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1、Problem-solving and decision-makingThis report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organisation without prior written approval from McKinsey & Company. This material was used by McKinsey & Compa

2、ny during an oral presentation; it is not a complete record of the discussion.July, 2011McKinsey & Company|1Importance of good problem-solving and decision-makingGet to answers fasterUse time and resources more efficientlyHave greater impact on the businessFree up time to do other thingsMcKinsey

3、 & Company|2Objectives and approach for sessionObjectivesIntroduce an approach/tools you can add to your toolkit of skills and use for many types of problem solvingApproachLearn key elements of approach through plenary lecture and discussionMcKinsey & Company|3McKinseys problem solving appro

4、achC R E A T I V E T H I N K I N GLogical problem solvingImpact-drivenFocusedFact-basedIMPACTMcKinsey & Company|4SynthesisAnalysisThe problem-solving cycleProblem definitionProblem structuringPrioritisationIssue analysis and work planProblem?Recom-mend-ations McKinsey & CompanyThink next ite

5、ration: what are the teams next priorities?Focus for todayMcKinsey & Company|5Step 1: Define the problemRecom-menda-tionsSynthesisProblem definitionStruc-turingPriori-tisingIssue analysisAnalysisC O M M U N I C A T I O N?!ProblemImpactThink IMPACT: What is the question you are trying to answer?M

6、cKinsey & Company|6What 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 and implementable?What are the common pitfalls?A problem definition is a way to frame a prob

7、lem so that we are clear up front on what we are trying to solve, and what success will look likeMcKinsey & Company|7Problem statements help sharpen your thinking about the problemWhat are we trying to achieve?Focuses the work and ensures that findings can be acted on. The more specific the stat

8、ement the better, provided that it is not so narrow that the “wrong” problem is addressed.Background and contextPotential challengesComments on the “situation” and “complication” facing the key decision-maker (e.g., industry trends, relative position in the industry).Indicates what will not be inclu

9、ded 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).14What is success?StakeholdersRefers to the basis on which the key decision-maker will de

10、cide 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 and external parties who can affect implementation (e.g., shareholders)23Where will we find information and h

11、elp?Describes implementation challenges (e.g., labour relations, communication practices, risk aversion) that must be addressed to change beliefs and behaviors5McKinsey & Company|8One idea of what a good problem definition looks likeWhat are we trying to achieve?The basic question we are trying

12、to solve. It should be SMART: specific, measurable, action-oriented, relevant and time-bound. Background and contextPotential challengesWhat is the current situation?What has happened so far?Why is this problem is being addressed now?What are the potential issues or problems that we can forsee and p

13、lan to mitigate?14What is success?StakeholdersWhat does a good final product look like? What are we trying to deliver?Who are the decision makers?Who needs to be involved?23Where will we find information and help?Where does expertise and knowledge, exist (Internal and external)? e.g., work that has

14、already been done, internal experts who we should draw on, published reports and papers5McKinsey & Company|9Problem statementCharacteristics of good problem statement Specific Measurable Action-oriented Relevant (to the key problem) Time-boundMcKinsey & Company|10Example problem statement: O

15、ilco refineryThe Oilco refinery is suffering from poor profitability despite a strong market niche positionShould the Oilco refinery improve its deteriorating position?Can the Oilco refinery be managed differently to increase profitability?Too generalNot disputableStatement of factMcKinsey & Com

16、pany|11Good problem solving: Oilco refineryWhat opportunities exist for 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 k

17、ey problem) Time-boundMcKinsey & Company|12Step 2: Structure the problemRecom-menda-tionsSynthesisProblem definitionStruc-turingPriori-tisingIssue analysisAnalysisC O M M U N I C A T I O N?!ProblemImpactThink DISAGGREGATION and HYPOTHESIS: What could the key elements of the problem be?McKinsey &

18、amp; Company|13Problem solving requires we answer a number of difficult questionsWhat issues should we think about?How will we build our smart cities?What steps will we need to take?McKinsey & Company|14What is an issue tree and why is it important?A problem solving tool that breaks a problem in

19、to discrete chunksWhy use logic trees?To break a problem into component partsTo ensure integrity of the problem solving is maintainedTo build a common under-standing within the team of the problem solving frameworkTo help focus team effortsProblemIssue 4Issue 1Sub-issueSub-issueIssue 2Sub-issueSub-i

20、ssueIssue 3Sub-issueSub-issueIssue 5Sub-issueSub-issueMcKinsey & Company|15The issue tree is a valuable tool to disaggregate a problem into core sub-questions that need to be addressed to answer the main questionDescriptionWhy use it?When to use it?Early in the problem solving process, when you

21、know little about the problemDecomposes an issue into smaller sub-issues (e.g., measures, criteria)Sub-issues answer the question “What?” or “How?”Helps disaggregate problem into individual piecesHelps divide the work among team membersIssue treeTextMcKinsey & Company|16Basic principle of the is

22、sue treeGoal:Break a problem into component parts and show concrete solutionsQuestionFormulation of the basic question to be resolved should be as specific as possibleIdea 1Idea 2Idea 3Idea 1.1Idea 1.2Idea 2.1Idea 2.2Idea 3.1Idea 3.2How / What?Level of detailComplete but non-overlapping list of conc

23、eivable solutionsFurther levels of detail for ideas, also complete and non-overlappingHow / What?McKinsey & Company|17QuestionTogether, statements answer the question or fully describe the idea on the level immediately aboveMECECollectivelyExhaustiveMutuallyExclusiveIdea 1Idea 2Idea 3Mutually Ex

24、clusive Collectively ExhaustiveContent of Statements does not overlapBenefit for impactEfficientTime and effort to structureproblemNOT EFFICIENTTrying to be perfect100%80%100%20%80/20 ruleGood issue trees meet MECE and 80/20 rule requirementsMcKinsey & Company|18Lets try out an exampleCreate an

25、issue tree to address the following:How can you reduce monthly shopping expenses?McKinsey & Company|19Example Issue tree solutionHow could you reduce your expenditure each month?Buy fewer itemsFoodClothing Travel EntertainmentShare costs of items (e.g., split rent with roommate, car pool)Pay les

26、s for same quantity of itemsBuy lower-quality items Buy items at discount/on saleMcKinsey & Company|20Good logic trees help prioritise issues and allocate responsibilities to team membersRecom-menda-tionsSynthesisProblem definitionStruc-turingPriori-tisingIssue analysisAnalysisC O M M U N I C A

27、T I O N?!ProblemImpactThink SPEED: Which part of the tree seems most important to the problem?McKinsey & Company|21Purpose of prioritisationBundle of possible actions developedBut:Limited resourcesTime constraintsPrioritisation requiredMcKinsey & Company|22How to prioritiseUse judgement/intu

28、itionDo back-of-the-envelope calculationsInvolve your teamTake risksTime and effortFocusing on impactPolishingBenefit for problem solvingBe practical!McKinsey & Company|23Methods for prioritisingKey ideasTake a reasonably quick, informal approach to get startedRemember that sometimes a ”back of

29、an envelope” calculation is all thats neededIf new information emerges, you can always reprioritise and switch your efforts to another part of the treeUse likely impact to decide where to go firstUse readily available data whenever possible; avoid major data requests Do not create massive spreadshee

30、ts or other computer models if you can move forward with less complete informationExample methodsPercentage of total “X”Estimated potential increase/decrease (sensitivity analysis)Simple ratiosQuick industry benchmarksQualitative input from interviewsEase of implementationTiming“Quick wins”Available

31、 resourcesHigh/low riskMcKinsey & Company|24Step 4: Issue analysis and work planRecom-menda-tionsSynthesisProblem definitionStruc-turingPriori-tisingIssue analysisAnalysisC O M M U N I C A T I O N?!ProblemImpactThink EFFICIENCY: How and on what should the team spend its time?McKinsey & Compa

32、ny|25Step 5: AnalysisRecom-menda-tionsSynthesisProblem definitionStruc-turingPriori-tisingIssue analysisAnalysisC O M M U N I C A T I O NThink EVIDENCE: What am I trying to prove/disprove?ProblemImpact?!McKinsey & Company|26Step 6: Synthesise findings Recom-menda-tionsSynthesisProblem definitionStruc-turingPriori-tisingIssue analysisAnalysisC O M M U N I C A T I O NThink SO WHAT: What are the implications of our findings?Pro

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