consulting process 1
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Module I
Identification of the key issues
of the engagement
Roll-out
Action 1
Action 2
Action 3
Action 4
Action 5
Qtr 1 Qtr 2 Qtr 3 Qtr 4
Introduction
Conclusion
Module I
Module II Module III Module IV
Module V
Module VI
2 Module I A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING
Contents of Module I
Introduction
Identification of the key issues of the engagement
3 Module I A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING
Schedule for the A.T. Kearney Business Unit Strategy Training Program
Source: A.T. Kearney
Administrative issues
Dinner
Monday Tuesday Wednesday Thursday Friday
Introduction
Module II
Lunch
Final presentation
Conclusion
Module III
Case presentation
Case preparation
Dinner
Case preparation
Dinner Dinner
Module V
Case preparation
Lunch
Module I
Lunch Lunch
Dinner
Case preparation
Case presentation
Guest Speaker
Strategy literature
review
Module VI
Lunch
Module IV Guest Speaker
Case presentation
8-9
9-10
10-11
11-12
12-1
1-2
Time
2-3
3-4
4-5
6-7
8-9
9-10
10-?
7-8
5-6
4 Module I A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING
Positioning of Module I in the overall training context
Module II
Structure and
dynamics of the
industry
Module III
Characteristics and
dynamics of the
individual companies
Module IV
Execution
capacity of the
client
Module VI
Implementable
recommendations
Module V
Definition and
evaluation of strategic
alternatives
Roll-out
Action 1
Action 2
Action 3
Action 4
Action 5
Qtr 1 Qtr 2 Qtr 3 Qtr 4
Source: A.T. Kearney
Content of A.T. Kearney’s Business Unit Training Program
Module I
Identification of the key
issues of the
engagement
Note: The order of presentation of the curriculum elements should not be interpreted as a sequential guideline for a strategy engagement. Different
elements of the program may be referenced at different times in the engagement
5 Module I A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING
During NCO you learned that consultants have developed a process to structure
client engagements
Note: Besides being part of the NCO, the techniques in focus are also an integral part of the Lead Strategy and Proposal Development Program
Source: A.T. Kearney; Professional Development Network Ltd.
Planning
Fact gathering
Analysis
Communication
1. Define commitments Issue diagram
2. Plan thinking Data framework
3. Prepare for fact
gathering
Matrix of data
sources
4. Gather facts Notes
5. Synthesize findings
6. Draw conclusions Diagnosis (data
package)
7. Generate
recommendations Logic diagram
8. Structure report Report outline
9. Communicate results
Final
report/presentatio
n
Work plan
Interview guides
Introduction
• Business unit strategy
projects also adhere to this
consulting process
• However, we will focus on
the three techniques of
particular importance to BU
engagements
– Situation, complication-
overriding question
analysis
– Issue breakdown
– Hypotheses generation
6 Module I A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING
Module I establishes the point-of-departure for business unit strategy engagements
•Establish a structured method of strategic
problem solving
•Describe the analytical “code-of-conduct” for
solving BU strategy engagements
•Establish a methodology and groundwork for
applying concrete techniques (Modules II-VI)
Introduction
Source: A.T. Kearney
• Situation-complication-
overriding question analysis
• Issue breakdown
• Hypotheses generation
Steps of issue analysis
7 Module I A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING
Contents of Module I
Introduction
Identification of the key issues of the engagement
8 Module I A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING
Overriding
Question
Conceptually, business unit strategy projects are comprised of a six-phase, iterative
process
Situation-
complication-
question
analysis
Iterations
Finding
Issue
Issue
Issue
Sub-issue
Sub-issue Conclusion
Issue breakdown Hypotheses
generation
Evidence/fact
gathering
Development of findings
and conclusions
Recom-
mendation
formulation
Source: A.T. Kearney; Professional Development Network Ltd.
Hypothesis
Fact
Fact
Fact
Fact
Finding
Recom-
mendation
Issue analysis
Description Key issues of the engagement Issue analysis
Conclusion
Conclusion
9 Module I A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING
Definition
Issue breakdown is the initial step after the situation, complication and overriding
question have been determined
• Issue analysis is a disciplined technique of
translating a client brief into a set of
logically related questions which require
clear answers
• Issue analysis is an iterative process and
is refined during the consulting process
• It is always the first and perhaps most
critical technique in the consulting
process
Source: A.T. Kearney
Key issues of the engagement Issue analysis
Yield
• Groundwork for hypotheses
• Framework from which to build a project
plan
• A point-of-departure for an engagement
which allows consolidation of client and
consultant views of the problem
• Reduction of fact-finding and analytical
work allowing more focus on the critical
issues for the client
Description
10 Module I A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING
Hypotheses are prospective answers to the questions raised during the issue
breakdown
• The consulting process aims to determine the
validity of the hypotheses
• Hypotheses are based on a “best educated guess” and
if correctly formulated:
– Force an issue to be addressed directly
– Yield concrete, defendable answers to the issues
• In practice, good hypotheses will:
– Derive directly from the corresponding issue
– Guide evidence gathering
– Give input for project planning
– Establish requirements for data collection and
analysis
– Provide a basis from which to draw conclusions
The result of this process will
be conclusions and
recommendations that fit with
the client’s problems and also
mirror state-of-the-art
thinking
Source: A.T. Kearney
Key issues of the engagement Issue analysis Description
11 Module I A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING
Issue analysis is useful throughout every stage of an engagement
Usage
Source: A.T. Kearney
• In the proposal process
– Identify issues and their components (sub-issues)
– Address implied questions by discussing issues
with the team and with clients
– Debate priorities with the client and write the
proposal
• In structuring tasks and guiding analysis throughout
the entire project
• In clarifying the focus of the team’s work and in
deriving individuals’ roles and responsibilities
accordingly
• In determining appropriate performance measures to
be used in the implementation process
Key issues of the engagement Issue analysis
Usage
12 Module I A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING
Identifying the key issues of the engagement starts by asking the right question
Source: A.T. Kearney
3
Situation-complication-overriding question analysis for a Nordic oil and
gas company
Source: A.T. Kearney
Situation
Complication
Overriding
question
• The client is considering combining its North Sea
activities into one business unit
• The client would like A.T. Kearney to analyze the market
requirements and optimize its value chain
• Client does not know if the overall effect of such an
integration would be advantageous
• The technology available to the industry is rapidly
changing
How should the client structure its North Sea activities to
optimize its performance in the region
Example
The situation presents the
facts surrounding the
engagement:
• Client describes its
situation, asks several
questions
• Client defines tasks of a
project and client
summarizes its view of
scope of work
Describes the difficulties
facing the client. A
problem that is linked to
the situation. From it, assess
whether or not the client
has:
• A full understanding of
the situation
• Asked the right questions
so far
• Proposed the scope of
work, which best
addresses the real
problems
The overriding question
emerges as a consequence
of the situation and
complication. Finding the
answer to the overriding
question is the objective
of the project
Key issues of the engagement Issue analysis
13 Module I A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING
From the overriding question, derive the main issues and sub-issues
• Issues and sub-issues must be
MECE (mutually exclusive and
collectively exhaustive)
• Issues are “Yes/No” questions
• The first line of the issue
analysis is critical for structuring
team organization and evidence
gathering
• Vertically, issues should be
broken down into sub-issues,
until they are manageable
• Horizontally, answers to all sub-
issues must provide an answer to
the above issue
• Issues and sub-issues must lead
to hypotheses
Rules for issue breakdown
• Use the components from the
“complication” to derive issues
• Start with a brainstorming session
and organize the ideas into issues
later
• “Good” issues are questions that
have relevance for the client, e.g.,
“do we have the money” is
irrelevant for a company with a
strong cash flow
Practical hints
Example
Source: A.T. Kearney
3
Issue analysis and hypothesis generation for combining a Nordic oil and
gas company’s North Sea activities into a single business unit
Source: A.T. Kearney
How should the client
structure its North Sea
activities to optimize its
performance in the region?
Should the client’s North
Sea business be integrated
completely?
Is the client presently
carrying out the key tasks
to exploit the strategic
opportunities of the
North Sea?
Is the client well-
positioned strategically
in the North Sea seismic
industry?
Issue 1 Issue 2 Issue 3
Overriding question
Key issues of the engagement Issue analysis
14 Module I A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING
The hypothesis generation builds on the identified issues
Example
Source: A.T. Kearney
An individual hypothesis
specifically answers a
specific sub-issue
A hypothesis should not
simply be a yes or no
assertion, but should also
provide a reason. This
can then be analyzed,
researched, and proven or
disproven
Hypotheses create a frame
upon which a project plan
is based 3
Issue 1: Is the client well-positioned strategically in the seismic
industry of the North Sea?
Source: A.T. Kearney
• Is the seismic market expected to develop rapidly in the North Sea?
• Will the oil companies use the same exploration methodologies to develop seismic data in the future?
• Will the industry´s business system change with respect to seismic acquisition and sales?
• No. The seismic market is expected to develop slowly in the North Sea market.
• Yes. For the short to medium term the exploration technologies will not change dramatically.
• No. Despite a shift in the industry’s competitive arena, the business system will remain the same.
Sub-issue Hypothesis Analysis Source Responsibility Timing Issue
• Is the client well-positioned strategically in the seismic industry of the North Sea?
Key issues of the engagement Issue analysis
15 Module I A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING
The hypothesis generation builds on the identified issues (cont’d)
Example
Source: A.T. Kearney
3
Issue 2: Is the client presently carrying out the key tasks to exploit
strategic opportunities in the North Sea?
Source: A.T. Kearney
• Do all present activities belong in the combined North Sea organization?
• Does the 3D business depend on Business Unit A’s 2D database?
• Is the performance of Business Unit A´s two product lines (2D/3D) superior?
• Should all present geographic areas of Business Unit A be integrated in the North Sea organization?
• Yes. All present activities do belong in the combined North Sea organization
• Yes. The 3D business does depend on the 2D database, and it is a weakness
• Yes. Business Unit A´s technology is superior within the industry
• Yes. All present geographic areas of Business Unit A should be integrated into the North sea organization
Sub-issues Hypothesis Analysis Source Responsibility Timing Issues
• Is the client
presently
carrying out
the key tasks
to exploit the
strategic
opportunities
of the North
Sea?
An individual hypothesis
answers specific sub-issue
A hypothesis should not
simply be a yes or no
assertion, but should also
provide a reason. This
can then be analyzed,
researched, and proven or
disproven
Hypotheses create a frame
upon which a project plan
is based
Key issues of the engagement Issue analysis
16 Module I A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING
The hypothesis generation builds on the identified issues (cont’d)
Example
Source: A.T. Kearney
3
Issue 3: Should the client’s North Sea business be integrated
completely?
Source: A.T. Kearney
Sub-issues Hypothesis Analysis Source Responsibility Timing Issues
An individual hypothesis
answers specific sub-issue
A hypothesis should not
simply be a yes or no
assertion, but should also
provide a reason. This
can then be analyzed,
researched, and proven or
disproven
Hypotheses create a frame
upon which a project plan
is based
Key issues of the engagement Issue analysis
• Will complete integration secure maxi-mum vessel capacity?
• Will such a controlled unit ensure conservation of Business Unit A´s project generation skills?
• Will a unified company sales force maximize return?
• Will the combined unit secure credi-bility in project management towards the multi-client customers?
• Yes. Such integration will maximize vessel capacity.
• No. In the short term such a combined unit will sacri-fice Business Unit A´s project genera-tion skills.
• Yes. Business Unit A´s superior tech-nology will be a major asset to the North Sea organizations sales force.
• No. Project management might be comprimized by the size of the new organization
• Should the the client’s North Sea business be integrated completely?
17 Module I A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING
Input Output
Methodology for performing issue analysis
1
Situational
analysis
2
Brainstorm and
issue breakdown
3
Hypotheses
generation
4
Formulate
project plan
Note: During the entire engagement, the issues and hypotheses will be continuously refined and iterated
Source: A.T. Kearney
Methodology
• Consensus with
client
• Common, unified
point-of-
departure among
team
• Structure for
project analysis
• Identification of
team roles
• Client request for
proposal (RFP)
• Annual reports
• Client interviews
• Expert interviews
• Analyst reports
• Industry reports
• SEC filings*
• Trade journals
• Press clippings
• Study client and its
industry to establish
the situation
• Seek consensus about
the situation with
client
• Define complication
using components of
the situation
• Define the overriding
question
• Brainstorm to uncover all
possible questions and
issues and to prevent the
issue analysis from
becoming limiting in scope
• Identify issues and sub-
issues
• Make certain that answers
to the issues solve the
overriding question
• Reach consensus with team
(and client if necessary) on
the issues at hand
• Provide testable
explanation that
answers each issue and
sub-issue
• Use “best-educated
guess” (best informed
decision) to develop
hypotheses
• Determine analyses
required to test
hypotheses
• Delegate project
responsibilities
• Establish timing
*Reports filed by publicly held companies with the Securities and Exchange Commission: e.g. 10K, 10Q
Iterations
(Project work)
Key issues of the engagement Issue analysis
18 Module I A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING
There is a right way and a wrong way to formulate issues
Right way
“Should we grow our
business through
acquisition of XYZ?”
Wrong way
“What should our
strategy be?”
• Guides project work
• Can be answered
definitively by “yes” or
“no”
• Requires another level of
questions
• Is open to many different
answers, not all of which
might be relevant to the client
situation
Conclusion
Source: A.T. Kearney
Key issues of the engagement Issue analysis
19 Module I A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING
Issue analysis is simpler in theory than in practice
Source: A.T. Kearney
Conclusion
• Use issue analysis to group, structure, and
prioritize client problems/challenges/uncertainties
• Expect disagreement among team members and
client
• Expect to revisit and revise the issue analysis
several (if not many) times
• And remember: There is not a single correct
answer, but the exercise is crucial to the success
of any strategy engagement
Key issues of the engagement Issue analysis
20 Module I A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING
Conclusion
Source: A.T. Kearney
Key points
Weaknesses
References
Strengths
Conclusion
• A dynamic/iterative technique which should be applied during the entire consulting process
• Brainstorming is a key beginning to every step of the issue analysis
• Should be the first step in every BU strategy engagement
• Fundamental in managing an engagement:
– Managing a team
– Managing upwards
– Managing the client
• Useful in many aspects of the engagement:
– To define key issues in the proposal process
– To structure tasks and control quality
– To clarify the focus of project work and to define team member roles and focus accordingly
– To prioritize client problems/challenges/uncertainties
• Minto, B. (1987); The Pyramid Principle - Logic in Writing and Thinking
• Ohmae, K. (1976); The Mind of the Strategist - The Art of Japanese Business
• Must be worded and presented carefully when achieving consensus with the client
Key issues of the engagement Issue analysis
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