What are the 2nd and 3rd level insights?
Partners ask MBB consultants to generate the 2nd and 3rd level insights. But consultants struggle to understand what that means and how to do it. In this post, I explain it using a real-life example.
What are the 2nd and 3rd level insights?
In this post, I will share a short story to illustrate the answer to this question, making it easier to understand. Bear with me, it might take a moment to explain.
But first, let’s understand this problem a little bit better.
Why do partners demand that you generate 2nd and 3rd-level insights?
They want to impress clients. That’s their core need to keep business coming in. They need to justify the high fees they charge. Unique insights have a profound impact on people. If they get impressed, they value the advice more.
And because partners don’t have time to produce insights themselves, they will push you to do that.
As a consultant, I hated this feedback. I simply didn’t understand what that meant or how to do it. I thought I was doing it, but apparently, my partners were not impressed. And now, as a coach, I see that many consultants face the same challenges.
Here, I want to provide you with an example you can relate to. And maybe, it will make you change your approach and teach you how to do it.
To provide a clear example, I first need to provide you with the relevant context. The thing is that insights are highly context-dependent. And often they are also audience-dependent, depending on their perspective and needs.
Here’s the story.
Last weekend, my wife and I went to the cinema to watch a new movie, Predator: Badlands. I am a bit of a Predator franchise fan, so it was kind of a big deal for me.
But as parents of four kids, we could find only a tiny window to go to the cinema.
Unfortunately, at that time, only one cinema was available, and it had seats available only in the 3D/4D theatre. And I hated it.
You know the type of theatres where you have to wear 3D glasses. But they make everything super dark and fuzzy.
On top of that, the chairs were shaking like crazy, making me feel nauseous.
After the first 5 minutes, I realized I couldn’t take it anymore. You know, the movie is action-packed. The chairs were shaking all the time. I just couldn’t focus my vision on what’s happening.
So, I knew it was going to be two hours of torture. I was upset because it was going to spoil a good movie for me.
I started looking around for a solution. And I noticed that some chairs were not shaking at all, and they were empty (1st level insight).
The first thought was that chairs react to weight and move if someone is sitting on them. But then I quickly dismissed that because the cinema looked pretty old, and having weight sensors seemed like overkill.
My second guess was that they are simply broken (2nd level insight). So, I proposed to my wife that we go and sit there (solution hypothesis). And we did that, and it worked well. All that shaking stopped, and we solved our problem.
But because my wife is also a McKinsey consultant, we kept pushing our thinking.
When we bought tickets, we looked at the map and noticed that all seats around us were taken, but in reality, they were actually available. We concluded that the cinema deemed these seats defective and doesn’t sell them (1st level insight).
And because there were significant clusters of empty seats, the cinema might be losing up to 50% of its revenue (2nd level insight).
But what the cinema management might not understand is that some customers don’t see it as a defect, but as a benefit (3rd level insight).
For example, other customers noticed what we did and started to move to empty seats as well. So, maybe it’s not only me who was annoyed with all the shaking.
If customers were given a choice, some of them would opt for non-shaking chairs, which would result in the cinema generating more revenue (solution hypothesis).
These thoughts kept running through my mind during the movie. My mind just couldn’t let it go. It went from issue to insight and to hypothesis again and again.
Here’s the summary of issues, insights, and hypotheses:
Issue: Shaking chairs made the movie experience very poor
1st level insight: But some chairs were not shaking
2nd level insight: Non-shaking chairs are broken
Solution hypothesis: Change seats to non-shaking ones
—
New issue: Cinema does not monetize its capacity fully
1st level insight: Cinema doesn’t sell non-shaking chairs as defective
2nd level insight: Around 50% of seats are not being sold
3rd level insight: Some customers actually value non-shaking chairs
Solution hypothesis: Cinema can offer a choice of shaking and non-shaking seats and make more money
The insights about cinema not making money are what partners call 2nd and 3rd-level insights and implications. That’s what they want you to think about. Not just solving your current task, but also thinking about the bigger picture.
And now imagine you come to your partner and say something like:
The cinema can increase revenue by 50% by offering customers the choice of either shaking or non-shaking seats.
That would be a game-changing insight for your partners and clients. Then, you can back it up with arguments and explain your reasoning.
Additionally, that would be a great example of a top-down, pyramid-principle communication.
If you start pushing yourself to find these unique, non-trivial insights, you’ll dramatically improve your problem-solving. This will result in higher performance, increased support from leadership, and overall better career progression.
I know it’s a somewhat simplified example, but I hope it effectively illustrates the mental journey you must undertake when solving complex issues.
And I know it’s hard to learn these things. It may seem simple in theory, but when you face real problems, it quickly gets too messy.
The most effective way to learn to generate unique insights is through practical work. Because we, as humans, learn best by doing something instead of learning the theory.
That’s why I ask consultants to complete practical exercises in my coaching program. Then, I can show them what good insights and hypotheses look like in the context of the problems they were solving.
If you’re an MBB consultant who wants to improve problem-solving and overall performance through personalized coaching support:
We will discuss your pain points, challenges, and aspirations. No strings attached, just straight answers to your biggest questions.
If you want to learn more about my coaching program, read this post:
The coaching program for MBB consultants.
P.S. At the end, I was quite proud of myself for solving that problem and continued watching the movie. By the way, the movie was quite good. And I really enjoyed it. If you like the Predator franchise, I am sure you would enjoy the movie.