Playing To Win
Generating Strategy Possibilities
Mutually Exclusive & Collectively Exhaustive vs. Happy Stories
I am often asked about generating strategic possibilities and, in particular, whether possibilities need to be mutually exclusive, collectively exhaustive (MECE). I thought I would give my perspective on that question in this Playing to Win/Practitioner Insights (PTW/PI) piece. It is called Generating Strategic Possibilities: Mutually Exclusive & Collectively Exhaustive vs. Happy Stories. All previous PTW/PI can be found here.
What is MECE?
The concept of MECE was created by former McKinsey consultant Barbara Minto, who is famous for The Pyramid Principle: Logic in Writing and Thinking, the consultant’s Bible for writing memos and crafting PowerPoint presentations. She is also famous for being , in 1963, the first female consultant that McKinsey ever hired. Hard to imagine that barrier was broken only 60 years ago. Nice work, Barbara!
The book describes how you build toward a compelling conclusion with ascending layers of logic. The first layer of logic supports an intermediate conclusion and, along with other intermediate conclusions, supports a higher-order intermediate conclusion and, in due course, the ultimate conclusion. According to the MECE principle, at each level of logic, the elements of logic utilized must be mutually exclusive — i.e. not overlap with each other — and be collectively exhaustive — i.e., no aspect of logic pertaining to the conclusion is left out. In this way, you build your ‘pyramid principle’ argument from layers of MECE components.
Her framework, training seminars, and book have been extremely influential, and I am duly impressed. And she reveals that her ideas were (at least in part) inspired by Aristotle, who is my favorite philosopher of all time, so it is not surprising that it resonates with me. And for better or worse, she is why virtually every McKinsey PowerPoint sounds the same!
But Then…
As with most good things in life, use of the good thing expands. Hey, this pickup truck is good for hauling a bed full of rocks, could it tow my boat too if we put a hitch on it? Could it serve as a camper if we set a tent-like structure in the bed? Sometimes, the expansion of use is an unalloyed good — as with the full-size pickup truck which has become one of America’s most beloved vehicles.
But for some things, the stretching of utility gets outside the valuable zone and becomes a net detriment — blue jeans at a wedding reception. In management, I sometimes think of military strategy being applied bluntly to business strategy or business strategy being applied bluntly to political strategy as that kind of stretch.
Something of the latter type appears to have happened with MECE. Minto created the tool for the purpose of helping to structure an argument to communicate it compellingly — in The Pyramid Principle.
Somehow it jumped the fence from that field into another pasture — options. The view became that if you are considering potential solutions to a strategy question or problem, you should seek to have the options you consider — or possibilities as I prefer to call them — be MECE. I don’t know how it happened, or whether Minto advocated that or not. There certainly is a plausible path from the consultants who learned to build their arguments with MECE to use MECE to guide possibilities generation.
What does that mean in the context of possibilities generation? The ‘mutually exclusive’ part means that each possibility you consider as a potential resolution of a strategy problem must be independent of every other one you consider. That is, one possibility can’t be entering Europe and another, entering Europe and Asia. Or win based on distribution advantage and win based on distribution advantage and speed to market. The ‘collectively exhaustive’ part means that you must not stop generating possibilities until you have exhausted all possibilities.
My Take
For sure, I can see how when communicating an argument, using MECE as a guiding tool makes sense and have no quarrel with it in that domain. But I am not a fan of MECE in possibilities generation — the third step in the Strategic Choice Structuring Process. The MECE approach is too technocratic for my liking. To me, there is nothing wrong with having possibilities that are partially overlapping (e.g. entering Europe and Asia versus entering Europe and Latin American) or one a subset of another (e.g. entering Europe versus entering Europe and Asia). It isn’t helpful to generating a great strategy solution to say that the possibilities can only be stated as enter Europe or enter Asia or enter Latin America. Sure, each of the entry of Europe, Asia, and Latin America has its own strategic logic, but it doesn’t help to evaluate each only independently because there may be (and probably are) important synergies to be gained by entering multiple regions.
In addition, the notion that your possibilities must be collectively exhaustive seems extreme. The possibilities are — as the saying goes — endless. Trying to imagine and carefully catalogue every one of them is likely to be a waste of the time and energy of any group. I have watched the excitement of groups plummet after they have gotten what they view as enough possibilities on the table. Of course, it is dangerous to fixate quickly on one or even a small handful. But tilling ever-more barren fields in the quest for exhaustiveness is going to drive any team to distraction.
Net, I don’t use MECE as a guideline or tool when generating possibilities. And when someone tries to impose MECE — which happens not infrequently — I push back.
My Alternative Approach
Recall that I see strategy as a problem-solving tool. The first step in the Strategic Choice Structuring Processis to define the problem as a gap between the outcomes you are currently producing and the outcomes you wish you were producing. The outcomes you are currently producing are the consequence of all the choices you have made up until today interacting with the competitive dynamics in the market in which you are competing. To close the gap, you need to make a different set of choices because doing the same thing and expecting a better outcome is the definition of insanity.
Rather than telling teams contemplating the different set of choices that they must generate a MECE set, I tell them that their job is to generate an array of happy stories. The only constraints on that happy story are that 1) in the story, the gap disappears, and 2) the choices required to realize the happy story can be enumerated. That means that the happy story isn’t so vague that its logic can’t be laid out. The story doesn’t have to be true/certain to succeed. But it has to be happy, and the logic has to be laid out.
I couldn’t care less if the happy stories overlap to some degree or if we have captured every theoretically plausible happy story. I just want them to be happy enough to the members of the management team to dive into and work on. I do push for variety. If all the happy stories are minor variants along one vector, I ask for happy stories that feel importantly different from the existing list. But exhaustive? No.
It is critically important to keep up the energy when working on strategy. For most people who aren’t strategy geeks like me, strategy is hard work. To the degree you can make it fun and organic rather than a Bataan death march, you will get better answers because engagement will be higher. Management teams have no interest in or excitement about MECE. They do in happy stories — which inspire them to determine on which happy story their time, energy and resources are most worth betting.
That having been said, it is important not to choose a happy story simply because it sounds good. That is why you must subject each happy story to the logical test of determining what would have to be true (WWHTBT), identifying the elements of WWHTBT that you are least confident are or can be made true, and testing those elements to gain confidence in your ability to make them true — or your lack thereof and the elimination of that happy story. That is, you must follow the happy story with rigorous assessment of it. Importantly, I find that the happiness of the story maintains the energy in the team to do the necessary assessment work.
Practitioner Insights
There are lots of management tools out there that can be applied to the world of strategy. As a practitioner, you need to sift through them carefully. Strategy is a human group exercise, and your tools need to be paired well with a group of humans — just like your wine needs to be paired carefully with your food.
Be careful of technocratic tools. To be sure, some executives are technocrats at heart, but in my experience, the best ones are not. You will create value if you can gently nudge the technocratically-inclined toward less technocracy and provide the technocratically-adverse with tools that make them comfortable and excited. Half the battle in strategy is getting everyone to lean in!
As applied to generating possibilities, the MECE standard is just too technocratic. It creates useless arguments — ‘no those aren’t mutually exclusive’ — and daunting tasks — ‘are we sure that we have been exhaustive?’ Life is too short!
Instead try generating happy stories. ‘If we shift our focus for older women to women between 25 and 49 fighting the first signs of aging, we can build a giant brand.’ ‘If we keep control of the package from shipper to recipient, people will have confidence it will get there when promised.’ ‘If we give them a little computer of their own, even if it is pathetically weak, it will transform users’ lives.’ These are exciting happy stories that provide the motivation for a team to work on seeing if it can make the story true.
You don’t need a terrifically long list of them. And they don’t need to be completely independent of one another. You just need a few exciting ones and the temerity to imagine that you could make one of them come true!
