McKinsey 7-Step Problem Solving Framework

Step 1: Define the Problem

• Problem Statement: What exactly are we trying to solve?
• Constraints: What are the limitations or boundaries?
• Dependencies: What must happen first or in parallel?
• Decision Makers: Who needs to be aligned?
• Success Criteria: How will we measure success?
• Time Frame: What's the deadline or urgency?

  Step 2: Disaggregate Using Logic Trees

• Create MECE Structure: Mutually Exclusive, Collectively Exhaustive breakdown
• Identify Key Drivers: What are the main components of the problem?
• Build Logic Tree: Visual breakdown of problem into manageable parts
• Validate Completeness: Ensure nothing important is missed

  Step 3: Prioritize Using Impact-Effort Matrix

• Assess Impact: How big is the lever's effect on the outcome?
• Assess Effort: How easy is it to move that lever?
• Focus on Quick Wins: High impact, low effort areas
• Identify Critical Path: Must-do items regardless of difficulty

  Step 4: Create Work Plan

• Define Analysis: What specific analyses need to be done?
• Assign Owners: Who is responsible for each workstream?
• Set Timelines: When will each deliverable be ready?
• Determine Precision Level: How thorough does analysis need to be?
• Plan Dependencies: What needs to happen in what order?

  Step 5: Conduct Analysis

• Start with Heuristics: Simple rules of thumb and summary statistics
• Use Right Tool: A/B testing, exploratory data analysis, or models
• Validate Data Quality: Is the data accurate and complete?
• Test Assumptions: Challenge your hypotheses rigorously
• Avoid Over-Engineering: Don't build complex models unnecessarily

  Step 6: Synthesize into a Story

• Build Pyramid Structure: Key insight supported by data points
• Create Clear Narrative: What should we do and why?
• Support with Evidence: Data-backed arguments for each point
• Make Actionable: Clear recommendations with rationale
• Consider Stakeholders: Address concerns and build buy-in

  Step 7: Monitor and Evaluate

• Track Implementation: Is the solution being executed?
• Measure Impact: Are we achieving the desired outcomes?
• Adjust Course: Make changes based on results
• Document Learnings: What worked, what didn't, and why?

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  Problem Definition Template

  Problem: [Clear statement of what needs to be solved]

  Constraints:

• [Constraint 1]
• [Constraint 2]
• [Constraint 3]

  Dependencies:

• [Must happen first]
• [Must happen in parallel]
• [Blocking items]

  Success Criteria:

• [Measurable outcome 1]
• [Measurable outcome 2]
• [Timeline and milestones]

  Stakeholders:

• [Key decision makers]
• [Execution team]
• [Others affected]

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  Logic Tree Examples

  For Revenue Problem:

• Market Size

- Current customers

- Potential customers

• Pricing

- Price per unit

- Volume

• Market Share

- Competitive positioning

- Marketing effectiveness

For Cost Problem:

• Variable Costs

- Cost of goods sold

- Processing costs

• Fixed Costs

- Facilities

- Overhead

- Technology

• Operational Efficiency

- Process waste

- Automation opportunities

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Prioritization Matrix

High Impact, Easy to Change (Quick Wins)

• Immediate actions with big results
• Low-hanging fruit
• Build momentum early

  High Impact, Hard to Change (Critical Path)

• Must-do items requiring significant effort
• May need more resources or time
• Don't delay on these

  Low Impact, Easy to Change (Fill-ins)

• Nice to have items
• Do during slack time
• Incremental improvements

  Low Impact, Hard to Change (Avoid)

• Don't waste time here
• Distractions from real priorities
• Defer or eliminate

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  Storytelling Structure (Pyramid Principle)

  Governing Thought: [One sentence summary of recommendation]

  Supporting Arguments:

• [Major point 1 with evidence]
• [Major point 2 with evidence]
• [Major point 3 with evidence]

  Supporting Data:

• For each major point, include:

- Specific numbers or facts

- Examples or case studies

- Qualitative insights

Recommendation:

• [Specific action to take]
• [Why this action]
• [Expected outcome]

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