CONFIDENTIAL

Consultants in action
the what and the how

Marketing Research Seminar

Presentation
Lari Hmlinen
Jani Kelloniemi

18 September, 2008

Objectives of this presentation

Describe
the role of a
consultant

Role of consultants and the typical challenges

Understanding the situation
Productization of the issue to be solved

Client
relationship
mgmt

Client relationship mgmt is a continuous process

Six key phases summarize a projects lifetime
Letter of Proposal and Steering Committees are key

Fact based
problem
solving

Problem solving tools and analytical approach

Use of (market) information/data in this
Communication and interaction throughout the study
Communication of findings and recommendations

scoping tools of work

Agenda

The role of consultants

Client relationship management
McKinsey problem solving process

Today we talk about the consultant value proposition, challenges related

to this external role and the McKinsey approach to tie these together

McKinsey
approach

Consultant value
proposition
knowledge, methodology
and fact based approach

Overcoming challenges
in the role as an
external to the company

Consultants help to create lasting impact

What is
consultants
value
proposition?

Issue for client

Consultants value proposition

Client lacks expertise

Proven methodology developed

in specific area
Unique challenges,
e.g., designing
organizational structure
Building world class skills

through numerous transformations

in different industries and
geographical areas
Cutting edge knowledge and skills

Funnel thinking and political Independent fact-based

games promoting finding
the non-optimal solution

Lacking resources
and drive for execution

recommendations
No historical or organizational burdens

Full commitment to execute

with competent resources

Specific challenges?

Consultants seen
as temporary change
agents with limited
liabilities

Challenges related
to working
as a consultant

Questioning consultants
knowledge of industry
specific issues and true
client problems

Clashing cultures
between clients
and consultants

Overall, aspiration of working as top management consultants is

reflected in our mission and core values

Mission

To help our clients make distinctive, lasting,

and substantial improvements in their
performance

To build a great Firm that attracts, develops,

excites, and retains exceptional people

Values

Adhere to the highest professional standards

Improve our clients performance significantly
Create an unrivaled environment for
exceptional people

Source: McKinsey

The way we work reflects these values

In teams, closely with clients

Top management perspective
Implementable recommendations
Fact based, objective

Source: McKinsey

Sustained client impact can only be achieved through the mobilization

of the client representatives at all phases of the project
Steering Group
CXO and other relevant
executives or business
owners or equivalent
Consultant firm senior
representative

Client management
Group strategy/
business development
Relevant business unit
representatives

Joint project team

Client

Consultants

Project leader
Part-time or full

Project manager
Supporting

time client
representatives

Provide subject matter expertise, knowledge

and historical data

Strong participation in problem solving
and data-analysis to develop clients analysis
capabilities enabling reuse of skills in future

Source: McKinsey

consultants

Consultant experts
Functional
(e.g., Corporate
Finance & Private
Equity, Strategy)
and industry experts
(e.g., Media and High
Tech, Energy)

Facilitate problem solving process with fact

based analysis
Maintain independent perspective
Act as trusted advisor through effective dialogue
Help initial implementation to achieve set targets

Building trust and providing an independent perspective are

the most crucial levers for building a successful client relationship

Independent
perspective
provided through
a trusted relationship

Taking into
consideration
perspectives,
motivations,
and aims
of different
stakeholders
within organization

Source: McKinsey

Rational
intelligence (IQ)

Relationship
intelligence
(RQ)

Fact and data

based solution thinking

Emotional
intelligence
(EQ)

Managing emotional
environment
of client, building
personal rapport

Agenda

The role of consultants

Client relationship management
McKinsey problem solving process

10

Client relationship management is a continuous process Engagements

initiated both through proactive discussions as well as client requests
Client relationship management is a
continuous process

Proposals on value
adding initiatives for
our clients

In-depth knowledge
of our clients
industries and
markets helps us to
initiate value creating
engagements

Source: McKinsey

Bringing
Building a
the latest
network of
knowledge
relationand
ships
Creating
a
views
winning
team

Client led
engagement
requests (e.g., RFPs)

Clients initiate
discussions on
potential areas based
on existing
relationships and trust

Counseling top
management

11

Any given project has 6 distinct phases in its lifecycle

Description of phase
1

On-going
discussions
Pre-LOP*
discussion

LOP handover
3
and
presentation
4

Project kickoff

Partners/APs/EMs
Discussions taking place through meetings
Request for proposal from client or generation from McKinsey
of ideas where to improve
Specifying the problem jointly and discussing
about the client context

Steering
Committees

Project wrap6
up and
handover

Partners/APs/EMs
from McKinsey

Our understanding of the situation

Proposed approach and team
McKinsey experience and credentials

Partners/APs/EMs

Presenting project scope and timeline to all

Whole McKinsey team

persons involved in project

Assign responsibilities

Periodic meetings where clients can ask

5

Persons involved

questions and provide guidance on areas that

are of further interest to them

Final presentation and handover to individual

persons that are responsible for the
implementation

* LOP = Letter of Proposal

Source: McKinsey

from McKinsey and

key experts
and client working
team

Whole McKinsey team

and key client
managers

Whole McKinsey team,

key client managers
and implementers
12

Of which the Letter of Proposal and the Steering Committees are the two
most important tools in managing scope of project
1

On-going
discussions

Letter of Proposal specifies the following:

2

Pre-LOP*
discussion

LOP handover
and
presentation

Project kickoff

Steering
Committees

Project wrapup and

handover

* LOP = Letter of Proposal

Source: McKinsey

Description of exact problem at client

Key work packages and deliverables at different
phases of project
Team composure and client team members needed
Duration of project and cost

Steering committees are sessions where the working team

(McKinsey and client members) present their findings to
the key managers and decision makers at the client
Persons can ask specific questions about the analyses,
numbers or how the findings affect the client
At the end of the meeting, the group jointly decides
what are the key areas to understand more deeply and
where to focus the efforts during the next few weeks
before the next Steering Committee meeting

13

Productization of the issue being solved is done through careful analysis

of the problem what do we need to solve?

How do you eat an elephantone small piece at a time!

Structured
problem solving
helps to cut
the elephant into
smaller pieces

14

Agenda

The role of consultants

Client relationship management
McKinsey problem solving process

15

Characteristics of a good problem solving process

Impact
driven

The goal of problem solving is to make positive, lasting

and substantial improvements in the performance

Focused

Hypothesis-driven and end product-oriented approach

to avoid boiling the ocean; teams need to balance examining
individual elements of a problem and looking at the big picture

Fact-based

Hypotheses always need to be supported with facts,

not just assumptions or speculations; if a team has to build
on assumptions initially, they need to be clearly labeled as such

Iterative
process

Problem solving approach is a structured yet iterative process

Gathering data, drawing implications (synthesis), developing
hypotheses for recommendations is iterative
Implementation is continuous as recommendations are
developed, barriers to overcome are identified, and seeds
for change are sewn

16

The 7 step problem solving loop

Problem

Define
problem

Structure
problem

Prioritize
issues
Develop
issue
analysis
and
work
plan

Communicate

Develop
recommendation

Synthesize
findings

Conduct
analyses

Communicate

17

Step 1: define problem

Think impact:
What do we want
to achieve?

Problem

Define
problem

Structure
problem

Prioritize
issues
Develop
issue
analysis
and
work
plan

Communicate

Develop
recommendation

Synthesize
findings

Conduct
analyses

Communicate

18

Getting an accurate understanding of the problem

is the first priority

19

Define the problem and scope in detail!

Basic question to be resolved

Brings focus to the analytic work succinct with actionable findings.
1 Perspective/context
Comments on the situation and
complication facing the client,
e.g., industry trends, relative position
in the industry

3 Decision makers
Identifies who at the client decides whether
to act upon the study recommendations,
e.g., CEO, Division Manager,
SBU Manager
4 Other key study stakeholders
Identifies who else could support/derail
the study and who else is influential

2 Criteria for success

Refers to the basis on which the client will
decide whether or not to act on the study
recommendations, e.g., financial returns,
effect on staff, market share growth

5 Constraints within solution space

Defines the limits to the set of solutions that
can be considered. Note: constraints may
have to be relaxed as the study proceeds

6 Scope of solution space

Indicates what will not be included in the study, e.g., international markets, research
and development activities, uncontrolled corporate costs
Source: McKinsey

20

Step 2: break problem into issues

Think disaggregation
and early hypothesis:
What could be the key
elements of the problem?

Problem

Define
problem

Structure
problem

Prioritize
issues
Develop
issue
analysis
and
work
plan

Communicate

Develop
recommendation

Synthesize
findings

Conduct
analyses

Communicate

21

Problems can be structured using three different types

of logic trees
Type
of tree
What Issue tree

Description
Starts with the
problem definition
and divides it into
components

How
Why

Reasons

Yes
?
No

Source: McKinsey

Hypothesizes
Hypothesis- a solution and
driven tree develops
a necessary and
sufficient rationale
to validate or
disprove it
Issue map

Elements
of branches

Typical
Application

Actions,
assertions,
criteria,
questions,
topics

Suitable for
a comprehensive
approach; Used
for a new problem
when relatively
little is known
about it
Typically used
when the problem
area is relatively
familiar and it is
possible to make
sound
assumptions

Reasons

Phrases key issues Questions

so that they can be
answered with yes
or no; sequences
them in a logical
order showing the
dependent action

Suitable when the

problem is well
understood and
can be structured
logically and within
a defined period
of time
22

Step 3: eliminate all non-key issues

Think speed:
Which issues are
most important
to the problem?

Problem

Define
problem

Structure
problem

Prioritize
issues
Develop
issue
analysis
and
work
plan

Communicate

Develop
recommendation

Synthesize
findings

Conduct
analyses

Communicate

23

Cut off branches

Issue 1

Keep focusing
Prioritize your effort on what
is most important

Issue 2

Helps ask so what. . . but also

ask what youve forgotten
Is the key to working efficiently

Problem
statement
Issue 3

Iss

ue
4

24

Possible prioritization criteria

High

High expected financial

impact

(Priority)
1

Inexpensive to execute
Short term pay off

Impact

Easy to implement

Low risk
High up on the top
managements agenda

Low
Slow

Immediate

Implementation speed

25

When prioritizing, be practical and consider the 80:20-rule

Percent
Benefit
100

Use your judgment/intuition

80

Involve key stakeholders

Do back-of-the-envelope

Vital to reduce
work load

calculation

Take risks

20

100
Time and expenditure

26

Step 4: build a detailed work plan

Think efficiency:
Where and how
should the team
spend its time?

Problem

Define
problem

Structure
problem

Prioritize
issues
Develop
issue
analysis
and
work
plan

Communicate

Develop
recommendation

Synthesize
findings

Conduct
analyses

Communicate

27

A little disciplined, early work planning can go a long way

in problem solving

28

Issue analysis sets the stage for action

Analyses
Logic tree
(after prioritization of issues)
2
3

Issue analysis
1

Source: McKinsey

29

Issue analysis worksheet which is further developed

into a workplan
Issue
Key issue
or unresolved
question that
elicits a yes
or no answer
and upon
which specific
action
depends

Hypothesis

Supporting
rationale

Analysis

Source

Statement
of the likely
resolution
of the issue.
It includes the
reason for
answering yes
or no

Elements you
have to believe
for the
hypothesis to be
true. Detailed
supporting
rationales make
the transition to
analysis easier.

Models that
should be
explored
in order to
confirm or
refute the
hypothesis

Likely location
or means of
obtaining data
to carry out
analysis

Yes ABC costs

will become
uncompetitive
without new
investment

Competitors
manufacturing
costs declining

Comparison
of manufacturing
costs

Specialist
magazines
/reports

Industry leaders
are investing in
new technology

Review of
competitive
investment

Manufacturing
and customer
interviews

Pay off short

Cashflow: NPV

Accounting Dpt.

Example
Should ABC
invest $20
million in new
manufacturing
technology?

Source: McKinsey

30

Tips for work planning

In right order Prioritize the issue tree (!) and the high level work plan.
Its easier to handle and simplifies design of the work plan
Early

Do not wait for data, critical mass or anything else

Revise

Revise, update and improve your hypotheses

as you work through the data

Specific

Be very specific on analysis and sources

Syndicate

Team members and other key stakeholders

Milestones

Be disciplined deliver on time using 80/20

Simple

Push detailed work plans out only 2 to 4 weeks ahead.

Dont Write an encyclopedia (!). Keep it simple.
Take piece by piece

31

Steps 5: conduct critical analyses

Problem

Define
problem

Structure
problem

Prioritize
issues
Develop
issue
analysis
and
work
plan

Communicate

Develop
recommendation

Synthesize
findings

Conduct
analyses

Communicate
Think evidence:
What are we trying
to prove/disprove?

32

Analysis

Most of the problem-solving time is spent doing in-depth analysis

Document assumptions and data sources

Build flexibility and clarity into the model
Label and date spreadsheets and analysis
Copy and back-up critical changes
Provide sanity check take a completely different analytical tact
to achieve the same answer
Key questions to ask

What is the minimum level of accuracy that is required to change the answer?
Have you left ample time in overall planning to reiterate certain analysis
and to allow synthesis?
Is there early warning analysis analysis that can indicate a whole
section of an issue tree is critical or irrelevant

Source: McKinsey PSMentor

33

Learn the 10 ways out

Ask What has to be true , not What is true

Make assumptions (but always (!!!!!) be explicit and remember
to test in the end)

Create facts through structured interviews, press clippings,

round-table sessions, fact finding missions, surveys, etc.

Combine macro data and cases

Quotes and observations are also facts
Understand whats enough
Ask yourself what the real insights are by summarizing
and synthesizing the data

Present your hypothesis as the basis for discussion

34

Market research process consists of four phases, dominated

by the qualitative and quantitative research methods

Set scope

Qualitative
research

Quantitative
research

Analysis

Design marketing

Test and

To confirm or

Get value and

generate
hypotheses
about way
consumers think
and behave
Can be used to
help eliminate
unacceptable
ideas but rarely
effective for
picking the best
concept or
product

deny the teams

hypothesis about
the way a
consumer thinks
or behaves.
Questions
structured so
hypothesis may
be answered in
most direct, but
insightful way

draw insights out

of raw data and
interviews
Prove or
disprove
hypotheses
Solidify
interpretations
through
triangulations

study, targets,
timetables,
milestones and
resourcing

Source: McKinsey

35

Step 6+7: synthesize findings and develop recommendations

Problem

Define
problem

Structure
problem

Prioritize
issues
Develop
issue
analysis
and
work
plan

Communicate

Develop
recommendation
Think potential
solution: What
should we do?

Synthesize
findings

Conduct
analyses

Communicate
Think so what:
What are the
implications of our
findings?

36

There is a difference between summary and synthesis

Summary

Synthesis

I have lost my keys,

my passport and my
tax return information

I have been sloppy

Facts
I have mislaid my keys
My passport is not where
I thought it was
My tax return information
is missing

37

3 Steps for moving from data to effective communications

1. Synthesize up

So what?

2. Align message

So what?
Problem
statement

3. Communicate down

Governing
thought

What?
Why?
How?

Audience
analysis
Support

Data

Governing
thought

Coherence

Source: McKinsey

38

with two types of reasoning existing in communication

Grouping structure

Argument structure

+
Governing thought supported
by separate but coherent ideas
(e.g., reasons, actions)

Source: McKinsey

Governing thought supported

by a progression of ideas:
from a statement and a comment
on that statement follows
an implication

39

Good problem solving check list

Use the tools actively What is not on paper does not exist
Be fact based
Be specific/precise
Be MECE Cover all important aspects of the problem once
Be impact driven and action oriented
Package the message in a structured and compelling way

40

Summary of key messages

Describe
the role of a
consultant

Role of consultants and the typical challenges

Understanding the situation
Productization of the issue to be solved

Client
relationship
mgmt

Client relationship mgmt is a continuous process

Six key phases summarize a projects lifetime
Letter of Proposal and Steering Committees are key

Fact based
problem
solving

Problem solving tools and analytical approach

Use of (market) information/data in this
Communication and interaction throughout the study
Communication of findings and recommendations

scoping tools of work

41

At the end, realized bottom line impact is one of the most

important criterion when analyzing the successfulness of projects

4 Rigorous follow-up
and corrective
actions

2 Identifying gap
between the
current state
and aspiration
1 Shared aspiration
level
turned into clear
measurable
targets

Source: McKinsey

3 Creation of action
and implementation
plan with timetable
and named
responsibles

42