McKinsey MECE Principle

Synopsis

Can you make every idea count and have every problem efficiently solved? The answer is yes, you can; with one simple tool – MECE Principle from McKinsey & Co. Our McKinsey MECE Principle presentation allows you to apply this clean and intuitive framework to protect you and your team from misfires and duplication of work and solve any problem, anywhere, anytime.

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Slide highlights

First and foremost, use this slide to define the basics of your problem and list all of your Mutually Exclusive (ME) items, as well as all of your Collectively Exhaustive (CE) items. Then communicated these items to your team or stakeholders.

With slides, such as this one, you can create and share with your team a Profitability Tree. Profitability trees are a type of issue tree that is created with the sole intent to run a thorough analysis of the company profits.

Overview

MECE Principle was developed by Barbara Minto – the first female MBA professional hire at McKinsey & Co, best known for the Minto Pyramid Principle – framework for writing and presenting ideas. Business strategy consultants apply MECE problem structuring to break down client problems into logical buckets of analysis.

The MECE Principle suggests that to solve any problem, you need to first understand your options by sorting them into two categories:

• Mutually Exclusive (ME) – includes items that can only fit into one category at a time (in other words, there is no overlap between them).
• Collectively Exhaustive (CE) – means all items can fit into one of the categories (there is an overlap between the two different areas of the framework).

If you're unsure how to pronounce MECE, McKinsey team pronounces it as "Mee-cee," but Barbara pronounces it with one syllable, rhyming with "Greece." "I invented it, so I get to say how to pronounce it," she says in a blog post for McKinsey & Co.

Application

According to IGotAnOffer Consulting, to make any framework MECE, you need to do the following:

Use a math formula

Using a math formula can work really well to break down a framework in a MECE way because math formulas are MECE by nature, the consultants say. For example, to calculate company profits, keep in mind that Profits = Revenue - Costs, where Revenue is Units sold and Price per unit and Costs is Fixed cost and Variable cost.

Use a supply-chain / process

Structuring your framework using a supply-chain or a process also works well. Because each step in the process is separate, your framework will be mutually exclusive. For example, the supply chain of the Coca-Cola company may look like this:

• Sourcing of raw ingredients
• Manufacturing a product
• Shipping to local markets
• Mixing and bottling of Coke in local markets
• Distribution to retail points (stores, wholesalers, etc.)

Use common lists

The last approach you can use to make your framework MECE is to rely on common lists of elements that are important in business. The following examples are again applied to Coca-Cola, where each bullet point could be a different framework:

• Products: Coke, Diet Coke, Coke Zero
• Countries: US, Europe, China, India
• Business entities: Suppliers, Clients, Competitors, Regulator
• Distribution channels: Retail stores (Walmart, Target), Restaurants (McDonald's, In-N-Out Burger), Wholesalers.

Hidden rules

MConsultingPrep experts list these four MECE Principle rules as hidden:

1. Parallel items – the first "hidden rule" of MECE is that all items have to belong on the same logical level.
2. Orderly list – this MECE Principle rule implies that items should be arranged in a logical fashion to extract the most benefits.
3. The "Rule of Three" – the "Rule of Three" states that sets of three items are the most intuitive to the human brain as they make information easy to store and process. Plus, smaller sets of items are less time-consuming to describe. In a MECE framework, the number of items on each level should be around three (however, two and four are also allowed). But once you hit five, things start to get confusing for both you and your stakeholders.
4. No interlinking items – for an issue tree to be truly MECE, the items on the same level must be interdependent. If there is interdependence between the items, one Root Cause Analysis will manifest in many different symptoms across the board, which will make it more difficult to locate the mentioned root cause. An example of this would be to break down revenue into the Unit Price and Sales Volume. While generally considered MECE, these two items are interlinked, so technically, they are not mutually exclusive.