportunities exist as long as Oilco to improve profitability by $40 million per year through overhead rationalisation, operational improvements, or restructuring non-core assets Specific, action-oriented Specific Measurable Action-oriented Relevant (to the key problem) Time-bound

Step 2: Structure the problem Recom-menda-tions Synthesis Problem definition Struc-turing Priori-tising Issue analysis Analysis C O M M U N I C A T I O N ! Problem Impact Think DISAGGREGATION in addition to HYPOTHESIS: What could the key elements of the problem be Problem solving requires we answer a number of difficult questions What issues should we think about How will we build our smart cities What steps will we need to take What is an issue tree in addition to why is it important A problem solving tool that breaks a problem into discrete chunks Why use logic trees To break a problem into component parts To ensure integrity of the problem solving is maintained To build a common under-st in addition to ing within the team of the problem solving framework To help focus team ef as long as ts Problem Issue 4 Issue 1 Sub-issue Sub-issue Issue 2 Sub-issue Sub-issue Issue 3 Sub-issue Sub-issue Issue 5 Sub-issue Sub-issue

The issue tree is a valuable tool to disaggregate a problem into core sub-questions that need to be addressed to answer the main question Description Why use it When to use it Early in the problem solving process, when you know little about the problem Decomposes an issue into smaller sub-issues (e.g., measures, criteria) Sub-issues answer the question “What” or “How” Helps disaggregate problem into individual pieces Helps divide the work among team members Text Basic principle of the issue tree Goal: Break a problem into component parts in addition to show concrete solutions Question Formulation of the basic question to be resolved should be as specific as possible Idea 1 Idea 2 Idea 3 Idea 1.1 Idea 1.2 Idea 2.1 Idea 2.2 Idea 3.1 Idea 3.2 How / What Level of detail Complete but non-overlapping list of conceivable solutions Further levels of detail as long as ideas, also complete in addition to non-overlapping How / What Good issue trees meet MECE in addition to 80/20 rule requirements Question Together, statements answer the question or fully describe the idea on the level immediately above ME CE Collectively Exhaustive Mutually Exclusive Idea 1 Idea 2 Idea 3 Mutually Exclusive Collectively Exhaustive Content of Statements does not overlap Benefit as long as impact Efficient Time in addition to ef as long as t to structure problem NOT EFFICIENT Trying to be perfect 100% 80% 100% 20% 80/20 rule

Let’s try out an example Create an issue tree to address the following: How can you reduce monthly shopping expenses Example Issue tree solution How could you reduce your expenditure each month Buy fewer items Food Clothing Travel Entertainment Share costs of items (e.g., split rent with roommate, car pool) Pay less as long as same quantity of items Buy lower-quality items Buy items at discount/on sale Good logic trees help prioritise issues in addition to allocate responsibilities to team members Recom-menda-tions Synthesis Problem definition Struc-turing Priori-tising Issue analysis Analysis C O M M U N I C A T I O N ! Problem Impact Think SPEED: Which part of the tree seems most important to the problem

Purpose of prioritisation But: Limited resources Time constraints Prioritisation required How to prioritise Use judgement/intuition Do back-of-the- envelope calculations Involve your team Take risks Time in addition to ef as long as t Focusing on impact Polishing Benefit as long as problem solving Be practical! Methods as long as prioritising Key ideas Take a reasonably quick, in as long as mal approach to get started Remember that sometimes a ”back of an envelope” calculation is all that’s needed If new in as long as mation emerges, you can always reprioritise in addition to switch your ef as long as ts to another part of the tree Use likely impact to decide where to go first Use readily available data whenever possible; avoid major data requests Do not create massive spreadsheets or other computer models if you can move as long as ward with less complete in as long as mation Example methods Percentage of total “X” Estimated potential increase/decrease (sensitivity analysis) Simple ratios Quick industry benchmarks Qualitative input from interviews Ease of implementation Timing “Quick wins” Available resources High/low risk

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Step 4: Issue analysis in addition to work plan Recom-menda-tions Synthesis Problem definition Struc-turing Priori-tising Issue analysis Analysis C O M M U N I C A T I O N ! Problem Impact Think EFFICIENCY: How in addition to on what should the team spend its time Step 5: Analysis Recom-menda-tions Synthesis Problem definition Struc-turing Priori-tising Issue analysis Analysis C O M M U N I C A T I O N Think EVIDENCE: What am I trying to prove/disprove Problem Impact ! Step 6: Synthesise findings Recom-menda-tions Synthesis Problem definition Struc-turing Priori-tising Issue analysis Analysis C O M M U N I C A T I O N Think SO WHAT: What are the implications of our findings Problem Impact !

Summary versus synthesis: what’s the difference FACTS I have misplaced my keys My passport isn’t where I thought it was I’m 2 months behind on my tax return SUMMARY SYNTHESIS Summary versus synthesis: extracting a higher level of meaning SYNTHESIS SUMMARY I’ve lost my keys in addition to passport in addition to I’m behind on my tax return FACTS I have misplaced my keys My passport isn’t where I thought it was I’m 2 months behind on my tax return SYNTHESIS I’ve been sloppy Synthesis helps develop a powerful in addition to effective main message What is the one thing I want my audience to think or do as a result of this communication Main message must be: Targeted Overarching Powerful Supportable

Step 7: Develop recommendations Recom-menda-tions Synthesis Problem definition Struc-turing Priori-tising Issue analysis Analysis C O M M U N I C A T I O N Think POTENTIAL SOLUTION: What should be done Problem Impact ! Last chance as long as any questions Thank you – Enjoy the rest of your day

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