Strategy Consulting Process - How Elite Consulting Firms Do great Work

Summary

The speaker emphasizes the importance of process in strategy consulting, highlighting how both top-down and bottom-up approaches are essential for problem-solving. While consultants are trained in tactics, the real value comes from hands-on experience and the ability to shift between high-level hypothesis generation and detailed data analysis. The process of working through problems is compared to methods like McKinsey's issue tree analysis and Six Sigma's DMAIC. Ultimately, success in consulting relies on embracing the process, despite uncertainty, to deliver great results.

Takeaways

• 🔍 The secret to successful strategy consulting lies in an obsessive focus on process and the way problems are approached.
• 🏋️‍♂️ Strategy consultants often don't realize the source of their work methodology, which comes from being immersed in the process and repeating tasks.
• 📚 Structured problem-solving processes like McKinsey's 'Define, Structure, Prioritize, Issue Tree, Analysis, Synthesis, and Recommendations' are crucial.
• 🔄 Other structured approaches like Six Sigma's DMAIC (Define, Measure, Analyze, Improve, Control) and the scientific method emphasize a similar iterative process.
• 📈 The process involves a simple four-step model: Define the problem, generate questions and hypotheses, conduct research and analysis, and derive answers.
• 🔄 Consulting work oscillates between two modes: top-down (high-level thinking and problem definition) and bottom-up (data-driven sense-making).
• 🤔 Individuals often lean towards one mode or the other, with some preferring to dive into data (bottom-up) and others starting with a high-level outline (top-down).
• 📊 Consultants must develop proficiency in both modes, as junior analysts spend more time in bottom-up analysis, while senior roles require more top-down strategy.
• 📈 A typical consulting project involves a dynamic shift between top-down and bottom-up modes, with phases of problem definition, hypothesis generation, and data analysis.
• 💡 To optimize this process, consultants should formally shift between modes, perhaps using different working environments for top-down strategic thinking and bottom-up data analysis.
• 🏆 The process itself, with its back-and-forth between modes, is what leads to the creation of great work in consulting, even when the end product is initially unknown.

Q & A

What is considered the secret sauce of strategy consulting?

The secret sauce of strategy consulting is the obsessive focus on process in the way you work and approach problems.

Why do former strategy consultants often struggle to articulate their understanding of how to do the work?

Former strategy consultants often struggle because they are used to being thrown into the mix and doing things repeatedly, rather than relying on extensive training decks.

What are some structured processes for solving problems mentioned in the transcript?

Some structured processes mentioned include McKinsey's Define, Structure, Prioritize, Issue Tree, Analysis, Synthesis, and Recommendations, Six Sigma's DMAIC method (Define, Measure, Analyze, Improve, Control), and the Scientific Method (Question, Hypotheses, Experiment, Analysis).

How does the speaker simplify the process of doing knowledge work?

The speaker simplifies the process as: 1) Define the problem, 2) Come up with questions and hypotheses, 3) Do research and analysis, and 4) Come up with answers.

What are the two modes of thinking that the speaker discusses?

The two modes of thinking discussed are top-down and bottom-up thinking.

What is the difference between top-down and bottom-up thinking?

Top-down thinking involves starting from a high, abstract level such as defining a problem or developing hypotheses, while bottom-up thinking involves sense-making from data and information first.

How does the speaker describe the shift between top-down and bottom-up modes in a consulting project?

The speaker describes the shift as a time-based process where individuals move between defining problems and hypotheses at a high level (top-down) and diving into data and analysis to make sense of information (bottom-up).

Why is it important for consultants to develop both top-down and bottom-up thinking modes?

Consultants need to develop both modes to effectively navigate the complexities of projects, where they must alternate between defining problems and hypotheses and analyzing data to find solutions.

What does the speaker suggest as a method to shift between the two thinking modes?

The speaker suggests formally shifting between the two modes by blocking off periods for data analysis and then summarizing findings, possibly using different working methods for each mode, such as using a computer for bottom-up and printing materials for top-down.

What does the speaker miss most about consulting after leaving?

The speaker misses the back-and-forth team environment and the process of shifting between top-down and bottom-up modes to create something impactful at the end of a project.

How does the speaker encourage clients to think about their work process?

The speaker encourages clients to focus on the meta process, which involves understanding how they solve problems and creating terms and approaches specific to their actual work.

Outlines

00:00

🧐 The Essence of Strategy Consulting: Process Focus

The paragraph emphasizes the critical role of process in strategy consulting. It highlights that consultants often excel due to their ingrained understanding of structured processes rather than specific tactics or techniques. The author points out that while consulting firms provide training in various methods, it's the repetitive application of these processes that truly hones consultants' skills. Several structured problem-solving approaches are mentioned, such as McKinsey's problem-solving process and the DMAIC method from Six Sigma. The author simplifies the consulting process into four steps: defining the problem, formulating questions and hypotheses, conducting research and analysis, and deriving conclusions. This is likened to the SCQA framework, which is also briefly introduced. The paragraph concludes by introducing a time-based process model that oscillates between top-down and bottom-up thinking, which is central to the consulting approach.

05:01

🔄 Navigating the Top-Down and Bottom-Up Dynamics in Consulting

This paragraph delves into the practical application of the top-down and bottom-up thinking modes within a consulting project. It describes how consultants initially engage in top-down thinking to define the problem's scope and then transition into a bottom-up approach to analyze data and refine hypotheses. The author illustrates the iterative nature of consulting work, where consultants frequently switch between abstract strategic thinking and detailed data analysis. The importance of balancing both modes is underscored, with the author sharing personal experiences and recommending strategies for effectively toggling between them. The paragraph also touches on the diagnostic phase common in consulting, which serves to gather preliminary information before fully defining the project's objectives. Lastly, it discusses the value of process in consulting, suggesting that a focus on process is what ultimately leads to successful outcomes and is a key aspect that the author misses post-consulting.

Keywords

💡Process

Process in the context of the video refers to the systematic approach and methodology used in strategy consulting. It is the core of the 'secret sauce' that leads to effective problem-solving. The speaker emphasizes the importance of process over specific tactics and techniques, suggesting that it is the iterative and structured way of working that truly shapes the consultant's ability to deliver results. The process involves defining problems, generating hypotheses, conducting research and analysis, and synthesizing findings into actionable recommendations.

💡Strategy Consulting

Strategy Consulting is a professional service that focuses on addressing complex issues faced by organizations, typically involving the development of comprehensive plans for improving performance. In the video, strategy consulting is discussed as a field where the 'secret sauce' is the meticulous focus on process, rather than just the application of various tactics and techniques. The speaker reflects on the training and development of consultants within this field, highlighting the importance of process in achieving successful outcomes.

💡Define

In the video, 'Define' is a crucial step in the consulting process, where the consultant seeks to clearly understand and articulate the problem at hand. This involves setting the scope and boundaries of the issue, which is essential for guiding subsequent analysis and research. The speaker mentions that defining the problem is often the starting point of a project, where consultants work at a high level to grasp the broadest aspects of the challenge they are addressing.

💡Hypothesis

A hypothesis in the context of the video is a proposed explanation or assumption made by consultants to guide their investigation. It is a tentative statement about the relationship between variables or the nature of a problem, which is then tested through research and analysis. The speaker discusses how consultants develop hypotheses as part of the top-down thinking mode, which helps to shape the direction of their work and focus their efforts on finding solutions.

💡Analysis

Analysis, as discussed in the video, is the detailed examination of data or information to draw conclusions or support hypotheses. It is a key component of the consulting process, where consultants engage in bottom-up thinking to make sense of the data and information they gather. The speaker emphasizes the iterative nature of analysis, where consultants may shift between analyzing data and refining their understanding of the problem or their hypotheses.

💡Top-Down Thinking

Top-Down Thinking is a cognitive approach where one starts with a broad perspective and then drills down to the specifics. In the video, this mode is contrasted with bottom-up thinking and is associated with activities like defining problems, developing hypotheses, and creating outlines for presentations. The speaker suggests that top-down thinking is essential for setting the stage for a project and for maintaining a holistic view of the work throughout the consulting process.

💡Bottom-Up Thinking

Bottom-Up Thinking involves starting with the details and building up to a broader understanding. In the video, this mode is characterized by diving into data sets and information to make sense of them and to inform higher-level conclusions. The speaker notes that consultants often shift between top-down and bottom-up thinking throughout a project, with bottom-up thinking being particularly important for junior analysts who are tasked with data analysis and sense-making.

💡Diagnostic Phase

The Diagnostic Phase, as mentioned in the video, is an initial stage in consulting projects where consultants gather information and insights about the client's situation before defining the problem and scoping the project. This phase is crucial for understanding the context and for shaping the direction of the consulting work. The speaker highlights how the diagnostic phase can even be offered as a free upfront service by some consulting firms to build trust and demonstrate the value of their process.

💡SCQA Framework

The SCQA Framework, which stands for Situation, Complication, Question, Answer, is a storytelling technique that the speaker mentions as being similar to the consulting process. It is a method for structuring communication to ensure clarity and effectiveness. In the video, the SCQA framework is used as an example of how consultants might organize their thinking and their presentations to address a problem, propose questions, and offer solutions.

💡Meta Process

The Meta Process, as discussed in the video, refers to the process of understanding and reflecting on one's own processes of work and problem-solving. It is about being aware of how one approaches tasks and how to optimize those approaches for better outcomes. The speaker encourages consultants to focus on their meta process, to think critically about how they solve problems, and to adapt their processes to fit the specific needs of their work and their clients.

Highlights

The secret sauce of strategy consulting is an obsessive focus on process.

Strategy consultants often don't realize where their understanding of how to do the work comes from.

Consulting firms train in tactics and techniques, but it's the process that leads to great work.

Structured processes for solving problems include McKinsey's issue tree analysis and the scientific method.

The process involves defining the problem, coming up with questions and hypotheses, doing research and analysis, and coming up with answers.

The best way to think about the consulting process is as a time-based process that shifts between top-down and bottom-up thinking.

Top-down thinking involves defining problems and developing hypotheses from a high-level perspective.

Bottom-up thinking is about sense-making from data and information.

People often fall into one or the other bucket, either top-down or bottom-up thinkers.

In consulting, you need to develop both top-down and bottom-up thinking modes.

Junior level analysts often spend more time in the bottom-up mode.

Shifting between top-down and bottom-up modes is a key part of a typical consulting project.

The process involves defining the problem, diving into data, refining hypotheses, and iterating between high-level and detailed analysis.

Consulting firms often have a diagnostic phase to gather information before scoping a project.

The process of consulting involves a back-and-forth between top-down and bottom-up thinking.

It's important to formally shift between the two modes to ensure a comprehensive approach to problem-solving.

Focusing on the meta-process of how you solve problems is crucial in consulting.

The process is what creates great work in consulting, and it's something that is deeply missed after leaving the field.

Transcripts

what's the secret sauce of strategy

Consulting I would argue that it is the

obsessive focus on process in the way

you work and approach problems now an

interesting thing I've noticed in doing

work and helping train and working with

former strategy Consultants is that they

often don't understand where their

understanding of how to do the work

comes from they want me to come in with

these extensive training decks uh

showing in immense detail how to do

different tactics and techniques but

while consulting firms do train you in

these tactics and techniques I really

think it's the process and being thrown

into the mix and doing things over and

over again that leads to great

work now there are many structured

processes for solving problems mckines

is Define structure prioritize issue

tree analysis synthesis and

recommendations comes from a famous memo

that you have to read when you start the

company but there's other famous

structured approaches to solving

problems for example in Six Sigma you

have the dmic method Define measure

analyze improve control the scientific

method to is a similar approach question

hypotheses experiment analysis and it's

all pretty much doing the same thing

it's saying here's this problem how can

we come up with questions how can we

analyze it and then how can we come to

conclusions when I teach process and

thinking about doing knowledge work with

my clients in workshops I put it in a

very simple way one Define the problem

two come up with questions and

hypotheses three do research and

Analysis and then four come up with

answers it's very similar to the scqa

framework and I've linked below I have a

video on that as well if you want to

check it out but this doesn't really

serve serve as a useful mental model of

how things actually happen in consulting

firms and broadly in knowledge

work the best way I've been able to

think about it is as a time-based

process that shifts people between two

modes these modes are top down and

bottom up top down thinking is thinking

of things from a highest most abstract

level this might be things like defining

a problem developing hypothesis es or

even creating story boards of a final

presentation or the answers bottom up is

sense making from the data and

information first and typically people

fall into one or the other bucket you

might want to pause and just think are

you a top- down person or a bottom up

person it's usually pretty easy to

notice for example if you're somebody

that feels completely comfortable like I

do diving into a huge data set not

knowing what you'll find but excited

about that you're probably a bottomup

person if you're somebody that likes to

start with an outline a structure of the

problem and know what the end product

might look like before diving into it

you're probably a top- down person in

writing I love how the fantasy writer

Brandon Sanderson writes about this as

Discovery writing versus outline writing

he says Discovery writers jump into the

story if they're writing a novel and

sort of figure out what the plot is

along the way outline writing is when

you start with an outline of what's

going to happen and then fill in the

holes right and the important thing he

notes is that it's a spectrum you're

never going to be 100% on one side or

the other and in Consulting you have to

develop both modes bottom up and top

down when you're a junior level analyst

you're often spending a lot of time in

the bottom up mode for me this was

really enjoyable but when I was shifted

into the top down mode it was different

and and challenging it was a muscle I

had to build over

time and so I want to dive in to this

chart I've created to help really bring

alive what it's like to shift between

the top down and bottom up modes

throughout a typical project or

assignment that you're going to be

working on you can think of this process

as something that could map to something

you work on over a couple of hours a

week or even over a few months at at

first you're at the top down you're

defining the problem this is where

you're really trying to figure out what

is the scope of what you're doing what

are the big questions right and in doing

this you may dig into detailed

information or data to really inform

that but you're really trying to stay at

high level and figure out what is the

broadest biggest problem that we're

really solving here from there you're

then of course going to dive into the

data and sometimes you're not actually

going to know what your hypotheses are

about how to solve the problem or the

direction you're going to take you may

need to figure it out now doing this may

actually reshape your own understanding

of the problem and this is why a lot of

consulting firms often have what they

call a diagnostic phase this helps them

get information from the client and the

situation before having to scope the

problem and actually sell a project so

sometimes will even do that diagnostic

phase as a free upfront project now once

you've sort of like clarified that

you're at the high level again right and

you're defining the hypotheses now you

might refine the problem statement and

thenine the hypotheses and you're asking

highle questions how can we generate

more Revenue how can we cut cost high

level questions like that right and then

you're going back down you're into the

mix and this is where it's chaotic in a

project you're going to be shifting

between modes you're going to be diving

into the data but at the same time

you're diving into the data you're

asking yourself questions where does

this fit in Does this answer the

hypothesis does this change anything

about the problem statement right back

and forth between those two modes you

might be working with a team where

somebody like a project manager might be

shaping and driving the top- down

questions and how it fits into the

bigger picture while you're working on a

very specific chunk right or you might

be responsible for both of those and you

have to figure out how to shift between

between those two different modes one

thing I recommend people do is sort of

like formally shift between the two

different modes right so if you're going

to just do a bunch of data analysis

block off a period after that where

you're going to summarize what you're

looking at right and I actually like to

do this in two different ways of working

for example I might do the bottom up

mode on a computer whereas the top down

mode I might print stuff out and try to

figure out what I'm actually looking at

and so this is the best way I've figured

out how to think about the Consulting

process in my work with clients I often

push them to think about how they

actually work I ask them what is your

process most of them look at me with a

blank face I don't know what my process

is and this is really about focusing on

The Meta process what I say is like you

need to talk about how you solve

problems you need to be devoted to that

if you're a senior person at a

consulting firm you need to be thinking

about how people work and then how do we

make this Consulting process fit into

our company create terms approaches that

are specific to how you're actually

doing work the more you focus on process

the more annoying and frustrating it can

be too because what you're doing in

process is you're saying we actually

don't know what the end product looks

like we're going to trust the process

hopefully better than the Philadelphia

76ers did sport shout out anything you'd

like to say oh just AES and know that

the process is what creates the great

work and after leaving Consulting this

is probably the thing I miss the most is

that back and forth that team

environment where you're getting

challenge you're shifting between the

two different modes you don't know where

you're going to end up and then somehow

at the end of the project you end up

creating something and you look back and

go wow that process worked