consulting process 1

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


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


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


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


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


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


• Situation-complication-

overriding question analysis

• Issue breakdown

• Hypotheses generation

Steps of issue analysis


Contents of Module I

Introduction

Identification of the key issues of the engagement


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


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


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


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


Key issues of the engagement Issue analysis Description


Issue analysis is useful throughout every stage of an engagement

Usage


• 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


Usage


Identifying the key issues of the engagement starts by asking the right question


3

Situation-complication-overriding question analysis for a Nordic oil and

gas company


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



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


3

Issue analysis and hypothesis generation for combining a Nordic oil and

gas company’s North Sea activities into a single business unit


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



The hypothesis generation builds on the identified issues

Example


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?


• 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?



The hypothesis generation builds on the identified issues (cont’d)

Example


3

Issue 2: Is the client presently carrying out the key tasks to exploit

strategic opportunities in the North Sea?


• 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?


answers specific sub-issue







disproven



is based



The hypothesis generation builds on the identified issues (cont’d)

Example


3

Issue 3: Should the client’s North Sea business be integrated

completely?


Sub-issues Hypothesis Analysis Source Responsibility Timing Issues


answers specific sub-issue







disproven



is based


• 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?


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


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)



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




Issue analysis is simpler in theory than in practice


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



Conclusion


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


consulting process 1

Documents