Consultants are often known for their ability to provide answers to challenges and solve complex problems quickly and creatively. So how do they do it?
A fundamental skill top consultants have in common is that they are experts at following a structured approach or framework to solve a problem, find an answer, or realize a result.
Consulting frameworks provide a vehicle to analyze and solve complex problems. These frameworks typically consist of steps, tools, processes, and best practices that consultants can utilize to assess a client's situation, provide insight, make recommendations, and implement solutions.
There are many frameworks. A quick search or prompt to a GPT-based tool will list out well over a hundred frameworks. With so many frameworks to choose from, selecting and applying the optimum framework can be challenging.
Before any framework can be effectively used, an important first step is understanding the problem, question, or task. Asking a simple question, “What exactly are you trying to solve?”
There are even frameworks for breaking down a problem. Barbara Minto at McKinsey & Company, one of the most respected consulting firms in the world, developed the MECE approach to create a logical process to understand a problem. [1]. MECE is short for Mutually Exclusive and Collectively Exhaustive.
Consultants use MECE to break down problems into logical categories. The idea behind MECE is to organize information into categories that do not overlap (mutually exclusive) and cover all possible options or elements (collectively exhaustive). This approach helps ensure that every possible scenario or aspect of a problem is considered without any overlap or redundancy, leading to clearer, more organized thinking and communication.
Once a problem and its components are clearly understood, a consultant can then go to work by applying the optimum framework to develop a solution.
Most of us have followed or been helped by someone applying a framework. They are utilized daily by healthcare professionals, financial analysts, engineers, repair technicians, help desks, scientists, project managers, teachers, and many other professionals. For example, a physician often follows a decision tree-based framework to aid in diagnostic and treatment decisions.
The most widely used frameworks are flexible, adaptable, and dependable. They have weathered numerous business cycles and changes in market preferences, government, regulation, culture, technological innovation, and more.
Some frameworks are proprietary, complex, and created by companies, researchers at top universities, or consulting firms for specific industries or problems; others are well-established methodologies.
Frameworks can offer space for creative adaptation and often can be blended with other frameworks to develop an optimized and targeted solution.
Anyone who has used a computer with a technical issue has most likely solved it by enlisting a technician who applied a framework to get it up and running again.
Let’s take a closer look at that example. If your computer is not working properly, you decide to call or chat with tech support or use the new AI-based “Tech Support Advisor from ChatGPT.” The technician (real, automated bot or GPT prompt) listens or has you type a description of the issue, gathers information, and then follows a troubleshooting methodology or framework, like the CompTIA troubleshooting methodology [2], to solve the problem and present possible solutions to get you up and running again.
CompTIA, short for the Computing Technology Industry Association, is a non-profit trade association known for its IT certification exams and advocacy on behalf of the information technology industry.
A troubleshooting methodology or framework is a generic industry approach that is often systematically followed to identify and resolve computer or technical issues. It typically involves a series of steps that guide the path to a solution.
Identify the Problem.
Gather Information by collecting relevant data about the problem, such as error messages, recent changes, or unusual behavior.
Narrow down the possible causes.
Formulate a hypothesis.
Test the hypothesis.
Recommend and implement a solution.
Verify the solution worked.
Document the solution in case it comes up again.
If applicable, take measures to prevent the problem from happening again, such as applying updates, creating backups, or implementing best practices.
A list of some more widely known business frameworks include:
2 x 2 Matrix
3C's Model (Company, Customers, Competitors)
4P’s (Product, Price, Place Promotion)
7P’s (Product, Price, Place, Promotion, People, Process, Physical Evidence)
Ansoff Matrix
Balanced Scorecard
BCG Matrix (Boston Consulting Group)
Blue Ocean Strategy
Competitive Benchmarking
Cost-Benefit Analysis
Digital Capability Framework
Doblin’s Ten Types of Innovation
DMAIC (Define, Measure, Analyze, Improve, Control)
External vs. Internal
Fishbone Diagram (Ishikawa or Cause-and-Effect Diagram)
Force Field Analysis (Change Management)
GE-McKinsey Nine-Box Matrix
McKinsey M&A
McKinsey 7-S Framework
McKinsey Growth Pyramid
McKinsey's MECE Principle (Mutually Exclusive, Collectively Exhaustive)
Minto Pyramid Principle
OKR (Objectives and Key Results)
PESTEL Analysis (Political, Economic, Social, Technological, Environmental, Legal)
PMBOK
Porter’s Five Forces
Profitability
Root Cause Analysis
SCQA Framework (Situation, Complication, Question, Answer)
SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats)
SWOT/TOWS Matrix
Value Chain Analysis
We will explore a few business frameworks in more detail, starting with a framework everyone should have in their toolkit, the 2x2 Matrix.
2 X 2 Matrix [3]
A 2x2 Matrix is a simple grid structure with two rows and two columns. It is often used in various contexts, including business and decision-making, to categorize or analyze items based on two distinct criteria. Each cell in the matrix represents a combination of the two criteria.
The matrix can be used for various purposes, such as:
Decision-Making
When you have two important factors, you can use a 2x2 matrix to compare and contrast options based on those factors.
Market Analysis
A 2x2 matrix might be used to categorize products or business units based on their market share and growth potential.
Risk Analysis
A 2x2 matrix can be used to assess risks by evaluating their likelihood and impact.
Build Your Own Quadrant Analysis
Based on any two dimensions, it can help categorize items into four quadrants, such as High-Low, High-High, Low-High, and Low-Low.
Suppose you were considering investing in a new product line for your company and wanted to determine which new products to invest in. You can create a 2x2 matrix to evaluate and exclude potential options for further consideration based on Profit Potential and Internal Capability.
The top-right cell (High Profit Potential & High Internal Capability) represents a scenario where the profit potential for the new product is high, and your company possesses a high level of internal capabilities required to produce it. This quadrant would indicate that products that fall within it may be a good investment opportunity.
The top-left cell (High Profit Potential & Low Internal Capability) represents a scenario where the profit potential for the new product is high. Still, your company possesses a low level of internal capabilities required to produce it. This quadrant would indicate that more analysis is needed to understand the effort, resources, cost, and feasibility of building or acquiring those capabilities before investing in these products.
The bottom-right cell (Low Profit Potential & High Internal Capability) represents a scenario where the profit potential for the new product is low, and your company possesses a high level of internal capabilities required to produce it. This quadrant might indicate a cautious approach, as the potential return may be limited. It could signal that more analysis needs to occur, as the investment in these products might only be advisable if there is significant demand, it will have a long production run, or there is no competition.
The bottom-left cell (Low Profit Potential & Low Internal Capability) represents a scenario where the profit potential for the new product is low, and your company possesses a low level of internal capabilities required to produce it. This quadrant could signal that the investment is not advisable.
Porter’s Five Forces [4]
Porter's Five Forces is a framework developed by Michael E. Porter, a renowned business strategist and professor at Harvard Business School. This framework is used to analyze the competitive forces within an industry and assess the attractiveness of that industry for potential entrants, existing competitors, and other stakeholders. The uniqueness of this framework is that it considers a broad view of industry influences that impact and govern profit structure.
Porter's Five Forces model consists of five key forces.
Threat of New Entrants
This force examines the ease with which new competitors can enter an industry. Factors such as barriers to entry, economies of scale, capital requirements, government regulations, and brand loyalty are considered. The higher the barriers, the lower the threat from new entrants.
Bargaining Power of Suppliers
This force evaluates suppliers' influence over the industry and its firms. Suppliers with significant bargaining power can pressure companies by raising prices, reducing quality, or limiting supply. Factors such as the number of suppliers, uniqueness of their products, and switching costs play a significant role in this force.
Bargaining Power of Buyer
This force assesses the influence that customers (buyers) have over the industry and its firms. Buyers with strong bargaining power can demand lower prices, better quality, or more favorable terms. Factors like the number of buyers, the availability of substitute products, and the importance of individual customers to the company's revenue are considered.
Threat of Substitute Products or Services
This force examines the availability of alternative products or services that can meet the same needs as the industry's offerings. If there are close substitutes, it can limit companies' pricing power and profitability in the industry.
Rivalry Among Existing Competitors
This force looks at the intensity of competition among existing firms in the industry. Factors such as the number of competitors, industry growth rate, product differentiation, and exit barriers contribute to rivalry. High rivalry can lead to price wars, reduced profitability, and increased competition for market share.
By analyzing these five forces, businesses can gain insights into the competitive dynamics of their industry and make strategic decisions accordingly.
For example, it may be an attractive industry if the forces are favorable (e.g., low threat of new entrants, weak bargaining power of suppliers and buyers). If the forces are unfavorable (e.g., high rivalry, strong bargaining power of suppliers or buyers, many competitors, little product or service differentiation), it may signal challenges that should be addressed through strategic planning and competitive positioning.
McKinsey 7-S [5]
The McKinsey 7-S Framework is a management model and organizational analysis tool originally developed by McKinsey & Company consultants Robert H. Waterman Jr. and Tom Peters in the late 1970s.
It is designed to help organizations analyze and align various aspects of their internal environment to achieve their strategic goals and improve overall performance.
The original framework includes seven interrelated elements: Strategy, Structure, Systems, Shared Values, Skills, Style, and Staff. These elements are categorized as either "hard" (Strategy, Structure, Systems) or "soft" (Shared Values, Skills, Style, Staff), emphasizing that attention must be paid to both tangible and intangible aspects when assessing an organization.
In the McKinsey 7-S Framework, hard elements like structure, systems, strategy, and skills are typically the more tangible and easier-to-measure components. These relatively tangible elements can be documented and analyzed with quantitative data.
In contrast, soft elements encompass an organization's more intangible and people-centric aspects, including shared values, style (leadership and management style), and staff (the workforce). These elements are often more challenging to quantify and involve the organization's culture, relationships, and human behaviors.
Strategy
This is the organization's plan for achieving its goals and objectives. It includes the organization's overall direction, competitive positioning, and plans for growth or diversification.
Structure
This refers to how the organization is organized, including its hierarchy, reporting relationships, and the division of responsibilities and roles among employees.
Systems
These formal and informal procedures, processes, and information systems support the organization's operations. They include performance management systems, communication, and decision-making processes.
Shared Values
Shared values represent the organization's core beliefs, principles, and culture. They shape the behavior and attitudes of employees and influence how the organization operates.
Skills
These are the competencies and capabilities of the organization's employees. Skills include the knowledge, expertise, and abilities required to effectively carry out the organization's activities.
Style
Style refers to the leadership and management styles within the organization. It includes leadership behavior and how decisions are made and implemented.
Staff
This element encompasses the organization's workforce, size, composition, and skill levels. It also considers factors related to employee recruitment, training, and development.
The McKinsey 7-S Framework suggests that all seven elements are interrelated and must be aligned to ensure effective organizational performance. When there is alignment among these elements, the organization is more likely to succeed in implementing its strategy and achieving its goals. A misalignment among these factors can lead to inefficiencies, conflicts, and obstacles to achieving the desired outcomes.
The framework is often used as a diagnostic tool to assess an organization's current state and identify areas where changes may be necessary to achieve strategic objectives. It can also guide organizational change efforts by helping leaders understand the interconnectedness of these elements and the potential impact of changes in one area on others.
DMAIC (Define, Measure, Analyze, Improve, Control) [6]
The DMAIC framework is a structured problem-solving and process improvement methodology commonly used in Six Sigma and Lean Management.
The framework provides a structured, data-driven problem-solving and continuous improvement approach. It is widely used in industries where process efficiency, quality, and consistency are critical, such as manufacturing, healthcare, and service, to drive improvements and achieve desired outcomes. Additionally, it can be combined with other tools and methodologies to enhance process excellence and achieve organizational goals.
DMAIC stands for Define, Measure, Analyze, Improve, and Control. It provides a systematic and phased approach to identifying and addressing issues within a process to achieve better results and operational excellence.
Define
In the first phase, the problem or opportunity for improvement is defined clearly, and the project's goals and objectives are established. This phase also involves identifying key stakeholders, understanding customer requirements, and setting a project scope.
Measure
During this phase, relevant data and metrics are collected to quantify the current state of the process or system being analyzed. It involves identifying critical process inputs (variables) and outputs (performance metrics) and establishing baseline measurements.
Analyze
In the analysis phase, data is analyzed to identify the root causes of the identified problems or variations in the process. Various statistical and analytical tools are used to determine the factors contributing to the issues and how they are related.
Improve
This phase focuses on generating and implementing solutions to address the root causes identified in the analyze phase. Improvement ideas are tested and evaluated, and the best solutions are selected for implementation. The goal is to optimize the process and achieve improved performance.
Control
The final phase, Control, is about maintaining the improvements achieved in the Improve phase and ensuring that the process remains stable and consistent over time. It involves creating control plans, setting up monitoring systems, and establishing standard operating procedures to prevent regression to the old ways of doing things.
Ansoff Matrix [7]
The Ansoff Matrix, also known as the Product or Market Expansion Grid, created by Igor Ansoff and published in the Harvard Business Review in 1957, is a strategic tool used in business growth and marketing strategies. It's a matrix that helps companies decide their product and market growth strategy.
The matrix has four quadrants.
Market Penetration
This strategy involves selling existing products to existing markets. It's a low-risk approach typically focused on increasing market share, improving sales, leveraging economies of scale, and competitive pricing.
Market Development
This strategy seeks to introduce existing products to new markets. It can involve exploring new geographical areas, different customer segments, or new uses for the product. It's riskier than market penetration due to the challenges of understanding a new market.
Product Development
This involves developing new products for existing markets. It's more risky than market penetration as it involves the creation of new products. This strategy is often driven by changes in customer needs, technological advancements, or to outpace competitors.
Diversification
The riskiest strategy, diversification, involves introducing new products to new markets. It's used when there are no opportunities left for growth in the current market. This can be “related diversification” (where the new products are somewhat connected to the existing business) or “unrelated diversification” (completely new areas for the company).
The Ansoff Matrix is valuable for businesses to understand their growth strategies and the inherent risks. It assists in decision-making about whether to focus on existing products and markets or to venture into new ones.
Please note there are several commonly accepted configurations of the matrix strategies by reversing existing and new positions.
Competitive Benchmarking [8]
Competitive benchmarking involves comparing a product, service, business, or industry position relative to competitors, industry standards, and best-in-class brands. Benchmarking helps identify and compare the most effective processes, strategies, techniques, and attributes for attaining business objectives by comparing metrics.
In its simplest form, it answers the question, “How are we doing when compared to XYZ?”
Competitive benchmarking is traditionally categorized as internal or external, with several focused subcategories.
Internal
Internal benchmarking compares various aspects of an organization across different internal units, product lines, departments, programs, or geographic regions. This comparison is categorized into two primary forms, Performance and Practice.
Performance Benchmarking
This focuses on comparing metrics or key performance indicators (KPIs). These metrics could include sales figures, production costs, employee productivity, customer satisfaction levels, or any other quantifiable performance measure. By analyzing these metrics, an organization can identify areas where one unit is outperforming others, understand why this is the case, and use these insights to drive improvements across the board.
Practice Benchmarking
This type of benchmarking goes beyond mere numbers and looks at different units' practices, processes, or strategies. For instance, it might involve comparing the manufacturing techniques used in different factories, the marketing strategies employed in different regions, or the HR policies across various departments. The goal is to understand which practices lead to better performance and how other organizational units can adopt or adapt them.
External
External benchmarking is outside an organization and can be categorized into several types, each focusing on different aspects of comparison with organizations outside of one's own. These types include Competitive, Functional, Generic, Strategic, and Process.
Competitive Benchmarking
This involves directly comparing your organization's products, services, processes, and practices with those of your direct competitors. It's particularly useful in understanding where you stand in the market and identifying improvement areas to gain a competitive edge.
Functional Benchmarking
Here, the focus is on comparing specific functions or operations (like HR, logistics, manufacturing, etc.) with those of companies known for their excellence in these areas. These companies may or may not be in the same industry. Functional benchmarking is helpful in improving operational efficiency and effectiveness.
Generic Benchmarking
This type broadens the scope by comparing similar business processes and practices across industries, such as customer service, supply chain management, or innovation processes. The benchmarking targets are organizations recognized for their best practices in these generic processes, regardless of their industry.
Strategic Benchmarking
This involves examining how companies compete and succeed in their respective industries. It focuses on long-term strategies rather than specific processes or operations. It's particularly useful for organizations developing or revising their strategic plans.
Process Benchmarking
This type focuses on comparing specific critical processes and operations within an industry. The goal is to identify the most efficient and effective ways to perform these processes, regardless of whether the benchmarking targets are direct competitors.
Each type of external benchmarking has its benefits and can be chosen based on the specific goals and needs of the organization. The key is clearly defining what you want to achieve through benchmarking and selecting the type that best aligns with those objectives.
The importance of benchmarking to decision makers is highlighted by the success of Gartner, Inc. [9], a global research and advisory company that provides insights, advice, and tools for leaders in IT, finance, HR, customer service, and support, legal and compliance, marketing, sales, and supply chain functions. They are well known for their benchmarking studies and the "Magic Quadrant," a series of market research reports that rely on qualitative data analysis methods to demonstrate market trends, such as direction, maturity, and participants. Their reports and insights are widely used and trusted by organizations worldwide to assess the viability and competitive landscape of various technologies and business practices.
The high-level view of the framework for the execution of competitive benchmarking involves seven core actions.
1. Identify Competitors
The first step is to identify the direct and indirect competitors in the market.
2. Select Comparison Metric
Choose specific metrics for comparison. These could include industry baselines, including sales figures, market share, product quality, customer satisfaction, operational efficiency, etc. The choice of metrics depends on what aspects of the business are to be focused on.
3. Acquire Data
Gather data to build or determine the selected metrics. This can involve internal data analysis, market research, customer surveys, and other methods.
4. Analyze
Analyze the data to understand the metric performance relative to competitors or the industry. This often involves overlaying other frameworks, for example, a SWOT analysis (strengths, weaknesses, opportunities, and threats).
5. Recommendations
Based on the analysis, set measurable goals for improvement. This might involve recommendations for adopting best practices from competitors, investing in areas of weakness, or leveraging strengths more effectively.
6. Implement and Monitor
Implement strategies and continuously monitor performance. This includes regular reassessments to ensure the company is achieving its goals.
7. Update
As market conditions change, update, adjust, and maintain the benchmark assumptions, studies, and strategies accordingly. This ensures that the company remains competitive and relevant over time.
Competitive benchmarking is not just about copying what competitors are doing. It's about understanding the market landscape and strategically positioning your company for success in a measurable way. It requires market intelligence, strategic thinking, and continuous improvement.
Conclusion
There are many business frameworks; selecting the right one can help guide and fast-track a solution. They can be utilized alone or in various combinations depending on the specific problem to be solved or the result needed.
Consultants often tailor their framework approach to meet the unique needs of their clients and industries. It's important to remember that while these frameworks can jumpstart a solution and provide a structured approach to problem-solving, their effectiveness relies on the expertise, experience, and effort of the people applying them to real-world business challenges. So don't forget to put the work in!
Take some time to learn about business frameworks and consider how they may help you more effectively solve a problem, find an answer, or realize a result.
References and Citations
McKinsey & Company website, https://www.mckinsey.com/alumni/news-and-events/global-news/alumni-news/barbara-minto-mece-i-invented-it-so-i-get-to-say-how-to-pronounce-it, “Barbara Minto: “MECE: I invented it, so I get to say how to pronounce it“, accessed November 10, 2023
CompTia website, https://www.comptia.org/blog/troubleshooting-methodology , “Use a Troubleshooting Methodology for More Efficient IT Support”, Damon M. Garn, December 6, 2021
University or Cambridge website, https://www.ifm.eng.cam.ac.uk/research/dstools/2x2-matrix/, “2x2 matrix”, accessed November 10, 2023
Porter, Michael E., http://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy/ar/1, "The Five Competitive Forces That Shape Strategy." Special Issue on HBS Centennial. Harvard Business Review 86, no. 1 (January 2008): 78–93
McKinsey & Company website, https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/enduring-ideas-the-7-s-framework, “McKinsey Quarterly, Enduring Ideas: The 7-S Framework”, March 1, 2008
American Society for Quality website, https://asq.org/quality-resources/dmaic, “The Define Measure Analyze Improve Control (DMAIC) process”, accessed November 10, 2023
Ansoff, H. Igor (Sep–Oct 1957), https://archive.org/details/strategiesfordiversificationansoff1957hbr/page/n1/mode/2up, "Strategies for Diversification", Harvard Business Review, Vol. 35 Issue 5, pp. 113-124
APQC (American Productivity & Quality Center) website, https://www.apqc.org/what-we-do/benchmarking, “Benchmarking Section”, accessed November 10, 2023
Gartner website, https://www.gartner.com/en/research/magic-quadrant, “Gartner Magic Quadrant & Critical Capabilities”, accessed November 10, 2023
Cover image, Microsoft Stock Image Photos, November 10, 2023
Physician diagnosis image, Microsoft Stock Image Photos, November 10, 2023
All other diagrams, graphs, and charts created by named author, Greg Valyou
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