1、Structured Problem Solving&Hypothesis GenerationConsulting Skills Workshop 2004 Capgemini-All rights reservedXxx/yymmdd-Structured Problem Solving and Hypothesis Generation,Author/2Goals of this module Lay out a systematic approach to solving business problems“Structured Problem Solving”Establish a
2、common“modus operandus”for Consulting teams Practice the suggested process on a real-life exampleConsulting Skills Workshop 2004 Capgemini-All rights reservedXxx/yymmdd-Structured Problem Solving and Hypothesis Generation,Author/3Strategy is about thriving in a changing world“The pictures pretty ble
3、ak,gentlemen.The worlds climates are changing,the mammals are taking over,and we all have a brain about the size of a walnut.”Consulting Skills Workshop 2004 Capgemini-All rights reservedXxx/yymmdd-Structured Problem Solving and Hypothesis Generation,Author/4 which is all about“decision making”“Stra
4、tegy is about making decisions”The best strategy“makers”are able to blend analytic techniques with an understanding of the future uncertainties and simple good luck Based on often imperfect information they make decisions and then drive implementationConsulting Skills Workshop 2004 Capgemini-All rig
5、hts reservedXxx/yymmdd-Structured Problem Solving and Hypothesis Generation,Author/5There are two basic approaches to problem solving;but both can workThe“theres a pony in here somewhere”approachThe structured analytic approachPotentialfor richpowerfulsolutionsScurry around analyzing tons of data to
6、 see if you can find something usefulGet the dataPotential forgood(and mixed)solutionsDefineproblemandhypothesesConsulting Skills Workshop 2004 Capgemini-All rights reservedXxx/yymmdd-Structured Problem Solving and Hypothesis Generation,Author/6Defining the issue is the first step in the journey to
7、final recommendationsDevelop Conclusions and Make Recommendations to ImplementFind InsightsAnalyse DataGather DataForm HypothesesSo what?aha,new thoughtWhat you should do and howDefine the IssuesWhat are the questions keeping you awake at night?Factual information gathered to prove or disprove hypot
8、hesesAnalyse what the data tells usStatements that provide direction and structure for the analysisConsulting Skills Workshop 2004 Capgemini-All rights reservedXxx/yymmdd-Structured Problem Solving and Hypothesis Generation,Author/7Hypothesis formation ensures that our analysis is focused on our cli
9、ents problemForm HypothesesDefine the IssuesGather DataAnalyse DataFind InsightsDevelop Conclusions and Make Recommendations to ImplementSo what?aha,new thoughtWhat you should do and howWhat are the questions keeping you awake at night?Factual information gathered to prove or disprove hypothesesAnal
10、yse what the data tells usStatements that provide direction and structure for the analysisConsulting Skills Workshop 2004 Capgemini-All rights reservedXxx/yymmdd-Structured Problem Solving and Hypothesis Generation,Author/8Hypotheses are developed in three steps What are the real strategic issues?Wh
11、at is the impact on the organisation?What are the priorities?We think.It looks like.The right answer may be.The options could be.We believe this to be true.A series of statements,not yet backed by data Based on initial data search or expert opinionsA number of assertions need to be true for a hypoth
12、esis to be valid.Is there a market for white label insurance products?Direct channels are growing Retailers have a strong channel and brand There are existing productsChubb Insurance can access new business by using the brand strength of Tesco resulting Is low cost of acquisition and profitable busi
13、nessDefine the questionReview and Describe Multiple AssertionsForm the hypothesis123Consulting Skills Workshop 2004 Capgemini-All rights reservedXxx/yymmdd-Structured Problem Solving and Hypothesis Generation,Author/9A hypothesis should identify not only the issue but also the cause and the impactTh
14、ink through these three stages as you create a hypothesis to help you plan out how you will test it:What is the issue?What is the underlying opportunity?Where is the advantage?What do you think causes the issue?What are the key drivers of the process?What is the impact of the issue?How can we tell t
15、here is an opportunity?Why do we care?“x is anopportunity.”“due to.”“resultingin.”Consulting Skills Workshop 2004 Capgemini-All rights reservedXxx/yymmdd-Structured Problem Solving and Hypothesis Generation,Author/10The Structured Problem Solving Process covers the life cycle of a consulting engagem
16、ent Define the Problem Structure the Problem Develop a Hypothesis Execute the Analysis Develop a Recommendation Create the Communication Deliver Communication Follow Up with ClientCovered in current moduleCovered later in the weekConsulting Skills Workshop 2004 Capgemini-All rights reservedXxx/yymmd
17、d-Structured Problem Solving and Hypothesis Generation,Author/11The Basics-Problem Solving ApproachConsulting Skills Workshop 2004 Capgemini-All rights reservedXxx/yymmdd-Structured Problem Solving and Hypothesis Generation,Author/12DEFINE THE PROBLEMSTRUCTURE THE ANALYSISFIND THE SOLUTIONOur proble
18、m solving approach produces results through answering a simple series of questions Is there a problem or opportunity?If so where does it lie?Why does it exist?What could we do about it?What should we do about it?Fine,but IWIK H2 do this.Consulting Skills Workshop 2004 Capgemini-All rights reservedXx
19、x/yymmdd-Structured Problem Solving and Hypothesis Generation,Author/13Source:Barbara Minto,“The Pyramid Principle”.Always ask:“Are they Mutually Exclusive and Comprehensively Exhaustive(MECE)?”Logical pyramids are basic tools for this approach,helping you to define,structure and solve the clients p
20、roblem 1.Ideas at any level in the pyramid must always be summaries of the ideas grouped below them2.Ideas in each grouping must always be the same kind of idea,and they must answer the same question implied by their summary3.Ideas in each grouping must always be in a logical order:MainAssertionKey
21、Line Deductively or inductively Trace course or time order Divide or structural order(e.g.,Sales,Marketing,Manufacturing,etc.)Classify or degree order(e.g.,most important,2nd most important,etc.)Consulting Skills Workshop 2004 Capgemini-All rights reservedXxx/yymmdd-Structured Problem Solving and Hy
22、pothesis Generation,Author/14Logical pyramids increase the effectiveness of problem solving,results delivery and communication Vertical structure Horizontal structure Key line/narrativebut help ensure thoroughanalysiswhile decreasingcomplexityand increasing the powerof presentations Logical pyramids
23、 have simple rules The effectiveness of our work depends heavily on how compellingly we can argue that the solution we put forward serves the client best The reasoning we have to apply to come to our solution is complex and difficult to summarize for brief client interactions To build succinct and c
24、ompelling presentations of our work,we use logical pyramids as the preferred communication style:Pyramids make information more memorable and meaningful They lead to a clearer definition of the problems we solve They structure our solutions to these problems and make them more compellingSource:Barba
25、ra Minto,“The Pyramid Principle”.which will make your work/life much easier to handleConsulting Skills Workshop 2004 Capgemini-All rights reservedXxx/yymmdd-Structured Problem Solving and Hypothesis Generation,Author/15Define and Structure the ProblemConsulting Skills Workshop 2004 Capgemini-All rig
26、hts reservedXxx/yymmdd-Structured Problem Solving and Hypothesis Generation,Author/16“If you dont know where you are going,any road will take you there.”-AnonymousWhy problem definition mattersConsulting Skills Workshop 2004 Capgemini-All rights reservedXxx/yymmdd-Structured Problem Solving and Hypo
27、thesis Generation,Author/17In structuring a problem,break it into smaller,easier-to-handle components AND start with the right definitionsUS Car MarketLight TrucksPassenger CarsBig 3Mini VansSport UtilityVehiclesFordGMChryslerBut be careful why does this not work?Consulting Skills Workshop 2004 Capg
28、emini-All rights reservedXxx/yymmdd-Structured Problem Solving and Hypothesis Generation,Author/18Mutually Exclusive and Comprehensively ExhaustiveThe most important rule for any structure you imposeConsulting Skills Workshop 2004 Capgemini-All rights reservedXxx/yymmdd-Structured Problem Solving an
29、d Hypothesis Generation,Author/19DivideClarifyDiagnosticFrameworkCause EffectFrameworkStructuralFrameworkProblem StructureTo help you solve a problem,your structure must:Disaggregate the problem into smaller and easier to solve componentsBe a“MECE”description of the problem and its possible solution
30、sTrace CauseThere are three ways to structure a business problemSource:Barbara Minto,“The Pyramid Principle”.Consulting Skills Workshop 2004 Capgemini-All rights reservedXxx/yymmdd-Structured Problem Solving and Hypothesis Generation,Author/20HeadHurtsPhysicalMentalExternalInternalStress,TensionHypo
31、chondriaBumped,Bruised HeadAllergiesBad Weather,Sinus Headache,Flu,ColdBrain TumorWater on the BrainExample 1 disaggregate the problem into a diagnostic solution treeSCooPSource:Barbara Minto,“The Pyramid Principle”.Consulting Skills Workshop 2004 Capgemini-All rights reservedXxx/yymmdd-Structured P
32、roblem Solving and Hypothesis Generation,Author/21Store is withinshopping radiusdo not know about the storeknow about the storenever visit the storeenter the storedo not buymake a purchasedo not come backmake repeat purchasesLocationAdvertisingSignage,CIConversionCustomer ValueRoot CauseExample 2(tr
33、ace cause)disaggregate the problem into a cause-effect framework How can TESCO improve its sales productivity(sales/sq.ft.)?Consulting Skills Workshop 2004 Capgemini-All rights reservedXxx/yymmdd-Structured Problem Solving and Hypothesis Generation,Author/22AccounttypePack sizeREPURCHASETarget marke
34、t persuaded to repurchase?DISTRIBUTIONBrand madeavailable?TRIALTarget market induced to try?AWARENESSTarget marketaware?ProductrejectionPrice/valuerejectionFrequencyof useOccasionof useConsumerprofilePackDisplayPromotiontypePromotiontuningSell-ineffectivenessFeedbackIf all lines of inquiry fail to r
35、eveal a problem source,go back to consider whether target market and consumer benefit have been accurately defined.AttributeawarenessAdvertisingrecallAdvertisingspending rateMediamixRegional weightAdvertisingcommunicationTargetmarketConsumerbenefitRegionSales forcecoverageSales forcedirectionTradete
36、rmsExample 3 disaggregate the problem into an intrinsic structure Why does Wimpys not show the anticipated financial performance?ChannelSource:Barbara Minto,“The Pyramid Principle”.Productspec.SellingpriceBrandnamePackagingPOSITIONINGBrand properly positioned for themarket?Consulting Skills Workshop
37、 2004 Capgemini-All rights reservedXxx/yymmdd-Structured Problem Solving and Hypothesis Generation,Author/23Exercise 1 Kmart vs.Wal*Mart:define and structure Kmarts business problem SituationKmart and Wal*Mart operate similar chains of Full line Discount storesDifferent pricing strategies:Kmart foll
38、ows a promotional pricing strategy of weekly sales,offering discounts on selected items,Wal*Mart follows an EDLP strategy(EDLP=Every Day Low Prices);Kmarts regular prices are higher than Wal*Marts,its sales prices are lowerWal*Mart has a better price perception than KmartKmart has a higher GM than W
39、al*Mart(23%vs.21%)Kmart has significantly higher SG&A as percent of sales,which eliminate Kmarts Gross Margin advantage over Wal*MartWal*Marts scale advantage is not driven by the number of stores,but by its sales per store(better sales per square foot)Kmart has significantly lower sales per square
40、foot sales than Wal*Mart($170 vs$250).With Wal*Marts sales productivity,Kmart would be about as profitable as Wal*Mart ComplicationKmart is operating at break-even,and Wal*Marts aggressive expansion puts more and more of Kmarts stores into direct competition with Wal*Mart,decreasing their store cont
41、ribution and Kmarts overall profitability Question?Structure Kmarts problem to help its management devise a solution,including identifying the key question that our study must answerConsulting Skills Workshop 2004 Capgemini-All rights reservedXxx/yymmdd-Structured Problem Solving and Hypothesis Gene
42、ration,Author/24Exercise 1 define and structure Kmarts problem:first step is to logically organize the factsCompanyCompetitorCustomerHigher GM than WalMart(+)Higher SG&A expenses than WalMart(-)Aging storesHi/Lo pricing strategyLower net income than WalMartEroding same-store sales vs.WalMartSales/sq
43、.ft.higher than KmartAggressive expansion into Kmart territoriesEDLP pricing strategyCustomers perceive WalMart prices better than KmartConsulting Skills Workshop 2004 Capgemini-All rights reservedXxx/yymmdd-Structured Problem Solving and Hypothesis Generation,Author/25Exercise 1 define and structur
44、e Kmarts problem:second step is to iterate to drive insight creationAlthough Kmarts Hi/Lo pricing strategy leads to high GM,high SG&A has led to eroding sales productivityHigher GM than WalMart(+)Higher SG&A expenses than WalMart(-)Aging storesHi/Lo pricing strategyLower net income than WalMartErodi
45、ng same-store sales vs.WalMartSales/sq.ft.higher than KmartAggressive expansion into Kmart territoriesEDLP pricing strategyCustomers perceive WalMart prices better than KmartWalMart is aggressively expanding,with highly productive stores and a different pricing strategy than KMartCustomers perceive
46、WalMart delivers higher value in some areasHow can Kmart improve its sales productivity(sales/sq.ft.)?Consulting Skills Workshop 2004 Capgemini-All rights reservedXxx/yymmdd-Structured Problem Solving and Hypothesis Generation,Author/26Exercise 4 summary performance data for a credit card issuer wha
47、ts the problem?Note:All figures in 1000s.Assume no priceinflation and that interest rates have remained constantThe 80/20 Rule 80%of the answer is in 20%of the dataOften we miss the goldmine because we are busy trying to value the shack built on top of it This data,taken from a real client(but rebas
48、ed,)tells the whole sorry story of their strategic problem in one picture Heading19981999 ChangeMarket PerformanceNo of Customers1,000 1,100 10%Number of Transactions50,000 52,000 4%Value of Transactions1,000,000 1,050,000 5%New Customers Added100 200 100%IncomeInterest Payments100,000 90,000 -10%Su
49、bscription Fees50,000 75,000 50%Transaction Fees100,000 105,000 5%Total250,000 270,000 8%ExpenditureOperational Costs55,000 55,000 0%Marketing and Sales10,000 13,000 30%Overhead25,000 25,000 0%Total90,000 93,000 3%Provision for Bad Debt10,000 20,000 100%Net Income150,000 157,000 5%Consulting Skills
50、Workshop 2004 Capgemini-All rights reservedXxx/yymmdd-Structured Problem Solving and Hypothesis Generation,Author/27Exercise 5 using a“quick and dirty”approach can produce surprisingly accurate results 30 million?300 million?3 billion?30 billion?300 billion?How Many(Retail)Litres of Petrol Are Sold
