P615 A – Management Consulting

Lecture 3

Faculty Instructor: Dr. Paul Snowdon

Email: [email protected]
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Learning Objectives for Today

• Consulting Process:
• Review the 4S Process
• Structure the Problem: Pyramids and Trees

• Consulting Frameworks & Concepts:

• Blue Ocean Strategy,
• Strategy Canvas,
• 4 Actions Framework
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Navigating the 4S’s

• While presented linearly, the
problem-solving process is
inherently iterative.

• The 4S method encourages you to

switch from an intuitive, informal,
and automatic approach to solving
and selling problems, to a
reasoned, structured, and manual
approach.

• Our consulting projects will focus

on the Issue-Driven Path, and the
Design Thinking Path
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Hypothesis Driven Approach

State • Define a problem statement

• Develop a high probability of success candidate solution

Structure • Develop a hypothesis pyramid based on these assumptions

• List ‘What must be true’ for this solution to work?

Solve • Develop a plan to test each assumption

• Refine the candidate solution based on data collected
• If data proves that the candidate solution is not viable, move to
Issue Driven approach or Design Driven approach

Sell • Focus on your target audience

• What on your insights and solutions, not your process of solving the
problem
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Issue Driven Approach

State • Define a problem statement

• Break large issue into smaller parts

Structure • Select a framework to structure the issue tree

• Create an issue tree to structure the problem

• Gather data to examine the materiality of the sub-issues to on

the large issue
Solve • Focus solution on the highest impact sub-issues
• If data proves that none of the issues materially affect the
problem, move to Design Driven approach

Sell • Focus on your target audience

• What on your insights and solutions, not your process of solving the
problem
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Design Driven Approach

State • Engage in empathetic sensemaking stage to understand

the issues

• Develop a prioritized set of design imperatives. These serve as

Structure a guiding vision for the ideation, prototyping, and testing
phases

• Perform analysis
• Develop prototypes
Solve • Test prototypes
• Refine prototypes
• Repeat the process until design imperatives are achieved

Sell • Focus on your target audience

• What on your insights and solutions, not your process of solving the
problem
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Structure the Problem –

Issue Driven Path
Pyramids and Trees
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Let’s Talk....

How can you collect data/information

about the key issues facing your client?

How can you organize this information?

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Develop Affinity Diagrams

• Can be done quickly
• Summarizing your data by topics (ex: Experiences of
X, Benefits of Y, Barriers to Z)
• Helps organize facts, issues and opinions into groups
based on their relationship
• Major drawback, doesn’t tell a story
• How to use it?
• Review your source data (interviews, observations,
surveys etc…)
• Write every key statement you see, on a separate
sticky note. Use their words, not yours
• Take sticky notes and move them into groups.
Use your words to generate initial themes for the
groups
• Explore the results, explore the meaning of the
results and refine your themes based on emerging
insights
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Affinity Diagrams Example

Why aren’t the sales reps using the SalesForce to manage their activities?

Don’t know
No owner how to use No
of the System executive
process support
System has
wrong Follow
Didn’t know up date
System is Management
Data in
supposed to not enforcing
System is
be used use
uploaded
late
Missing Activities
in System
Activity types in
Activities
System are not
disappear
relevant
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Affinity Diagrams Example

Why aren’t the sales reps using the SalesForce to manage their activities?

Data Integrity Training Management

Data in Activity
Missing Don’t know No Management
System is types in
Activities in how to use executive not enforcing
uploaded System are
System System support use
late not relevant

System has Didn’t know

No owner
Activities wrong System is
of the
disappear follow up supposed
process
date to be used

Affinity diagrams help visualize themes and summarize issues/opportunities.

Combine customer ‘narrative’ with data to create a powerful platform for change.
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Issue Trees Help Us Focus & Clarify

Each issue or sub-issue is a question
Practitioner tips
• Start with an Affinity diagram to
Sub-Issue organize your learnings from
Issue 1 Discovery
(Question) • Translate your themes into
Sub-Issue
questions
Core • Break your core question into
Question Sub-Issue sub-questions
• For each sub-question, develop a
Issue 2
Sub-Issue set of issues (questions!) that
(Question)
need to be explored. Use the
Sub-Issue 80/20 rule!
• The goal is to have a level of
decomposition that is testable
• Use the issue tree to allocate
analytical work across the team
At each level, breakdowns
are MECE
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Issue Tree Example

Why aren’t the sales reps using the SalesForce to manage their activities?

Why Don’t reps What is missing What Management

trust the data in in our Rep Actions can we take to
the system? Training? improve usage?

Why is Who
Why are we What should be What
Data in Whare are the
Missing features do the behaviours can
System is Activity types
Activities in reps not executive management
uploaded in System are
System? know how champion? take to increase
late? not relevant?
to use? adoption?
Why do we
Why do have the Why don’t
Activities wrong reps know the
disappear? follow up system is
date? supposed to
be used
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Issue Tree – Your Turn

• You have been hired by a Telco executive to develop a set
of recommendations on how to reduce customer churn
on mobile services.

• You have decided to build an issue tree on this, using the

following as your CORE QUESTION:

‘Why are more clients of the Telco unsubscribing from their

mobile service?’

Build an Issue Tree for this Core Question

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Issue Tree
Benefits Tips

• Rigorous approach to • Develop an issue tree to

developing related ensure you understand
consulting questions the breadth of the client
• Allows you to drill down needs and to manage
on key questions that the scope.
engagement must resolve • Sanity check: can your
• Exposes your thinking and project resolve all of the
allows others to critique it clients issues/questions?
If not, talk with your client
about scope!
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Blue Ocean Strategy

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Red Ocean vs Blue Ocean

• Compete in existing market space • Create uncontested marketspace

• Beat the competition • Make the competition irrelevant
• Exploit existing demand • Create and capture new demand
• Make the value-cost trade-off • Break the value-cost trade-off
• Align the whole system of a firm’s • Align the whole system of a firm’s
activities with its strategic choice activities in pursuit of
of ‘differentiation OR low cost’ differentiation AND low(er) cost
Chan, K. W., & Mauborgne, R. A. (2005). Blue ocean strategy. Harvard Business Review Press.
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The Business Case for Blue Oceans

Innovation
Strategy

86% of New New 14% of New

Line Extensions
Ventures Markets/Industries Ventures

62% of Revenue 38% of Revenue

39% of Total 61% of Total

Profits Profits

Chan, K. W., & Mauborgne, R. A. (2005). Blue ocean strategy. Harvard Business Review Press.
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Characteristics of an Effective Blue Ocean

Strategy
1. Focus
• A clearly defined strategic profile or value curve helps companies
avoid trying to be everything to all consumers

2. Divergence
• Breaking away from the industry’s standard value curve to stand
apart from the competition

3. Compelling tagline
• Delivering a clear, truthful message that accurately reflects your
strategic profile is a good way to test for a truly effective strategy
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Blue Ocean – Strategy Canvas

• A strategy canvas is both a diagnostic and action
framework for innovation
• It allows you to understand your positioning relative to
competitors and to make choices about where to be unique
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Strategy Canvas - Example

Factors the US wine
industry competed on:
1. Price per bottle
2. Elite, refined brand
imaging on labels
3. Marketing
4. Aging quality
5. Vineyard prestige
6. Wine complexity
7. Wine range Many of your competitors will have
similar strategy profiles!

The strategy canvas shows the current state of play in

your market from a customer’s perspective.
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How To Build A Strategy Canvas

1. Name the industry you are in
2. Identify the key competitive factors your industry or
target industry competes on
3. Rate the relative offering level of each factor on the
vertical axis using a 5-point scale.
• A relatively low offering level should be plotted lower on the axis, and a
relatively high offering level should be plotted higher.
4. Connect the dots to create your as-is strategic profile
or value curve.
5. Decide on the best player to plot your offering against
and repeat the process.
• Typically, the industry leader or your strongest competitor.
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Strategy Canvas - Exercise

• Consider the last mobile phone you purchased
• What factors did you consider when purchasing
it?
• Draw the strategy canvas to compare the phone
you purchased with your second choice
• Analysis their value curves
• Where do their value curves differ? Where are they 24

similar?
• What did you learn about how they chose to be
different in the eyes of their customer?
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Analyzing your Strategy Canvas – 4

Actions Framework

Build your Future State strategy canvas and use the 4

actions framework to determine the focus of your solutions.
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Client-Assessment
Strongly Strongly
Disagree Agree
1 5

Our client has a simple picture that captures

their overall product/service strategy

All of their managers understand their

product/service strategy

They know which factors their industry (or

target industry) compete on and invest in for
our product/service

They know what sets their product or service

offering apart

They know how their offering diverges from the

competition

They have an objective view of the current

state of play in their product/service
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Exercise
Consider the 3 Circles Analysis (from last week) and Blue
Ocean strategy
• Where are they similar?
• Where are they different?

Consider Play to Win and Blue Ocean

• Where are they similar?
• Where are they different?

Discuss and Report Out

• How could you use each one in a consulting engagement?
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Wawa Case
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Case Discussion
There are a variety of inflection points in Wawa's
journey. Pick one and apply the TOSCA framework to
understand the context and use TOSCA to develop a core
consulting question for that inflection point. What did you
learn from engaging in the TOSCA? Be prepared to share
your insights.
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Case Discussion
The Diamond-E framework is a powerful lens to examine
the various strategic moves that Wawa made. Pick one of
their strategic moves. Can you see how the elements of
the Diamond-E interacted? Please be prepared to share
your insights.
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Case Discussion
We will do a group exercise to analyze Wawa's strategic
moves using the Blue Ocean Strategy Canvas and the Four
Actions Framework. Please come prepared with thoughts
on this, perhaps even some sketches!
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Case Discussion
Wawa has experienced success, but also failures. Why did
their failures occur? What can we learn from them? Apply
the Diamond-E and Strategy Canvases to analyze what
went wrong. Please be prepared to share your insights.
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Appendix
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Structure the Problem –

Hypothesis Driven Path
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Hypothesis Pyramids
Lead Hypothesis Practitioner tips
• Build your hypothesis pyramid Top-
Sub- Sub- Sub- Down.
Hypothesis 1 Hypothesis 2 Hypothesis 3 • The goal is to have a level of
decomposition that is testable. In
WWH2BT WWH2BT WWH2BT practice, you will have more than one
–A –1 –i level of decomposition
• Every Solution Hypothesis is based on
WWH2BT WWH2BT WWH2BT assumptions
–B –2 – ii • “WWH2BT” = “What Would Have To Be
True?”
WWH2BT WWH2BT WWH2BT • WWH2BT forces you to make your
–C –3 – iii assumptions explicit
• Each assumption must be tested!
Etc.. Etc.. Etc.. • Use this pyramid to allocate analytical
work across the team

Use the Hypothesis to structure your thinking and focus your

fact finding
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Hypothesis Pyramid Exercise

• You are the owner of a food
truck at McMaster, and you
currently have a revenue
shortfall. What ideas do you
have on how to solve this
problem?

• Create a solution hypothesis

pyramid to improve revenue.
Make sure it is MECE.
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Hypothesis Pyramid Example Note how this

tree is MECE !
How can we Increase Revenues

Increase Sales Volume Increase Price/Unit Add New Revenue Stream

Source Increase Flat Price Targeted Add a Create a

New Operating Increases Price Subscription New
Locations Hours Increases Service Channel

Open an
Introduce On-Line
Salsa of Sales
Establish Implement Upgrade the Month
Establish Channel
Locations Stratified Offers To (Ex: Monthly
Locations Take-Home (Ex: Uber Eats)
with Higher Pricing Higher Priced
with Packaged Salsas)

Density of
(ex: Basic vs
Foods
Customers ‘Gourmet’ tacos)
(ex: Steak instead of
Customers looking for ground beef)
(Ex: Office
Buildings)
Gourmet
Food (Ex:
Farmers Markets)

Note how we used the PROFIT MODEL framework to drive our solution hypotheses.
We also need to establish WWH2BT for each of these solution hypotheses and
gather data to prove/disprove the feasibility of each solution hypothesis