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MECE Approach to Business Intelligence (BI) initiative

by Kesavan, H.

"MECE" stands for "Mutually Exclusive, Collectively Exhaustive". I am sure you must have guessed by now where that term comes from. If you said "Mckinsey", bingo! You can pat yourself on your back.

MECE is an approach that Mckinsey consultants religiously follow to find professional solutions to all their client problems. Given a problem statement, MECE addresses the problem by listing at the top level all issues making up that problem. Once the list is prepared, one ensures that each issue is separate and distinct and that there are no overlaps. Or in other words, it is ensured that all issues are 'mutually exclusive'.

The next step examines whether every aspect of the problem comes under one and only one of those issues. If so, the issues could be termed as "collectively exhaustive".

To illustrate, here is an example. Let us say that a car manufacturer wants to sell more cars. The problem statement then becomes "need to sell more cars". The following, then, are some of the ways in which you could increase sales.

1. Reduce unit cost of cars
2. Increase the number of distribution channels
3. Enhancing brand recall

Suppose, now, you wish to add a 4th item, say "reducing the advertising expenditure". We need to check how this fits in with the 3 ways already identified. Although the 4th item is an important issue, it is definitely not a 4th point alongisde others since it is an aspect of the 1st issue, namely, 'reducing unit cost of cars'. In this manner, we can go ahead and create a MECE list.

Now let us understand how this MECE approach can be gainfully deployed in a Business Intelligence (BI) project. A BI system seeks to provide decision support to the key decision makers in an organization. In order to accomplish this, one needs to first examine all the reports produced on a daily or periodic basis in an organization.

In order for the BI system to be 'completely exhaustive', it needs to consider all essential reports from all the functional aspects of business such as Marketing, HR, Finance, R&D and so on. This is relatively an easy task.

The tough part lies in listing all the performance oriented metics or rather the "actionable" metrics from the identified reports and then pruning it down to a 'mutually exclusive" list of Key Performance Indicators (KPIs). And these KPIs need to contain both "leading" and "lagging" KPIs - or in other words a 'completely exhaustive' list of KPIs. (Leading indicators are those that have a significant impact on the future performance of a company; whereas Lagging indicators measure past activity. For instance, number of promotional campaigns scheduled for the next quarter is a 'leading indicator' and 'return on investment over the past 2 years' is a 'lagging indicator'.)

This MECE list of KPIs shall form the foundation on which the BI implementation roadmap shall be based.

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