Business Consulting Services

Jeffrey M. Kurtz

Agenda

• Problem Definition discussion• Problem Definition Exercise

• Objectives:1. Understand the Problem Definition Process

2. Be Able to Define a Client’s Problem

Ultimate Goal “Here”How Do You Get “Here”?

Get Here

5 Fatal Flaws of Consulting

1. Projects not defined in terms of client results

2. Unrealistic solutions – beyond the resources

3. Unrealistic solutions – one big change

4. Non-collaborative consulting

5. Labor intensive use of consultants (instead of leveraged use)

Good Consulting Techniques

1. Project goals are defined in terms of measurable improvements in client bottom-line results.

2. Project scope determined by assessing what the client organization will be willing and able to absorb and implement.

3. Projects divided into steps to produce rapid results and experience that lay foundation for further progress.

4. Client and consultant work together as partnership at every stage of the project.

5. Client teams take major responsibility for the project, and consultants provide unique, focused support.

What’s a Problem?

Something that isn’t right that has finally reached the point that it can’t be ignored any longer.

Ultimate Goal “Here”How Do You Get “Here”?

Get Here

Problem Definition

Excellent Consulting

begins with

Accurate

Problem Definition

Problem Definiton

What is the difference between

The Symptoms and The Problem?

Presenting Problems = SymptomsSymptom - Back PainAsk questions: Where? In the middle of my back &

sometimes my neck.How long? About 2 hours.When does it hurt? It started when I was

shoveling snow. It goes away if I sit down and rest.

Are there any significant medical issues in your family? Dad died from a heart attack.

Do Research:Check Pulse – rapidCheck BP – highCheck Breathing – labored and shallowCheck Skin – pink, cool and dampHypothesis: Heart attack.Treatment: Immediate cardiac care.

Symptom - Back PainAsk questions: Where? In the middle of my back.How long? About 2 hours.When does it hurt? It started when I was

shoveling snow. It goes away if I sit up straight and don’t turn my head.

Are there any significant medical issues in your family? No.

Do Research:Check Pulse – normalCheck BP – normalCheck Breathing – slightly elevated and

shallowCheck Skin – pink, warm & dry

Hypothesis: Strained back muscles.

Treatment: Ibuprofen, heat, relaxation.

Presenting Problems = SymptomsSymptom - Back PainAsk questions: Where? In the middle of my back &

sometimes my neck.How long? About 2 hours.When does it hurt? It started when I was

shoveling snow. It goes away if I sit down and rest.

Are there any significant medical issues in your family? Dad died from a heart attack.

Do Research:Check Pulse – rapidCheck BP – highCheck Breathing – labored and shallowCheck Skin – pink, cool and damp

Hypothesis: Heart attack.

Treatment: Immediate cardiac care.

Symptom - Back PainAsk questions: Where? In the middle of my back.How long? About 2 hours.When does it hurt? It started when I was

shoveling snow. It goes away if I sit up straight and don’t turn my head.

Are there any significant medical issues in your family? No.

Do Research:Check Pulse – normalCheck BP – normalCheck Breathing – slightly elevated and

shallowCheck Skin – pink, warm & dryHypothesis: Strained back muscles.Treatment: Ibuprofen, heat, relaxation.

Presenting Problems

Presenting Problem – Profitability

Ask Questions:What has happened to sales?

Remained steady.What has happened to expenses?

IncreasedWhat areas have increased the most?

Cost of Goods Sold (COGS)Why? I’m not sure.

Research: Industry Norms Historical – COGS% up Break down components of COGS

– shipping costs 30% above industry norm.

Hypothesis: Examine ways to lower shipping costs of raw materials.

Presenting Problem – Profitability

Ask Questions:What has happened to sales?

Declined.What has happened to expenses?

Increased slightly.What products have declined the

most? Our pink widgets.Why? I’m not sure.

Research: Industry Norms Historical – Pink & Striped widget

sales are down Competition, trends, pricing, etc.

Hypothesis: Competition has increased in the Pink widget business and technology has made Striped widgets unnecessary.

Presenting Problems

Presenting Problem – Profitability

Ask Questions:What has happened to sales?

Remained steady.What has happened to expenses?

IncreasedWhat areas have increased the most?

Cost of Goods Sold (COGS)Why? I’m not sure.

Research: Industry Norms Historical – COGS% up Break down components of COGS

– shipping costs 30% above industry norm.

Hypothesis: Examine ways to lower shipping costs of raw materials.

Presenting Problem – Profitability

Ask Questions:What has happened to sales?

Declined.What has happened to expenses?

Increased slightly.What products have declined the

most? Our pink widgets.Why? I’m not sure.

Research: Industry Norms Historical – Pink & Striped widget

sales are down Competition, trends, pricing, etc.

Hypothesis: Competition has increased in the Pink widget business and technology has made Striped widgets unnecessary.

Defining the Problem1. Uncover the Presenting Problems.

2. Identify the key questions to ask and investigate further.

3. Answer the key questions and define the overall issue.

4. Define a course of action.

Issue Decomposition

Issue Decomposition = A tool to define/structure key questions to be answered to solve a business issue (i.e., Issue Tree)

Issue Tree Enables You to:• Clearly state a business problem• Understand the business problem’s key drivers and components• Identify interrelationships between factors• Comprehensively answer/address the business problem• Organize efforts to collect relevant information• Communicate your approach, and, eventually, your

recommendations in a logical fashion

FRAMING THE PROBLEM – ISSUE TREE EXAMPLE

Problem: How can the Acme Widget Company increase profits from its existing business lines?

FRAMING THE PROBLEM – ISSUE TREE EXAMPLE

How can Acme increase profits from existing business lines?

from McKinsey Consulting

FRAMING THE PROBLEM – ISSUE TREE EXAMPLE

How can Acme increase profits from existing business lines?

From Widgets

From Thrum-mats

From Grommets

Which Business

Lines?

from McKinsey Consulting

FRAMING THE PROBLEM – ISSUE TREE EXAMPLE

How can Acme increase profits from existing business lines?

From Widgets

From Thrum-mats

From Grommets

Increase Revenues

Decrease Expenses

Which Business

Lines? How?

from McKinsey Consulting

FRAMING THE PROBLEM – ISSUE TREE EXAMPLE

How can Acme increase profits from existing business lines?

From Widgets

From Thrum-mats

From Grommets

Increase Revenues

Decrease Expenses

Decrease raw material costs

Decrease labor costs

Decrease overhead costs

Which Business

Lines? How? How?

from McKinsey Consulting

FRAMING THE PROBLEM – ISSUE TREE EXAMPLE

How can Acme increase profits from existing business lines?

From Widgets

From Thrum-mats

From Grommets

Increase Revenues

Decrease Expenses

Decrease raw material costs

Decrease labor costs

Decrease overhead costs

Negotiate wage concessions

Implement a labor-saving production process

Which Product Lines? How? How? How?

Negotiate higher productivity quotas

from McKinsey Consulting

Issue Tree- MECE

• The number of primary questions and the number of question tiers is dependent upon the business issue being addressed.

• ME = Mutually Exclusive = Ensure that that no overlaps exist.

• CE = Collectively Exhaustive = Ensure that all aspects of the business issue are considered.

MECE example

Case Practice as Team

STC

As a team, work for 30 minutes to

1. Define the Problem

2. Present it to the class

Reminder

• Client presentations will be held on:• ENG – Wednesday class time.• BA - Thursday evening from 6:30 to ~ 8 p.m.

• Please dress “business casual” for that session.

Thanks!