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StructuredProblemSolving&HypothesisGenerationStructuredProblemSolving&HGoalsofthismoduleLayoutasystematicapproachtosolvingbusinessproblems–“StructuredProblemSolving”Establishacommon“modusoperandus”forConsultingteamsPracticethesuggestedprocessonareal-lifeexample?2004Capgemini-AllrightsreservedGoalsofthismoduleLayoutaStrategyisaboutthrivinginachangingworld…“Thepicture’sprettybleak,gentlemen...Theworld’sclimatesarechanging,themammalsaretakingover,andweallhaveabrainaboutthesizeofawalnut.”?2004Capgemini-AllrightsreservedStrategyisaboutthrivingin…whichisallabout“decisionmaking”“Strategyisaboutmakingdecisions”Thebeststrategy“makers”areabletoblendanalytictechniqueswithanunderstandingofthefutureuncertaintiesandsimplegoodluckBasedonoftenimperfectinformationtheymakedecisionsandthendriveimplementation?2004Capgemini-Allrightsreserved…whichisallabout“decisionTherearetwobasicapproachestoproblemsolving;butbothcanworkThe“there'saponyinheresomewhere”approachThestructuredanalyticapproachPotentialforrichpowerfulsolutionsScurryaroundanalyzingtonsofdatatoseeifyoucanfindsomethingusefulGetthedataPotentialforgood(andmixed)solutionsDefineproblemandhypotheses?2004Capgemini-AllrightsreservedTherearetwobasicapproachesDefiningtheissueisthefirststepinthejourneytofinalrecommendationsDevelopConclusionsandMakeRecommendationstoImplementFindInsightsAnalyseDataGatherDataFormHypothesesSowhat?—aha,newthoughtWhatyoushoulddo…andhowDefinetheIssuesWhatarethequestionskeepingyouawakeatnight?FactualinformationgatheredtoproveordisprovehypothesesAnalysewhatthedatatellsusStatementsthatprovidedirectionandstructurefortheanalysis?2004Capgemini-AllrightsreservedDefiningtheissueisthefirsHypothesisformationensuresthatouranalysisisfocusedonourclient’sproblemFormHypothesesDefinetheIssuesGatherDataAnalyseDataFindInsightsDevelopConclusionsandMakeRecommendationstoImplementSowhat?—aha,newthoughtWhatyoushoulddo…andhowWhatarethequestionskeepingyouawakeatnight?FactualinformationgatheredtoproveordisprovehypothesesAnalysewhatthedatatellsusStatementsthatprovidedirectionandstructurefortheanalysis?2004Capgemini-AllrightsreservedHypothesisformationensurestHypothesesaredevelopedinthreestepsWhataretherealstrategicissues?Whatistheimpactontheorganisation?Whatarethepriorities?Wethink...Itlookslike...Therightanswermaybe...Theoptionscouldbe...Webelievethistobetrue...Aseriesofstatements,notyetbackedbydataBasedoninitialdatasearchorexpertopinionsAnumberofassertionsneedtobetrueforahypothesistobevalid.Isthereamarketforwhitelabelinsuranceproducts?DirectchannelsaregrowingRetailershaveastrongchannelandbrandThereareexistingproductsChubbInsurancecanaccessnewbusinessbyusingthebrandstrengthofTescoresultingIslowcostofacquisitionandprofitablebusinessDefinethequestionReviewandDescribeMultipleAssertionsFormthehypothesis123HypothesesaredevelopedinthAhypothesisshouldidentifynotonlytheissuebutalsothecauseandtheimpactThinkthroughthesethreestagesasyoucreateahypothesistohelpyouplanouthowyouwilltestit:Whatistheissue?Whatistheunderlyingopportunity?Whereistheadvantage?Whatdoyouthinkcausestheissue?Whatarethekeydriversoftheprocess?Whatistheimpactoftheissue?Howcanwetellthereisanopportunity?Whydowecare?“xisanopportunity...”“…dueto...”“…resultingin...”AhypothesisshouldidentifynTheStructuredProblemSolvingProcesscoversthelifecycleofaconsultingengagementDefinetheProblemStructuretheProblemDevelopaHypothesisExecutetheAnalysisDevelopaRecommendationCreatetheCommunicationDeliverCommunicationFollowUpwithClientCoveredincurrentmoduleCoveredlaterintheweek?2004Capgemini-AllrightsreservedTheStructuredProblemSolvingTheBasics-ProblemSolvingApproach?2004Capgemini-AllrightsreservedTheBasics-ProblemSolvingADEFINETHEPROBLEMSTRUCTURETHEANALYSISFINDTHESOLUTIONOurproblemsolvingapproachproducesresultsthroughansweringasimpleseriesofquestionsIsthereaproblemoropportunity?Ifsowheredoesitlie?Whydoesitexist?Whatcouldwedoaboutit?Whatshouldwedoaboutit?Fine,butIWIKH2dothis...?2004Capgemini-AllrightsreservedDEFINETHEPROBLEMSTRUCTURETHSource:BarbaraMinto,“ThePyramidPrinciple”.Alwaysask:“AretheyMutuallyExclusiveandComprehensivelyExhaustive(MECE)?”Logicalpyramidsarebasictoolsforthisapproach,helpingyoutodefine,structureandsolvetheclient’sproblem1. Ideasatanylevelinthepyramidmustalwaysbesummariesoftheideasgroupedbelowthem2. Ideasineachgroupingmustalwaysbethesamekindofidea,andtheymustanswerthesamequestionimpliedbytheirsummary3. Ideasineachgroupingmustalwaysbeinalogicalorder:MainAssertionKeyLineDeductivelyorinductivelyTracecourseortimeorderDivideorstructuralorder(e.g.,Sales,Marketing,Manufacturing,etc.)Classifyordegreeorder(e.g.,mostimportant,2ndmostimportant,etc.)?2004Capgemini-AllrightsreservedSource:BarbaraMinto,“ThePLogicalpyramidsincreasetheeffectivenessofproblemsolving,resultsdeliveryandcommunication…VerticalstructureHorizontalstructureKeyline/narrative…buthelpensurethoroughanalysis……whiledecreasingcomplexity……andincreasingthepowerofpresentationsLogicalpyramidshavesimplerules…TheeffectivenessofourworkdependsheavilyonhowcompellinglywecanarguethatthesolutionweputforwardservestheclientbestThereasoningwehavetoapplytocometooursolutioniscomplexanddifficulttosummarizeforbriefclientinteractionsTobuildsuccinctandcompellingpresentationsofourwork,weuselogicalpyramidsasthepreferredcommunicationstyle:PyramidsmakeinformationmorememorableandmeaningfulTheyleadtoaclearerdefinitionoftheproblemswesolveTheystructureoursolutionstotheseproblemsandmakethemmorecompellingSource:BarbaraMinto,“ThePyramidPrinciple”.…whichwillmakeyourwork/lifemucheasiertohandle?2004Capgemini-AllrightsreservedLogicalpyramidsincreasetheDefineandStructuretheProblem?2004Capgemini-AllrightsreservedDefineandStructuretheProbl“Ifyoudon’tknowwhereyouaregoing,anyroadwilltakeyouthere.”
-AnonymousWhyproblemdefinitionmatters?2004Capgemini-Allrightsreserved“Ifyoudon’tknowwhereWhypInstructuringaproblem,breakitintosmaller,easier-to-handlecomponentsANDstartwiththerightdefinitionsUSCarMarketLightTrucksPassengerCarsBig3MiniVansSport
UtilityVehiclesFordGMChryslerButbecareful—whydoesthisnotwork??2004Capgemini-AllrightsreservedInstructuringaproblem,brea"MutuallyExclusiveandComprehensivelyExhaustive"Themostimportantruleforanystructureyouimpose?2004Capgemini-Allrightsreserved"MutuallyExclusiveandCompreDivideClarifyDiagnostic
FrameworkCauseEffect
FrameworkStructural
FrameworkProblemStructureTohelpyousolveaproblem,yourstructuremust:DisaggregatetheproblemintosmallerandeasiertosolvecomponentsBea“MECE”descriptionoftheproblemanditspossiblesolutionsTraceCauseTherearethreewaystostructureabusinessproblemSource:BarbaraMinto,“ThePyramidPrinciple”.?2004Capgemini-AllrightsreservedDivideClarifyDiagnostic
FramewHeadHurtsPhysicalMentalExternalInternalStress,TensionHypochondriaBumped,BruisedHeadAllergiesBadWeather,SinusHeadache,
Flu,ColdBrainTumorWaterontheBrainExample1—disaggregatetheproblemintoadiagnosticsolutiontreeSCooPSource:BarbaraMinto,“ThePyramidPrinciple”.?2004Capgemini-AllrightsreservedHeadPhysicalMentalExternalInteStoreiswithinshoppingradiusdonotknowaboutthestoreknowaboutthestorenevervisitthestoreenterthestoredonotbuymakeapurchasedonotcomebackmakerepeatpurchasesLocationAdvertisingSignage,CIConversionCustomerValueRootCauseExample2(tracecause)—disaggregatetheproblemintoacause-effectframeworkHowcanTESCOimproveitssalesproductivity(sales/sq.ft.)??2004Capgemini-AllrightsreservedStoreiswithindonotknowaboAccounttypePacksizeREPURCHASETargetmarketpersuadedtorepurchase?DISTRIBUTIONBrandmadeavailable?TRIALTargetmarket
inducedtotry?AWARENESSTargetmarketaware?ProductrejectionPrice/valuerejectionFrequencyofuseOccasionofuseConsumerprofilePackDisplayPromotiontypePromotiontuningSell-ineffectivenessFeedbackIfalllinesofinquiryfailtorevealaproblemsource,gobacktoconsiderwhethertargetmarketandconsumerbenefithavebeenaccuratelydefined.AttributeawarenessAdvertisingrecallAdvertisingspendingrateMediamixRegionalweightAdvertisingcommunicationTargetmarketConsumerbenefitRegionSalesforcecoverageSalesforcedirectionTradetermsExample3—disaggregatetheproblemintoanintrinsicstructureWhydoesWimpy’snotshowtheanticipatedfinancialperformance?ChannelSource:BarbaraMinto,“ThePyramidPrinciple”.Productspec.SellingpriceBrandnamePackagingPOSITIONINGBrandproperly
positionedforthe
market??2004Capgemini-AllrightsreservedAccountPacksizeREPURCHASEDISTExercise1—Kmartvs.Wal*Mart:defineandstructureKmart’sbusinessproblemSituationKmartandWal*MartoperatesimilarchainsofFulllineDiscountstoresDifferentpricingstrategies:Kmartfollowsapromotionalpricingstrategyofweeklysales,offeringdiscountsonselecteditems,Wal*MartfollowsanEDLPstrategy(EDLP=EveryDayLowPrices);Kmart'sregularpricesarehigherthanWal*Mart’s,itssalespricesarelowerWal*MarthasabetterpriceperceptionthanKmartKmarthasahigherGMthanWal*Mart(23%vs.21%)KmarthassignificantlyhigherSG&Aaspercentofsales,whicheliminateKmart'sGrossMarginadvantageoverWal*MartWal*Mart’sscaleadvantageisnotdrivenbythenumberofstores,butbyitssalesperstore(bettersalespersquarefoot)KmarthassignificantlylowersalespersquarefootsalesthanWal*Mart($170vs$250).WithWal*Mart’ssalesproductivity,KmartwouldbeaboutasprofitableasWal*MartComplicationKmartisoperatingatbreak-even,andWal*Mart’saggressiveexpansionputsmoreandmoreofKmart'sstoresintodirectcompetitionwithWal*Mart,decreasingtheirstorecontributionandKmart'soverallprofitabilityQuestion?????StructureKmart'sproblemtohelpitsmanagementdeviseasolution,includingidentifyingthekeyquestionthatourstudymustanswer?2004Capgemini-AllrightsreservedExercise1—Kmartvs.Wal*MarExercise1—
defineandstructureKmart’sproblem:firststepistologicallyorganizethefactsCompanyCompetitorCustomerHigherGMthanWalMart(+)HigherSG&AexpensesthanWalMart(-)AgingstoresHi/LopricingstrategyLowernetincomethanWalMartErodingsame-storesalesvs.WalMartSales/sq.ft.higherthanKmartAggressiveexpansionintoKmartterritoriesEDLPpricingstrategyCustomersperceiveWalMartpricesbetterthanKmart?2004Capgemini-AllrightsreservedExercise1—
defineandstructExercise1—
defineandstructureKmart’sproblem:secondstepistoiteratetodriveinsightcreationAlthoughKmart’sHi/LopricingstrategyleadstohighGM,highSG&AhasledtoerodingsalesproductivityHigherGMthanWalMart(+)HigherSG&AexpensesthanWalMart(-)AgingstoresHi/LopricingstrategyLowernetincomethanWalMartErodingsame-storesalesvs.WalMartSales/sq.ft.higherthanKmartAggressiveexpansionintoKmartterritoriesEDLPpricingstrategyCustomersperceiveWalMartpricesbetterthanKmartWalMartisaggressivelyexpanding,withhighlyproductivestoresandadifferentpricingstrategythanKMartCustomersperceiveWalMartdelivershighervalueinsomeareasHowcanKmartimproveitssalesproductivity(sales/sq.ft.)??2004Capgemini-AllrightsreservedExercise1—
defineandstructExercise4—summaryperformancedataforacreditcardissuer…what’stheproblem?Note:Allfiguresin1000s.AssumenopriceinflationandthatinterestrateshaveremainedconstantThe80/20Rule…80%oftheanswerisin20%ofthedataOftenwemissthegoldminebecausewearebusytryingtovaluetheshackbuiltontopofitThisdata,takenfromarealclient(butrebased,)tellsthewholesorrystoryoftheirstrategicprobleminonepicture
?2004Capgemini-AllrightsreservedExercise4—summaryperformanExercise5—
usinga“quickanddirty”approachcanproducesurprisinglyaccurateresults30million?300million?3billion?30billion?300billion?HowMany(Retail)LitresofPetrolAreSoldinFrancePerYear?Data:FrenchPopulation~60million.1Gallon=3.8Litres?2004Capgemini-AllrightsreservedExercise5—
usinga“quickaDevelopaHypothesis?2004Capgemini-AllrightsreservedDevelopaHypothesis?2004CapExplicitlytiesyouranalysistoyourproblemdefinitionWhyhypothesesmatterTheykeepyoureffortHelpsdefinethelevelofaccuracythatmattersEnsuresyouanalyzenomorethanisneededtodisprovehypotheseswithinareasonabledoubtAllowsquickcheckbeforemassivedatacollectionandcrunching:“Ifweconfirmourbeliefinthehypothesis,willwebeabletoactonit?”KeepsyouefficientOntargetAccurateMinimalActionableOnTime?2004Capgemini-AllrightsreservedExplicitlytiesyouranalysisSource:BarbaraMinto,“ThePyramidPrinciple”.1.Rule2.Case3.ResultRuleCaseResultIfweputthepricetoo
high,saleswillgodownWehaveputpricestoohighTherefore,saleswillgodownCaseResultRuleWehaveputpricesupSaleshavegonedownSaleshavegonedownbecausethepriceistoohighSaleshavegonedownSalesgodownwhenpricesaretoohighProbablywehaveputpricestoohighHypothesisResultRuleCaseAbductionisavariationondeductiveandinductivereasoningandapowerfultooltodevelophypothesesDeductionInductionAbduction1.Case2.Result3.Rule1.Result2.Rule3.Case?2004Capgemini-AllrightsreservedSource:BarbaraMinto,“ThePDEVELOPAHYPOTHESIS
Whatdifferentiatesagoodhypothesisfromabadone?Ontarget:Answersthecorequestionontheclients’mindAccurate:EmbracestheentirerangeofcompetitiveorprofitdriversMinimal:
“Occam’s
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