Module I

Identification of the key issues

of the engagement

Introduction

Module I

Module II

Module III

Module V

Roll-out
Qtr 1
4

Qtr 2

Qtr 3

Qtr

Action 1
Action 2
Action 3
Action 4
Action 5

Module VI

Conclusion

Module IV

Contents of Module I

Introduction

Identification of the key issues of the engagement

A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING

Module I

Administrative issues

Schedule for the A.T. Kearney Business Unit Strategy Training Program

Time

Monday

Tuesday

Wednesday

Thursday

Friday

Module II

Module III

Module V

Final presentation

8-9
Introduction
9-10
10-11
11-12
12-1

Module I

1-2

Lunch

Conclusion
Lunch

Lunch

Lunch

2-3
3-4

Module VI
Guest Speaker
Module IV

Guest Speaker

4-5
Case preparation

Case preparation

Case preparation

Strategy literature
review

7-8

Case presentation

Case presentation

Case presentation

Case Dinner
preparation

8-9

Dinner

Dinner

Dinner

Dinner

5-6

Lunch

6-7

9-10
10-?

Source: A.T. Kearney

A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING

Module I

Content of A.T. Kearneys Business Unit Training Program

Positioning of Module I in the overall training context

Module II
Structure and
dynamics of the
industry

Module I
Identification of the key
issues of the
engagement

Module III
Characteristics and
dynamics of the
individual companies

Module V
Definition and
evaluation of strategic
alternatives

Module VI
Implementable
recommendations

Roll-out
Qtr 1

Qtr 2

Qtr 3 Qtr 4

Action 1
Action 2
Action 3
Action 4
Action 5

Module IV
Execution
capacity of the
client

Note: The order of presentation of the curriculum elements should not be interpreted as a sequential guideline for a strategy engagement. Different
elements of the program may be referenced at different times in the engagement
Module I
A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING
Source: A.T. Kearney

Introduction

During NCO you learned that consultants have developed a process to structure
client engagements

Planning

1. Define commitments

Issue diagram

2. Plan thinking

Data framework

Matrix of data
sources
3. Prepare for fact
gathering

Work plan
Interview guides

4. Gather facts

Notes

Fact gathering
5. Synthesize findings

Analysis

Communication

6. Draw conclusions

Diagnosis (data
package)

7. Generate
recommendations

Logic diagram

8. Structure report

Report outline

9. Communicate results

Final
report/presentatio
n

Business unit strategy

projects also adhere to this
consulting process
However, we will focus on
the three techniques of
particular importance to BU
engagements
Situation, complicationoverriding question
analysis
Issue breakdown
Hypotheses generation

Note: Besides being part of the NCO, the techniques in focus are also an integral part of the Lead Strategy and Proposal Development Program
Source: A.T. Kearney; Professional Development Network Ltd.
Module I
A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING

Introduction

Module I establishes the point-of-departure for business unit strategy engagements

Establish a structured method of strategic

problem solving
Describe the analytical code-of-conduct for
solving BU strategy engagements

Establish a methodology and groundwork for

applying concrete techniques (Modules II-VI)

Source: A.T. Kearney

A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING

Steps of issue analysis

Situation-complicationoverriding question analysis

Issue breakdown
Hypotheses generation

Module I

Contents of Module I

Introduction

Identification of the key issues of the engagement

A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING

Module I

Key issues of the engagement

Issue analysis

Description

Conceptually, business unit strategy projects are comprised of a six-phase, iterative

process
Situationcomplicationquestion
analysis

Hypotheses
generation

Issue breakdown

Evidence/fact
gathering

Development of findings
and conclusions

Recommendation
formulation

Issue analysis
Fact
Finding

Sub-issue
Issue

Fact
Sub-issue

Overriding
Question

Conclusion

Hypothesis

Conclusion

Recommendation

Issue
Fact
Finding
Issue

Conclusion
Fact

Iterations
Source: A.T. Kearney; Professional Development Network Ltd.
A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING

Module I

Key issues of the engagement

Issue analysis

Description

Issue breakdown is the initial step after the situation, complication and overriding
question have been determined

Definition

Yield

Issue analysis is a disciplined technique of

translating a client brief into a set of
logically related questions which require
clear answers
Issue analysis is an iterative process and
is refined during the consulting process
It is always the first and perhaps most
critical technique in the consulting
process

Source: A.T. Kearney

Groundwork for hypotheses

Framework from which to build a project
plan

A point-of-departure for an engagement

which allows consolidation of client and
consultant views of the problem
Reduction of fact-finding and analytical
work allowing more focus on the critical
issues for the client

A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING

Module I

Key issues of the engagement

Issue analysis

Description

Hypotheses are prospective answers to the questions raised during the issue
breakdown

The consulting process aims to determine the

validity of the hypotheses
Hypotheses are based on a best educated guess and
if correctly formulated:

Force an issue to be addressed directly

Yield concrete, defendable answers to the issues
In practice, good hypotheses will:
Derive directly from the corresponding issue

Guide evidence gathering

The result of this process will

be conclusions and
recommendations that fit with
the clients problems and also
mirror state-of-the-art
thinking

Give input for project planning

Establish requirements for data collection and
analysis
Provide a basis from which to draw conclusions

Source: A.T. Kearney

A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING

Module I

10

Key issues of the engagement

Issue analysis

Usage

Issue analysis is useful throughout every stage of an engagement

Usage
In the proposal process
Identify issues and their components (sub-issues)
Address implied questions by discussing issues
with the team and with clients
Debate priorities with the client and write the
proposal
In structuring tasks and guiding analysis throughout
the entire project
In clarifying the focus of the teams work and in
deriving individuals roles and responsibilities
accordingly

In determining appropriate performance measures to

be used in the implementation process

Source: A.T. Kearney

A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING

Module I

11

Key issues of the engagement

Issue analysis

Example

Identifying the key issues of the engagement starts by asking the right question
The situation presents the
facts surrounding the
engagement:
Client describes its
situation, asks several
questions
Client defines tasks of a
project and client
summarizes its view of
scope of work

Situation-complication-overriding question analysis for a Nordic oil and

gas company

Situation
Describes the difficulties
facing the client. A
problem that is linked to
the situation. From it, assess
whether or not the client
has:
A full understanding of
the situation
Asked the right questions
so far
Proposed the scope of
work, which best
addresses the real
problems
The overriding question
emerges as a consequence
of the situation and
complication. Finding the
answer to the overriding
question is the objective
of the project
Source: A.T. Kearney

Complication

Overriding
question

The client is considering combining its North Sea

activities into one business unit
The client would like A.T. Kearney to analyze the market
requirements and optimize its value chain

Client does not know if the overall effect of such an

integration would be advantageous
The technology available to the industry is rapidly
changing

How should the client structure its North Sea activities to

optimize its performance in the region

Source: A.T. Kearney

A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING

Module I

12

Key issues of the engagement

Issue analysis

Example

From the overriding question, derive the main issues and sub-issues
Rules for issue breakdown
Issues and sub-issues must be
MECE (mutually exclusive and
collectively exhaustive)
Issues are Yes/No questions
The first line of the issue
analysis is critical for structuring
team organization and evidence
gathering
Vertically, issues should be
broken down into sub-issues,
until they are manageable
Horizontally, answers to all subissues must provide an answer to
the above issue
Issues and sub-issues must lead
to hypotheses

Practical hints
Use the components from the
complication to derive issues
Start with a brainstorming session
and organize the ideas into issues
later
Good issues are questions that
have relevance for the client, e.g.,
do we have the money is
irrelevant for a company with a
strong cash flow

Source: A.T. Kearney

Issue analysis and hypothesis generation for combining a Nordic oil and
gas companys North Sea activities into a single business unit

Overriding question

How should the client

structure its North Sea
activities to optimize its
performance in the region?

Issue 1

Issue 2

Issue 3

Is the client wellpositioned strategically

in the North Sea seismic
industry?

Is the client presently

carrying out the key tasks
to exploit the strategic
opportunities of the
North Sea?

Should the clients North

Sea business be integrated
completely?

Source: A.T. Kearney

A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING

Module I

13

Key issues of the engagement

Issue analysis

Example

The hypothesis generation builds on the identified issues

An individual hypothesis
specifically answers a
specific sub-issue

Issue 1: Is the client well-positioned strategically in the seismic

industry of the North Sea?
Issue

Sub-issue

Is the client
wellpositioned
strategically
in the seismic
industry of
the North
Sea?

Source: A.T. Kearney

Analysis

Source

Responsibility

Timing

Is the seismic No. The

market
seismic
expected to
market is
develop
expected to
rapidly in the
develop
North Sea?
slowly in the
North Sea
market.
Will the oil
Yes. For the
companies use short to
the same
medium
exploration
term the
methodologies exploration
to develop
technologies
seismic data in will not
the future?
change
dramatically
.
Will the
No. Despite
industrys
a shift in the
business
industrys
system change competitive
with respect to arena, the
seismic
business
acquisition
system will
and sales?
remain the
same.

A hypothesis should not

simply be a yes or no
assertion, but should also
provide a reason. This
can then be analyzed,
researched, and proven or
disproven

Hypotheses create a frame

upon which a project plan
is based

Hypothesis

Source: A.T. Kearney

A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING

Module I

14

Key issues of the engagement

Issue analysis

Example

The hypothesis generation builds on the identified issues (contd)

An individual hypothesis
answers specific sub-issue

A hypothesis should not

simply be a yes or no
assertion, but should also
provide a reason. This
can then be analyzed,
researched, and proven or
disproven

Hypotheses create a frame

upon which a project plan
is based
Source: A.T. Kearney

Issue 2: Is the client presently carrying out the key tasks to exploit
strategic opportunities in the North Sea?
Issues

Sub-issues

Hypothesis

Is the client
presently
carrying out
the key tasks
to exploit the
strategic
opportunities
of the North
Sea?

Do all present
activities
belong in the
combined
North Sea
organization?

Yes. All
present
activities do
belong in the
combined
North Sea
organization

Does the 3D
business
depend on
Business Unit
As 2D
database?

Yes. The 3D
business does
depend on the
2D database,
and it is a
weakness

Is the
performance
of Business
Unit As two
product lines
(2D/3D)
superior?

Yes. Business
Unit As
technology is
superior
within the
industry

Should all
present
geographic
areas of
Business Unit
A be
integrated in
the North Sea
organization?

Yes. All
present
geographic
areas of
Business Unit
A should be
integrated into
the North sea
organization

Analysis

Source

Responsibility

Timing

Source: A.T. Kearney

A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING

Module I

15

Key issues of the engagement

Issue analysis

Example

The hypothesis generation builds on the identified issues (contd)

An individual hypothesis
answers specific sub-issue

Issue 3: Should the clients North Sea business be integrated

completely?
Issues

Sub-issues

Hypothesis

Should the the

clients North
Sea business
be integrated
completely?

Will complete
integration
secure maximum vessel
capacity?

Yes. Such
integration will
maximize
vessel
capacity.

Analysis

Source

Responsibility

Timing

Will such a
No. In the
controlled unit
short term such
ensure
a combined
conservation of
unit will sacriBusiness Unit
fice Business
As project
Unit As
generation
project generaskills?
tion skills.

A hypothesis should not

simply be a yes or no
assertion, but should also
provide a reason. This
can then be analyzed,
researched, and proven or
disproven

Hypotheses create a frame

upon which a project plan
is based

Source: A.T. Kearney

Will a unified Yes. Business

company sales
Unit As
force maximize superior techreturn?
nology will be
a major asset to
the North Sea
organizations
sales force.
Will the
No. Project
combined unit
management
secure credimight be
bility in project
comprimized
management
by the size of
towards the
the new
multi-client
organization
customers?
Source: A.T. Kearney

A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING

Module I

16

Key issues of the engagement

Issue analysis

Methodology

Methodology for performing issue analysis

Iterations
(Project work)

Input
Client request for
proposal (RFP)
Annual reports
Client interviews
Expert interviews
Analyst reports
Industry reports
SEC filings*
Trade journals
Press clippings

Situational
analysis

Study client and its

industry to establish
the situation
Seek consensus about
the situation with
client
Define complication
using components of
the situation
Define the overriding
question

Brainstorm and
issue breakdown

Brainstorm to uncover all

possible questions and
issues and to prevent the
issue analysis from
becoming limiting in scope
Identify issues and subissues
Make certain that answers
to the issues solve the
overriding question
Reach consensus with team
(and client if necessary) on
the issues at hand

Output
Consensus with
client
Common, unified
point-ofdeparture among
team
Structure for
project analysis
Identification of
team roles

Hypotheses
generation

Provide testable
explanation that
answers each issue and
sub-issue
Use best-educated
guess (best informed
decision) to develop
hypotheses

Formulate
project plan

Determine analyses
required to test
hypotheses
Delegate project
responsibilities
Establish timing

*Reports filed by publicly held companies with the Securities and Exchange Commission: e.g. 10K, 10Q
Note: During the entire engagement, the issues and hypotheses will be continuously refined and iterated
Source: A.T. Kearney

A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING

Module I

17

Key issues of the engagement

Issue analysis

Conclusion

There is a right way and a wrong way to formulate issues

Right way
Guides project work

Should we grow our

business through
acquisition of XYZ?

Wrong way

What should our

strategy be?

Source: A.T. Kearney

Can be answered
definitively by yes or
no

Requires another level of

questions
Is open to many different
answers, not all of which
might be relevant to the client
situation

A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING

Module I

18

Key issues of the engagement

Issue analysis

Conclusion

Issue analysis is simpler in theory than in practice

Use issue analysis to group, structure, and

prioritize client problems/challenges/uncertainties
Expect disagreement among team members and
client
Expect to revisit and revise the issue analysis
several (if not many) times
And remember: There is not a single correct
answer, but the exercise is crucial to the success
of any strategy engagement

Source: A.T. Kearney

A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING

Module I

19

Key issues of the engagement

Issue analysis

Conclusion

Conclusion

Key points

Strengths

Useful in many aspects of the engagement:

To define key issues in the proposal process
To structure tasks and control quality
To clarify the focus of project work and to define team member roles and focus accordingly
To prioritize client problems/challenges/uncertainties

Weaknesses

Must be worded and presented carefully when achieving consensus with the client

References

Source: A.T. Kearney

A dynamic/iterative technique which should be applied during the entire consulting process
Brainstorming is a key beginning to every step of the issue analysis
Should be the first step in every BU strategy engagement
Fundamental in managing an engagement:
Managing a team
Managing upwards
Managing the client

Minto, B. (1987); The Pyramid Principle - Logic in Writing and Thinking

Ohmae, K. (1976); The Mind of the Strategist - The Art of Japanese Business

A.T. KEARNEY BUSINESS UNIT STRATEGY TRAINING

Module I

20