An amazing framework to solve business problems:

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There are two type of things I learned in Graduate school:

1. Useful

2. Not Useful! (useless)

This post is NOT about discussing useless learning’s! So let me share one of most useful things that I learned in my two years at a School of management: How to solve business problems? Sounds cliched but that was, I think, one of the most important skills I picked up there. In particular, I learned about Frameworks used to solve business problems, one of them was called “MECE” which is what I want to share with you in this post.

(Side-note: Most folks learn this at some strategy consulting firm like McKinsey but unlike them, I learned about it in school)

Before we begin, I want to share about why you should care and then I’ll talk about what is it.

Why MECE?

No matter which team you work for, you are solving problems. You wouldn’t have a job if you’re not doing that — so why not get better at it?

If you want to find a root cause of a business problem (& find the solution faster!) then you need to break it down…to break it down, you need to structure it. Now, they are many ways (or Frameworks) to structure a problem — MECE is one of the most effective frameworks out there. So lets learn about that:

(side-note: MECE framework may sound like a simple idea BUT it’s NOT easy to apply!)

What is MECE?

It’s an acronym and it stands for “Mutually Exclusive and Collectively Exhaustive” which means that when you break a problem into sub-items then they should be:

1. Not overlap with each other (mutually exclusive)

2.  If you add up all sub-items then it should represent all possible solutions (collectively exhaustive)

Let’s take an example:

Say that you are asked to analyze “why is Profitability declining?”

Here’s a non-MECE way:

  • Find Top 10% profitable products [does NOT pass the collectively exhaustive test]
  • Out of them find products that are have declining profits
  • Try to find reasons why those products would have declining profits

Here’s a MECE way:

Visual for MECE principle

  • Break it down to Revenue & Cost
  • let’s start with cost, let’s say it’s constant = revenue must be going down for declining profits
  • further break down revenue into 1) Revenue from all non-usa locations 2) USA locations (Note the use of MECE principle here)
  • let’s say that revenue for non-usa locations is increasing, then it must be USA locations that’s the problem! (Note how effectively are able to narrow down and find the root cause faster!)
  • Let’s further break down to product categories for USA locations…Continue breaking down the sub-items in a MECE way till you find the root cause

I hope that gives you a good overview of MECE principle.

Conclusion:

MECE is one of the few effective frameworks that you can use to solve a business problem. If you want to get better at structuring your ideas (to solve business problems), consider practicing MECE as there are ample resources available online that would help you master this!

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