Problem-solving and

decision-making

July, 2011

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Importance of good problem-solving and decision-making

Get to answers faster

Use time and resources more efficiently
Have greater impact on the business
Free up time to do other things

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Objectives and approach for session

Objectives

Approach

Introduce an

Learn key

approach/tools you
can add to your
toolkit of skills and
use for many types
of problem solving

elements of
approach through
plenary lecture
and discussion

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McKinseys problem solving approach

IMPACT
Logical
problem solving

Impactdriven

Focused

Factbased

C R E AT I V E T H I N K I N G

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The problem-solving cycle

Focus for today

Problem

Problem
definition

Problem
structuring

Prioritisation
Issue
analysis
and work
plan

Think next iteration:

what are the teams
next priorities?

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Recommendations

Synthesis

Analysis

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Step 1: Define the problem

?
Problem

Think IMPACT:
What is the question you
are trying to answer?

StrucProblem turing
definition

Prioritising

Issue
analysis

Analysis

C O M M U N I CAT I O N

Synthesis Recommendations

Impact

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What is a good problem definition?

A problem definition is a way to frame a problem so that

we are clear up front on what we are trying to solve, and
what success will look like

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 and
implementable?

What are the common pitfalls?

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Problem statements help sharpen your thinking about the problem

What are we trying to achieve?
Focuses the work and 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.
1

Background and context

Comments on the situation and complication

facing the key decision-maker (e.g., industry
trends, relative position in the industry).

What is success?
Refers to the basis on which the key decisionmaker will decide whether to act on the
recommendations (e.g.,financial returns, effect on
staff, market share growth).

Stakeholders
Identifies primary decision makers (e.g., CEO,
Division Manager) as well as internal and
external parties who can affect implementation
(e.g., shareholders)

Potential challenges
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).

Where will we find information and help?

Describes implementation challenges (e.g., labour relations, communication practices, risk aversion)
that must be addressed to change beliefs and behaviors

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One idea of what a good problem definition looks like

What are we trying to achieve?
The basic question we are trying to solve. It should be SMART: specific, measurable,
action-oriented, relevant and time-bound.
1

Background and context

What is the current situation?

What has happened so far?
Why is this problem is being addressed
now?
2

What is success?
What does a good final product look like?
What are we trying to deliver?

Stakeholders
Who are the decision makers?
Who needs to be involved?

Potential challenges
What are the potential issues or problems
that we can forsee and plan to mitigate?

Where will we find information and help?

Where does expertise and knowledge, exist (Internal and external)? e.g., work that has
already been done, internal experts who we should draw on, published reports and papers
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Problem statement

Characteristics of good problem statement

Specific
Measurable
Action-oriented
Relevant (to the key problem)
Time-bound

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Example problem statement: Oilco refinery

The Oilco refinery is suffering from

poor profitability despite a strong
market niche position

Statement of fact

Should the Oilco refinery improve

its deteriorating position?

Not disputable

Can the Oilco refinery be

managed differently to increase
profitability?

Too general

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Good problem solving: Oilco refinery

What opportunities exist for Oilco to improve

profitability by $40 million per year through
overhead rationalisation, operational
improvements, or restructuring non-core
assets?

Specific
Measurable
Specific,
Action-oriented
action-oriented
Relevant (to the key
problem)
Time-bound

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Step 2: Structure the problem

?
Problem

Think DISAGGREGATION and

HYPOTHESIS:
What could the key elements of
the problem be?

Problem
definition

Structuring

Prioritising

Issue
analysis

Analysis

C O M M U N I C AT I O N

Synthesis Recommendations

Impact

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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?

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What is an issue tree and why is it important?

A problem solving tool that breaks a problem into discrete chunks

Why use logic trees?

Sub-issue
Issue 1

To break a problem into

component parts

Sub-issue
Sub-issue

Issue 2

To ensure integrity of the

problem solving is maintained
To build a common understanding within the team of
the problem solving
framework

Sub-issue
Problem

Sub-issue
Issue 3
Sub-issue
Issue 4
Sub-issue
Issue 5
Sub-issue

To help focus team efforts

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The issue tree is a valuable tool to disaggregate a problem into core subquestions that need to be addressed to answer the main question

Text

Issue
tree

Description

Why use it?

Decomposes an
issue into smaller
sub-issues (e.g.,
measures, criteria)

Helps
disaggregate
problem into
individual pieces

Sub-issues answer
the question
What? or How?

Helps divide the

work among
team members

When to use it?

Early in the
problem solving
process, when
you know little
about the
problem

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Basic principle of the issue tree

How / What?
How / What?
Idea 1.1
Idea 1
Idea 1.2

Idea 2.1
Question

Idea 2
Idea 2.2

Goal:
Break a problem
into component
parts and show
concrete solutions

Idea 3.1
Idea 3
Idea 3.2
Formulation of
the basic
question to be
resolved should
be as specific as
possible

Complete but nonoverlapping list of

conceivable solutions

Further levels of detail for ideas,

also complete and nonoverlapping

Level of detail
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Good issue trees meet MECE and 80/20 rule requirements

Mutually Exclusive Collectively Exhaustive

Idea 1

ME
Mutually
Exclusive

Question

Idea 2

80/20 rule

Content of
Statements
does not
overlap

Benefit for impact

100%
80%

T
NO

Idea 3

CE
Collectively
Exhaustive

Together, statements
answer the question or
fully describe the idea
on the level immediately
above

20%
Efficient

EF

IE
IC

NT

Time and
effort to
100%
structure
problem
Trying to be perfect

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Lets try out an example

Create an issue tree to address the

following:
How can you reduce monthly shopping
expenses?

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Example Issue tree solution

Food
Clothing
Buy fewer items
Entertainment
How could you
reduce your
expenditure
each month?

Travel
Buy lower-quality items
Pay less for
same quantity of
items

Buy items at discount/on sale

Share costs of items (e.g., split
rent with roommate, car pool)

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Good logic trees help prioritise issues and allocate responsibilities to team
members

?
Problem

Think SPEED:
Which part of the tree seems most
important to the problem?

Problem
definition

Structuring

Prioritising

Issue
analysis

Analysis

C O M M U N I C AT I O N

Synthesis Recommendations

Impact

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Purpose of prioritisation
Bundle of possible actions developed

Prioritisation
required

But:
Limited resources
Time constraints

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How to prioritise
Use judgement/intuition

Involve your team

Be practical!

Polishing

Focusing
on impact
Time and
effort
Do back-of-theenvelope calculations

Benefit for
problem
solving
Take risks
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Methods for prioritising

Key ideas

Take a reasonably quick, informal

approach to get started

Remember that sometimes a back
of an envelope calculation is all
thats needed
If new information emerges, you can
always reprioritise and switch your
efforts 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 forward with less complete
information

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 and work plan

?
Problem

Think EFFICIENCY:
How and on what should
the team spend its time?

Problem
definition

Structuring

Prioritising

Issue
Analysis
analysis

C O M M U N I CAT I O N

Synthesis Recommendations

Impact

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Step 5: Analysis

Think EVIDENCE:
What am I trying to
prove/disprove?

?
Problem

Problem
definition

Structuring

Analysis Synthesis Recommendations

C O M M U N I CAT I O N

Prioritising

Issue
analysis

Impact

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Step 6: Synthesise findings

?
Problem

Think SO WHAT:
What are the implications
of our findings?

Problem
definition

Structuring

Prioritising

Issue
analysis

Analysis Synthesis Recommendations

C O M M U N I CAT I O N

Impact

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Summary versus synthesis: whats the difference?

SUMMARY

SYNTHESIS

FACTS

I have misplaced my keys

My passport isn't where
I thought it was

I'm 2 months behind

on my tax return

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Summary versus synthesis: extracting a higher level of meaning

SUMMARY

SYNTHESIS

Ive lost my keys

and passport and
I'm behind on my
tax return

Ive been sloppy

FACTS

I have misplaced my keys

My passport isn't where
I thought it was

I'm 2 months behind

on my tax return

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Synthesis helps develop a powerful and 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

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Step 7: Develop recommendations

?
Problem

Think POTENTIAL
SOLUTION:
What should be
done?

Problem
definition

Structuring

Prioritising

Issue
analysis

Analysis Synthesis

C O M M U N I CAT I O N

Recommendations

Impact

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Last chance for any questions

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Thank you Enjoy the rest of your day

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