Can't find critical data for analysis?
Most consultants freeze when critical data is missing. But that’s when real problem-solving begins. What can you do? Let me share a real example of how to solve problems despite uncertainty.
Can’t find critical data for analysis?
I know it’s extremely frustrating. But the world is not perfect, and most of the time we don’t have the data we want.
For most of my McKinsey career, I operated in the developing countries of Asia and Africa. Data was always scarce, borderline non-existent. We had to solve problems creatively.
In this post, I don’t plan to show you various ways to reframe your problems. It’s highly dependent on the context and problems you solve.
But I want to share a real example I encountered recently. I want to inspire you on how flexible and creative you can be in your problem-solving.
I am starting a new series of posts where I share some real-life problems and their solutions. One of my clients shared that it was super helpful for him to learn through these examples because he can see how problem-solving should work.
A sneak peek: A consultant was tasked to validate the financial viability of a new product, but he couldn’t find any data on its global pricing.
How to solve this problem without this critical data?
The answer is simple but hard to execute:
Reframe your approach using the data you have.
Change the angle of your attack.
I know this advice sounds too generic. It easily falls into the category of things that are easier said than done.
As a consultant, I was frustrated when I heard this from my managers and partners.
But let me try to push beyond generic and share a real-life example with you.
As with any example, context is important. So let me build it up first. Later, we can use this context to make a few important learning points.
Bear with me, it can take some time. But I promise, the reward will be significant.
Context
My coaching client, a first-year MBB consultant (Consultant), asked me for help with solving his real problem on the project. He is a member of my coaching program.
I regularly help my clients with their real problems. That allows them to gain momentum and learn problem-solving more effectively.
Here’s the problem he shared with me. I sanitized it, but you’ll be able to get the gist of it.
He was working on a project for a client, a chemical manufacturing company (Company).
The company asked the consulting firm to help with one question.
They’ve been approached by another company (Third party) proposing an investment project. They proposed to build a factory that will use a new technology to produce a product that is supposed to replace an existing product on the market (a commodity-like product).
The main benefit for the company is that the new technology uses waste material produced by the main business.
The company asked the consulting firm to look into it and advise on the financial feasibility of this project.
Because that was not the main scope of the consulting project, that question landed on the laps of the consultant as he was the most junior in the team.
His task was to look into this investment opportunity and verify it. The third party provided the investment model he had to verify.
He researched the topic. But because the technology was new, the information was scarce, and he couldn’t find critical data for his analysis.
He couldn’t find the global prices for that new product. There were a few factories being built globally. But none of them shared their pricing data.
Without prices, he couldn’t estimate the economics of this project and its financial viability.
He got desperate.
That was his first serious task, and he really wanted to nail it.
That’s when he approached me.
Let’s PAUSE here!
Here, I propose you take a moment and think about how you would approach this problem. Think of a few ideas on how you would reframe your approach and solve it without pricing data.
I don’t expect you to solve it like this. You don’t have the critical research and context information that the consultant had. But it's extremely helpful to think before we dive deep into solutioning. This will enhance your learning.
Solutioning
I looked into the problem and quickly caught up with him, asking him a bunch of questions.
It became apparent that the pricing route was a dead end.
We had to reframe our approach and change the angle of attack.
We stepped back and revisited the problem we were trying to solve on a more fundamental level.
What is the main investment thesis of this project?
The new product was supposed to substitute the existing product.
Let’s dig deeper.
Under what conditions would that project be successful?
There were a few I could think of, but one stood out as the most important.
If we want to replace existing products, the production cost of a new product should be lower than the current market price of the existing product.
Ideally, with some handsome margin.
A little side note.
Here I use my favorite reframe:
What do we have to believe for this to happen?
It’s a very useful reframe for any kind of business case. When you struggle to estimate the market upside of a new product or service, you can define what minimal conditions you need to believe in to make it work.
In this example, we can’t estimate the product's top line because we don’t have market prices.
When you start coming up with potential pricing points or market penetration, these assumptions become vulnerable to clients’ attacks. Often, you don’t have solid data to back it up. It looks like fortune-telling, looking at the crystal ball. Not a very scientific approach.
That’s why we reframe and focus on things we can control and estimate, like costs. Costs are your absolute minimum. And then when you make anything above that number, it’s your profit. You and your clients can speculate on growth potential. But at least you can agree on what is fact-based: the break-even point.
This reframe is helpful when you discuss business cases with defensive and skeptical clients.
Fortunately, the third-party company provided the production economic model. And the cost of production was available.
Here was the first insight:
The cost of production was 3x higher than the price of the existing products.
Wow! That was extremely insightful.
I actually didn’t even expect that the delta would be so huge.
That was promising. We could build the whole solution just based on that one insight.
But let’s not rush and be careful in our thinking process. We need to make sure we don’t have any blind spots.
Here’s the important question to ask:
What if we are wrong and missing something else? Where can we get attacked by our partners and clients?
We asked ourselves this important question:
What if the benefits of this new product outweigh the cost difference?
It was actually a very plausible assumption. So we decided to check that.
Here’s what we found:
Apparently, the new product was indeed more effective than the current ones. But it only improved efficiency by 15-20%. It didn’t compensate for the 3x difference.
We diffused this threat. We proactively added that point into our solution to prevent this question.
We also thought about other ideas, but nothing serious came to mind.
The consultant created a simple one-pager:
He showed the prices of current conventional products (2-3 variations) and compared them with the new product's cost of production.
Omg, that one slide was telling.
He showed that slide to his manager and partner, and they were so impressed! They liked the elegant reframe so much that they approved it right away. They just gave him a few comments on how to build a storyline around it to make it a 5-page document.
The next day, they showed this document to the client, and they loved it as well.
That definitely answered the question of financial viability.
But there was a more important impact for the consultant.
His leaders were so impressed that they started trusting him more. The consultant could feel how they started to treat him differently. That one win allowed him to build momentum and a stronger reputation.
That project went very well for him, and his improved reputation allowed him to get staffed on another high-profile project.
That one win was extremely important for the consultant early in his career. While his peers were stuck on a beach, he was consistently staffed on high-profile projects.
But the most important lesson I wanted him to experience was how these wins happen, and how significant, disproportionate, and long-lasting the benefits can be.
Unfortunately, many junior consultants can work for months without achieving any meaningful wins. So, they don’t know what to push for in their work.
But let’s get back to you.
If you got to this point, we can start learning. Once you have downloaded the critical context, we can talk about a few critical lessons of this example.
Reframing is a powerful tool in problem-solving.
If you are stuck, think about whether you have other angles of attack.
There are a few reframes I particularly like to do.
- step back and review the fundamentals of the problem;
- what we need to believe for this to work;
- reality check: how things work in the real world and whether it gives us additional insights;
- the opposite reality check: how things should work for the opposite reality to be true;
These are just a few reframes I use, but of course, it’s not a comprehensive list. Your problem and context will dictate what reframe you can apply.
From my experience, I can tell that there’s always an elegant solution or a hack to any problem. You must look for them. If you don’t try, you won’t find it.
Unfortunately, it’s harder to teach this skill because it’s highly dependent on the context of the problem. But with enough practice, you can become more proficient in this skill.
Consider other alternatives
A quite common mistake consultants make is to pick up the first solution and run to execute it without any proper stress-testing.
But then, when partners ask why they haven’t considered other alternative solutions, they get caught off guard.
In this example, we found a good solution. But we moved through it very carefully, making sure we considered the possibility that we could be wrong. That’s why we also did an additional analysis of product efficiency versus cost advantage.
Focus on one killer page
Here’s the life hack for you.
Usually, in problems we solve, there’s one killer idea that cracks the problem. If you can find it early, focus on producing one killer slide as the highest priority.
Then you can show it to your partners and align on the overall solution. In the beginning, you don’t need to produce dozens of pages. You can produce them later once you align on that one killer idea.
And the opposite is true.
When you don’t have that one killer idea, you can produce dozens of random slides. But your partners won’t be satisfied with these slides, giving you dozens of comments resulting in multiple iterations. That’s how you make your work harder and productivity lower.
In our example, the slide comparing the prices of existing products with the cost of production was the killer slide. It answered the whole question instantly, because it showed the logical inconsistency of the proposal. And then they built storytelling slides around that, telling about the context.
I hope that one example showed you how you can solve these problems. But the main lesson I wanted you to take away is how much rigor, flexibility, and creativity you can have in your problem-solving process. That’s what it takes to solve problems elegantly.
This was an experimental post. I plan to write more examples like that. But let me know what you think and if it was helpful.
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