Sunday, November 24, 2013

Top-Down vs. Bottom-Up Problem Solving Approaches at McKinsey

There are typically two primary ways to approach problem-solving - "top-down" and "bottom-up".  In this post I'll explain the differences as well as why the top-down approach is preferred by McKinsey bosses and interviewers...

McKinsey takes a structured approach to solving problems that includes breaking down larger issues into smaller pieces.  Those components of the problem are arranged into an "issue tree" with the biggest, overarching issues at the top.  Those are then supported by additional, increasingly specific, tactical, broader levels of supporting details.  I will devote a future post to these issue trees.

Top-Down Approach

This means the problem solving begins at the "top" or with the highest-level, overarching question or theme, also known as the governing thought.  From there, the problem is broken down, identifying and developing the elements the next level down, with special focus on the critical or vital few drivers of impact.  Only after those key elements have been determined does the focus shift to tactical details.  The process is repeated, adding additional levels down the tree the tree is exhaustive.

Bottom-Up Approach

This is the opposite of the top-down approach and, as the name implies, begins with the tactical, granular, specific details.  In this case, the work focuses on starting with a laundry list of issues, then organizing them into like groups, or "buckets".  Those buckets can often be grouped further, building levels up the tree, until, finally, the key drivers and governing thought are reached.

Top-Down vs. Bottom-Up Thinking

The simplest way to summarize the difference is this:  working at the top is considered strategic, while working at the bottom is tactical.  McKinsey consultants are encouraged to think strategically vs. tactically.  Here are some reasons why...

Why the Top-Down Approach is Preferred

There is a strong bias toward top-down thinking at McKinsey because it a) is logical, with a structured approach and b) starts by defining the most important questions and issues first.  The assumption is that if enough smart, experienced, hard-working consultants and clients align on the governing thought, the rest of the work that follows will be directionally correct.

Working top-down helps ensure that the questions asked and issues raised are completely exhaustive.  Less relevant ones might eventually get trimmed, but they will at least have been considered.  Top-down thinking also limits wasted work because only those topics deemed relevant and important to the governing thought need to be developed in detail.

Why the Bottom-Up Approach is Not Preferred

Starting at the bottom introduces several challenges.  First, it's not immediately clear - and might never be - if important details or areas have been missed or under-represented.  Second, items can be bucketed in a variety of ways that might all seem correct, but could be sub-optimal and/or lead to very different governing thoughts.  Finally, there's just a lot more work to be done at the bottom of the tree where there are countless details that can be considered and developed.

A Common Exception - Excel Modeling

One noteworthy exception when the bottom-up approach is often seen as superior to the top-down approach is in Excel modeling.  While a top-down approach to quantitative questions is helpful at the beginning of an engagement or workstream to get a directional sense of what the final answer will be, using that approach with clients and/or a final answer runs the risk of coming across as naive or just plain wrong.  Instead, a bottom-up model is required to confirm and support the final answer.

15 comments:

  1. Very interesting! This work is really satisfactory for us. Thanks Essay writing tips on the most burning problems

    ReplyDelete
  2. This comment has been removed by the author.

    ReplyDelete
  3. Hi. I am looking for a more academically acceptable resource for the top down approach to problem solving for my research proposal. Could you possible me help me with this?

    ReplyDelete
    Replies
    1. @Shamila, were you able to find any sources for your research?

      Delete
  4. Hi,
    Need to know what approach is used to identify the problem

    ReplyDelete
  5. Your website is terribly informative and your articles are wonderful.
    List of Top Business Consultants

    ReplyDelete
  6. Nice blog. Thanks for sharing. We are offering Business Consultancy . For more details visit our website.

    ReplyDelete
  7. Thanks a lot for sharing us about this update. Hope you will not get tired on making posts as informative as this.
    offshore company setup dubai

    ReplyDelete

  8. Parking Management Software
    online parking software
    Cloud based parking solutions
    Free Parking Software for Town Houses, Condominiums, and Businesses Solves Parking Problems
    Searching for a parking space is such as frustrating routine activity for lots of people in cities all over the world. This search is burning over a million barrels of oil of the world each day. There are also 4-parking spaces every vehicle in the US and almost all streets are most of the time, empty, which leads to urban environments that are ironically doing far more to accommodate the vehicles than people. As the global population continuously urbanize, without a convenience-driven and well-planned retreat from cars, these sort of parking problems will worsen.
    http://webparkingsoftware.com software is the first step in the right decision. It involves using low-cost sensors, mobile phone-enabled, and real time data collection automated payment systems enabling people to reserve parking in advance or predict accurately where they can find a spot. When deployed as a system, free parking software thereby reduces car emissions in the urban centers by means of reducing the necessity for the people to circle the city blocks needlessly searching for parking. Furthermore, it permits the cities to manage their parking supply carefully.
    This free parking software is now being developed in many different states and cities around the United States and some other countries. For instance, in LA, smart meters and low-power sensors are tracking the occupancy of parking spaces across the Hollywood district, one of the most congested areas. The users will be able to access this occupancy data in order to determine the availability of the spots and then pay for them with their mobile phones. Other than the environmental benefits and lending convenience, free parking software is improving the utilization of the current parking, which lead to greater revenue for parking owners.
    These programs will be able to make great differences on a neighborhood level, but more widespread development and deployment is necessary for free parking software to change the cities and to contribute to the transportation sector pollution reductions greenhouse gas. One problem is that there are no citywide solutions all over the fragmented private and public parking providers. The occupancy data has a tendency to have many owners and is not accessible or standardized in a way that may enable software developers to turn into user-friendly applications. Thereby, individual smart parking efforts are so far successful locally, but uncoordinated, and operates in their own entrepreneurial or bureaucratic vacuums without a need to take gap between current free parking software and more widespread transportation system planning is an enormous missed opportunity for the cities to reduce the transportation related emissions.
    Moreover, free parking software has been hindered by a lack of insight into the complete benefits of this software, specifically when compared to the cost of building extra parking spaces. Lack of collaboration between communities with the parking software programs, as well as lack of coordination between hardware providers, municipalities, and developers is also contributing to the slower adoption of smart parking. Nevertheless, it is possible to overcome all these issues. Cities will be able further accelerate these advantages by means of updating the land use and building codes policies to reflect the reduced need for parking.

    ReplyDelete

  9. Awesome Posting! because there are a lot of informative postings so, thanks a lot for sharing the good infor.

    how long can a person go without food
    earthquake preparedness kit

    ReplyDelete
  10. Good post, thanks for sharing this useful information.
    Click More Details Visit Our Website

    Texus
    Texus Systems

    ReplyDelete
  11. Nice Information
    Prorelix research provide resource for drug development and analysis on the industry to support top Clinical research companies and pharmaceutical and biotechnology industries.

    ReplyDelete
  12. Nice Information
    Prorelix research provide resource for drug development and analysis on the industry to support top

    Clinical research companies
    and pharmaceutical and biotechnology industries.

    ReplyDelete

  13. I like to read your blog. Thanks for sharing this wonderful & great information.

    Austin web development
    Austin webdesign

    ReplyDelete