"The McKinsey method.

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McKinsey method. Using techniques from leading strategic consultants to solve personal and business problems Ethan Rasiel

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Title: McKinsey Method. Using techniques from leading strategic consultants to solve personal and business problems
Author: Ethan Rasiel
Year: 2012
Genre: Management, personnel selection, Corporate culture, Foreign business literature

About the book “The McKinsey Method. Using the techniques of leading strategic consultants to solve personal and business problems" Ethan Rasiel

The book reveals for the first time the management practices that McKinsey has carefully guarded for a long time, and showcases tools that enable managers at every level to think like McKinsey consultants and find solutions to their toughest business problems.

This work will be useful not only to representatives of consulting companies and business school students, but also to all those who solve business problems.

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Today in the world there is no other consulting firm as well-known, successful and in demand as McKinsey & Company. Its clients include most of the world's leading corporations. Many of the world's greatest business leaders and management thinkers have emerged from this company. Among them are Tom Peters, Louis Gerstner, Jon Katzenbach and many others. The book reveals for the first time the management practices that McKinsey has long guarded and demonstrates the tools that enable managers at every level to think like McKinsey consultants and find solutions to their toughest business problems. This work will be useful not only to representatives of consulting companies and business school students, but also to all those who solve business problems.

* * *

by liters company.

How McKinsey approaches problems

McKinsey's focus is on solving problems for client companies. The company's consultants have a real passion for solving problems. This is how one of them said it former managers project:

Solving problems is not part of your job at McKinsey, but the job itself. Imagine looking around you, thinking only one thing: how can I make something better than it is? Your inner voice constantly asks: “Why is this or that done this way and not otherwise? Can it be made even better? You should develop a skeptical attitude towards everything in the world.

In the first part of the book, we will tell you how the Firm's employees approach solving problems faced by their clients. We will show you how to collect and structure facts and test hypotheses. In this part, you will become familiar with McKinsey's main solution search method and learn a few rules to help you apply this method.

Building a solution

As any McKinsey consultant knows, the solution process has three main features. The solution to the problem posed by the client must:

Rely on facts;

Have a clear structure;

Based on the formulation and analysis of hypotheses.

In this chapter, you'll learn what these traits mean and how knowing them can help you solve problems in any business.

Facts are a consultant's best friend

Facts are the building blocks that lay the road to solving a problem, so there is no need to be afraid of facts.

Solving a problem begins with gathering facts. On the first day of work on a project, team members review many articles and internal research materials from the Firm. Then, at the first meeting, each consultant reports on the facts he has found that shed light on one or another aspect of the problem. The team then comes up with an initial hypothesis about how the problem they are facing can be solved and begins gathering evidence to support or refute that hypothesis.

New employee begins his work at the Firm by learning to collect and analyze facts. According to one former senior project manager:

If you strip away all the sophisticated intellectual terminology that pervades McKinsey's decision-making process, what emerges is the careful, painstaking analysis of all the elements of a problem combined with vigorous fact-gathering.

Why are facts so important to McKinsey's work? There are two reasons for this. Firstly, facts compensate for the lack of practical intuition (for this, see the section “Each client is unique: there are no template solutions” in the second chapter of the book). Most McKinsey employees are specialists generalist: They know a little about a lot of things. As they gain experience and move up the career ladder, they begin to know a lot about a lot of things. But even then, they will still know much less about, say, perishable food storage methods than a wholesale operations specialist with ten years of supermarket experience. If this specialist has a problem, he finds a solution using only intuition in just a few seconds (however, turning to facts is also useful for him). McKinsey consultants do not have such intuition, and therefore they turn to facts first.

Secondly, facts help overcome mistrust. As a rule, the age of the person whom the company hires as a consultant is 25-30 years old: he graduated from college or university with excellent marks, worked for two or three years in a large corporation and then received an MBA from one of the leading business schools ( at least this is the case in the USA). It happens that during the course of work on the first project, a new consultant has to present the results of his analysis to the president of a Fortune 50 corporation. Of course, this president will be extremely distrustful of anything that a yellow-haired 27-year-old business school graduate tells him, if the words the latter will not be supported by facts. The same is true when a junior manager presents his proposal to the boss.

Despite the evidentiary power of facts (or perhaps precisely because of it), many businessmen are afraid of them. Perhaps this is a fear that if they look at the facts more closely, they (or someone higher up) will not like the picture that emerges. It seems to such people that if unpleasant facts are not noticed for a long time, they will disappear by themselves. Of course, they will not disappear anywhere. Turning away from the facts is the surest path to failure, since the truth will eventually come out anyway. We must not be afraid of facts, but hunt for them and use them to our advantage.

CISI principle

Structuring thinking when searching for a solution to a problem in business (or any other) is achieved by drawing up an exhaustive full description of this problem—that is, a description that is free from confusion or redundancy.

The abbreviation “VISI” means “mutually exclusive, jointly exhaustive.” This is the principle on which McKinsey's entire solution process is based, and it is literally drilled into the heads of new consultants. Every document, every presentation, every email or voicemail from any McKinsey employee should be written according to the ISI principle. Ask anyone who has worked at McKinsey about their most memorable problem-solving method, and the answer is likely to be “VISI.”

The CISI principle structures thinking as clearly as possible (thereby eliminating confusion) and in the most complete manner. The application of this principle begins at the most general level - with the compilation of a list of sub-problems into which the problem can be broken down. Having compiled this list, think carefully about whether each sub-problem is independent of the others. If this is so, then the listed subproblems are mutually exclusive. Further, is every aspect of the problem reflected in one and only one sub-problem—in other words, is everything taken into account? If so, then the listed subproblems, taken together, describe the problem exhaustively.

Let's say your team is doing research for a large American company– let's call it Acme Widgets. The task is formulated as follows: “Find a way to increase sales of goods produced by the company.” After some thought, the consultants suggested following methods sales increase:

It doesn’t matter that at first the list may be too general (in the next section we will talk about levels of detail), for now the only thing that is important to us is that this list meets the SICI principle.

Let's say someone suggests another item, for example, “Modernization of the production process.” How will this item fit in with the three already available? This item is certainly important, but it will not be the fourth item, since it is a subitem for “Reducing unit costs” - along with other subitems, such as “Developing a distribution network” and “Improving inventory management.” Why? The point is that these three sub-items are ways to reduce unit costs, and if we single out one of them (or all three) as a separate item, then our original list will be redundant. It will contain items that overlap with each other. Such intersection indicates confusion in the author's head and leads to confusion in the reader's head.

Once you have a list whose items are clearly separated from each other (i.e., they are mutually exclusive), you should make sure that these items reflect all aspects of the problem (i.e., their totality is exhaustively complete). To do this, let’s return to the sub-item “Modernization of the production process”, which we included in the item “Reducing costs per unit of production”. Suppose one of the consultants says: “It is still possible to change the production process in such a way that the quality of the product increases.”

He is right. Does this mean that “modernization of the production process” should be highlighted as a separate item? No, it doesn’t mean - you just need to detail the list even further and include the sub-item “Modernization of the production process to reduce costs per unit of production” in the item “Reduction of costs per unit of production”, and the sub-item “Modernization of the production process to improve product quality” in the item “Improvement product marketing." Now our list of solutions will look like this:

Changing the way you sell through retail network;

Improving product marketing:

– modernization of the production process to improve product quality;

Reduced unit costs:

– modernization of the production process to reduce costs per unit of production.

Let us further assume that the consultants also expressed other interesting ideas, which cannot be attributed to any of the items on the list. What to do in this case? Of course, these ideas can be ignored, but such ignoring is unlikely to have a good impact on the customer company. You can add new items to the list, but then there will be too many of these items. As is commonly believed at McKinsey, good list should consist of no less than two points and no more than five (but best of all, of course, three).

There is a solution to this dilemma: the magical category “Other.” If you can't figure out where to put two or three brilliant ideas, this category will come to the rescue. However, “Other” should not be placed among the items in the main list, otherwise the list will look ridiculous. This category will look normal among other sub-items, but on the opening slide of the presentation it will immediately catch your eye. Try to figure out what items the ideas proposed by team members can be classified into, and if you can’t do anything, then the “Other” category will help you comply with the CISI principle.

How to Solve a Problem in the First Team Meeting: Initial Hypothesis

Solving a puzzling problem is like a long journey, guided by the original hypothesis.

It is not easy to explain what an initial hypothesis (IG) is, which is also the third element on which the search for a solution to the problem facing the consultant is based. To make the explanation clearer for you (and me), I will break this section into three parts:

Determining the initial hypothesis;

Proposing an initial hypothesis;

Testing the initial hypothesis.

Defining the initial hypothesis

The essence of an initial hypothesis is to make an assumption about what the solution to a problem might be, and this assumption is made before you even begin to search for the solution itself. This doesn't sound very clear, but in fact we do this kind of thing regularly.

Let's say you want to find a restaurant located in a part of the city where you have never been. You know that on Smith Street you have to turn at the third intersection and then turn right at the first intersection and the restaurant will be around the corner. You know how to get to Smith Street, and then you just have to follow the description. Congratulations – you have your initial hypothesis!

Finding a solution to a business problem is more difficult than finding a restaurant, but the meaning of the original hypothesis remains the same. IG is a kind of guide (sometimes very approximate), following which you move towards a solution. If the initial hypothesis is correct, then the search for a solution is simply a detailed route using the analysis of facts.

For example, let’s take the already familiar American company Acme Widgets. Let's say your team needs to figure out how to increase sales of its products. To this end, using your knowledge of the company’s business, you organized brainstorm, but before embarking on intensive fact-gathering and analysis, you may be able to tentatively formulate the following initial hypothesis:

Ways to increase sales:

Improving product marketing;

Reducing costs per unit of production.

As will be discussed in the next section, to determine what kind of analysis is required to prove or disprove IG, each of these points must be broken down into sub-points. Remember that a hypothesis is nothing more than an unproven theory, and not a ready-made answer. If the IG turned out to be successful, then the final presentation of the project results will appear on the customer’s table in just a couple of months. If it is incorrect, then after you are convinced that it is incorrect, you will have enough information in your hands to put forward the correct hypothesis. IG only becomes a guide to a decision when it is clearly formulated and the criteria for its proof or refutation are also clearly discussed.

Proposing an initial hypothesis

IS is a product of the structuring of facts. Therefore, to nominate an IG, you must have a sufficient factual basis. However, there is no point in searching for information before you know exactly where to look for it. One former senior project manager spoke about following method IS nominations:

At the beginning of a project, I try to digest as much factual information as possible. To do this, I read publications related to the customer’s industry for several hours, but I do this not to collect facts, but in order to feel the atmosphere of this industry - its professional jargon, typical problems for it, etc. Then I look for technical experts among the Firm’s employees. who have already worked in this industry. This method allows you to get up to speed as quickly as possible.

To put forward an initial hypothesis, not all available facts are needed. You only need enough information to form a good overview of an industry or issue. If the problem concerns your own business, then all the required facts may already be in your hands, and all you have to do is structure them correctly.

Structuring a problem begins by identifying its components, or “key factors” (see the section “Finding Key Factors” in Chapter 3). Then formulate practical recommendations on how to control each of these factors. This stage of work is extremely important. Let's say the profitability of your business depends on the weather - in other words, the weather will be a key factor affecting profit in the current quarter. In this case, the recommendation “We need to pray for good weather” will not be considered practical, unlike the recommendation “We should reduce our dependence on weather conditions.”

The next step is to formulate specific tasks based on the recommendations. What needs to be done to implement this or that recommendation? Imagine the most likely answers to this question, and then go down another level. As you think about each problem, figure out how you can prove or disprove the hypothesis about its solution. As you gain experience, you will develop the ability to distinguish in advance between provable and unprovable things. This skill will help you avoid getting into dead ends.

Suppose, when looking for a solution to a problem posed by a client, your team identified the following key factors: the work of the sales department, marketing strategy and the value of production costs. Based on this, you have compiled the following list practical recommendations as an initial hypothesis:

Ways to increase sales:

Changing the method of sales through the retail network;

Improving product marketing;

Reducing costs per unit of production.

So, first of all, let’s pay attention to the work of the sales departments. Let's say these departments are organized by geography (Northeast region, Mid-Atlantic region, Southeast region, etc.) and are engaged in the delivery of products to retailers three types: supermarkets, department stores and specialty stores. Your team makes an initial hypothesis: To increase sales, salespeople should be grouped not geographically, but by customer type. Now your task is to test this hypothesis.

End of introductory fragment.

* * *

An introductory fragment of the book The McKinsey Method. Using the Techniques of Top Strategic Consultants to Solve Personal and Business Challenges (Ethan Rasiel, 2012) provided by our book partner -

McKinsey tools. Best practice for solving business problems Friga Paul

McKinsey method

When analyzing data, McKinseyites apply the following principles.

"80/20". The 80/20 rule is one of the great truths in business. According to this rule, 20% of the analyzed examples will create 80% of the studied effect. This rule was discovered by economist Vilfredo Pareto. Studying economic conditions in his native Italy, Pareto determined that 20% of its population owned 80% of the land. Later, while working in his garden, he discovered that about 80% of the pea crop grew on just 20% of the plants. Based on these and other observations, he determined that for any series of elements studied, a small part of them accounts for a large proportion of the effect. Over time, Pareto's observations were summarized as the "80/20" rule.

Although this rule has been around much longer than McKinsey, it was the Firm's consultants who made it the basis of all their thinking. When you look at your organization's key numbers, you will almost always find examples of the 80/20 ratio. For example, you might determine that 80% of your sales come from 20% of your customers, 80% of your profits come from 20% of your salespeople, and 80% of your time is spent doing 20% of the work.

The key to the 80/20 rule is data. As you analyze them on the computer, play a little with the numbers, sorting them in different ways. Every time you see the 80/20 rule in action, look for the possibilities it contains. If 80% of your sales come from 20% of your salespeople, what exactly are those people doing right and how can you transfer that to everyone else? And are these ineffective others even necessary? As you can see, applying this rule can be of great benefit.

Take notes daily. At the end of each day, ask yourself, “What are the three most important things I learned today?” Take half an hour before leaving work to put these things on paper; You don’t need a beautiful design; it’s enough to quickly sketch out a diagram or a short list of several points. This exercise will give your thoughts a boost. You won't forget what you depicted in this diagram, even if you don't use it later. If you do not record your thoughts, they will be erased from memory by the time you leave the office.

Don't force the facts to fit the decision. Let's say you and your team formulate a brilliant hypothesis; but be prepared for facts and analysis to show you are wrong. In this case, it is the hypothesis that must change, not the facts.

This text is an introductory fragment. From the book McKinsey Tools. Best practice for solving business problems by Friga Paul

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From the author's book

The McKinsey Method As with structuring, let's start with the principles that McKinsey adheres to. Solve the problem at the first meeting. McKinseyites know that analyzing facts with the intention of confirming or disproving a primary hypothesis is much more powerful.

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The McKinsey Method The following guidelines help McKinseyians plan their analysis. Find the key factors. The success of most companies depends on a number of factors, but not all of them are equally important. With limited time and resources, you cannot afford such luxury,

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The McKinsey Method Let's take a quick look at McKinsey's research principles. Facts are your friends. At McKinsey, problem solving is based on fact-based analysis. Facts compensate the consultant for experience and intuition, which he does not yet have, unlike the head of the client company,

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The McKinsey Method McKinsey emphasizes the importance of being prepared and polite when conducting interviews. Prepare: Write preliminary plan. Make a written list of the questions you want to ask in the order in which you plan to ask them. A plan is needed for two reasons.

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The McKinsey Method The central principle of knowledge management at McKinsey is: don't reinvent the wheel. Whatever problem you're working on, chances are someone has already done something similar. McKinsey understands the value of collecting and using this

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McKinsey method When analyzing data, McKinseyians apply the following principles: “80/20”. The 80/20 rule is one of the great truths in business. According to this rule, 20% of the analyzed examples will create 80% of the studied effect. This rule was discovered by economist Vilfredo Pareto.

From the author's book

The McKinsey Method McKinsey has a principle: make sure the solution you offer is right for the client. Make sure the solution you offer is right for the client. Management, like politics, is the art of the possible. The most beautiful solution based on the analysis of a huge

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The McKinsey Method McKinsey emphasizes the need for presentation structure to be logical and simple. Be structured. To successfully present your ideas, you must lead your audience through logical reasoning, step by step, so that you are easy to follow. Yours

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The McKinsey Method Former McKinsey employees firmly believe that to convince a client, you need to take care of everything in advance. Take care of everything in advance. A good business presentation should not include new information, which will shock the audience. Before organizing the ceremony

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The McKinsey Method The importance of communication at McKinsey is expressed in the principle of “keep the information flowing.” Keep information flowing. Information is power. Unlike other resources, its value increases when more people use it. So that your team

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The McKinsey Method Two McKinsey lessons apply to team building. Keep your finger on the pulse to keep team morale high. It is extremely important to be in constant contact with the team to know their level of motivation and enthusiasm during the project, especially when

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The McKinsey Method McKinsey takes a unique approach to attracting clients. How to sell without selling. If you ask a McKinsey consultant how the Firm sells its services, they will tell you in a slightly arrogant tone that McKinsey doesn't sell them. This is only partly true. Actually McKinsey

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The McKinsey Method McKinsey people eagerly talked about how they walked the thorny path to success at the Firm. Find yourself a mentor. Take advantage of the experience of others - find someone senior in the organization who can serve as your mentor. Even if in your

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The McKinsey Method McKinseyites often complain that they don't have time for their personal lives. But they were still able to offer two recommendations on this topic. How to approach business trips. IN modern business You can't do without travel. Try to see interesting things on business trips

The McKinsey Method reveals the management approaches and techniques that McKinsey has long guarded and demonstrates the tools that enable managers at every level to think like McKinsey consultants and find solutions to their most complex business problems. Today in the world there is no other consulting firm as well-known, successful and in demand as McKinsey & Company.

Why The McKinsey Method is Worth Reading

If you are a company executive who has turned to McKinsey or another consulting firm for help, this book will give you an idea of what these strange people do. Although each consulting firm has its own methods of work, the essence management consulting it’s the same everywhere – it’s an objective look at the client’s situation. It's possible that other firms operate very differently from McKinsey, but their consultants' minds are similar.

Who is the author of the book “The McKinsey Method”

Ethan Rasiel joined McKinsey in 1989 and worked there until 1992. His clients were large companies from the fields of finance, telecommunications, IT and consumer goods. In addition, Rasiel has worked as an investment banker and asset manager. He holds a bachelor's degree from Princeton University and an MBA from the Wharton School of Business.

About McKinsey

James O. McKinsey & Company was founded in 1926 by James O. McKinsey in Chicago. James McKinsey is a professor of accounting at the University of Chicago Business School who first proposed the use of financial planning as a management tool. Marshal Field's became his first client in 1935 and soon convinced McKinzie to leave his own firm and take over his general director. In 1937, McKinsey died suddenly of pneumonia.

Marvin Bauer, who joined the firm in 1933 and became McKinsey's successor, foresaw the firm's success on the world stage and laid down its basic principles. The Chicago and New York branches separated from the firm when McKinsey died. In 1939, with the help of New York partners, Bauer reestablished the firm's New York office and renamed it McKinsey & Company. One of the firm's early partners, Andrew T. Carney, retained the firm's Chicago office and renamed it with his own name, thus marking the beginning of the rival firm A.T. Kearney, a management consulting company.

Today McKinsey has 94 offices in more than 60 countries.

Name: McKinsey method. How to solve any problem
Authors): Ethan Rasiel
Publisher: Alpina Publisher, 2018

Description:
Original (English): "The McKinsey Way: Using the Techniques of the World"s Top Strategic Consultants to Help You and Your Business" by Ethan M. Rasiel

The book reveals for the first time the management practices that McKinsey has long guarded and demonstrates the tools that enable managers at every level to think like McKinsey consultants and find solutions to their most complex business problems.

Why the book is worth reading:

If you are a company executive who has turned to McKinsey or another consulting firm for help, this book will give you an idea of what these strange people do. Although each consulting firm has its own methods of work, the essence of management consulting is the same everywhere - it is an objective view of the client’s situation. It's possible that other firms operate very differently from McKinsey, but their consultants' minds are similar.

This work will be useful not only to representatives of consulting companies and business school students, but also to all those who solve business problems.

Ethan M. Rasiel(Ethan M. Rasiel) joined McKinsey in 1989 and worked there until 1992. His clients included large companies from the financial, telecommunications, IT and consumer goods sectors. In addition, Rasiel has worked as an investment banker and asset manager. He holds a bachelor's degree from Princeton University and MBA business school Wharton.

Preface by translators
"The McKinsey Method" - expanding the boundaries of your world's screen...
Preface to the Russian edition
Acknowledgments
Introduction
Part I: Understanding Business Problems Using the McKinsey Method
1. Construction of the solution
2. Development of approaches to problem solving
3. The “80/20” principle and other rules
Part II. Solving Business Problems: The McKinsey Method
4. Sales
5. Team formation
6. Hierarchy management
7. Conducting research
8. Conducting interviews
9. Brainstorm
Part III. McKinsey's approach to "selling advice"
10. Presentations
11. Representing data using charts
12. Management of internal communications
13. Working with clients
Part IV. How to survive at McKinsey