Project Skills Workshops Structuring the Logic

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Project Skills WorkshopsStructuring the Logic

• Instructors
• Douglas Dow Integrative Projects
• Selwyn DSouza Managing New Ventures
• 20 October 2005

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Agenda

• Structuring the Logic 60 mins
• What is it the benefits
• MECE disaggregations
• Deductive logic
• Inductive logic
• Practical hints on building a pyramid
• An example the MBS Mt Eliza merger 10
• In-class Exercise No. 1 - Whitecane 30
• Assignment - PaperCo 5

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Structuring the logic

• We are going to force you to spend a lot more
  time on this than normal
• Management problems are frequently very complex
• Examples
• Our duty of care
• There is a tremendous benefit in attacking such
  problems in a what is referred to as a
  deliberative approach

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The nature of complex problems (and
approaches to solving them)
Technical linear programming, game trees, DCF,
etc
Deliberative Argument mapping, Pyramidal logic
Savant Chess master Idiot savant
Intuitive Pattern matching, Bill the Mechanic
(Pirsig) Doing cases, more cases, and even more
cases !
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There are a variety of names for the
deliberative approach

• Argument mapping
• from the field of philosophy see van Gelder
  article
• Scientific method (1st stage of )
• from the pure sciences see Pirsig article
• Pyramidal logic or McKinsey method
• from management consulting see Ohmae article
  and books by Minto and Rasiel
• It is also often referred to as
• Structuring the logic
• Framing the problem
• Issue trees

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In theory, logical structuring is quite simple

• It is about breaking a complex problem into
  smaller and more manageable chunks, and
• Being very clear and explicit about the
  relationships amongst the components of the
  argument
• Usually illustrated in the form of a tree or
  pyramid (thus, the term pyramidal logic)
• Unfortunately it is harder to do well than it
  sounds

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The benefits of logically structuring issues

• Helps uncover implicit assumptions
• Lowers the risk of missing key issues
• Easier to test confirm the elements
• Saves time
• Results in a more convincing case

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Uncovering assumptions and missing issues?
Consider this shopping list

• Milk
• Potatoes
• Grapes
• Eggs
• Carrots

• Oranges
• Butter
• Apples
• Sour cream

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Can you remember them all ?
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I guarantee, more people will remember them if
they are present this way
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Two things are going on here

• The Magical Number Seven, Plus or Minus Two
  (George Miller, The
  Psychology of Communication, 1967)
• An imposition of logical relationships

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Easier to test and saves time? Consider a simple
example from Pirsig
Source Pirsig, Zen and the Art of Motorcycle
Maintenance, 1974, p103
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Or, a more management oriented example
Through better technology?
Higher price realisation?
Through a stronger brand?
Why is Phoenix the most profitable player in
solar hot water?
In manufacturing?
Lower unit costs?
In distribution?
In marketing?
Source BCG 1998, Training manual
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There are three key building blocks to a logic
tree

• MECE disaggregations
• Deductive Logic
• Inductive Logic

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MECE disaggregations

• are about breaking an idea, concept, or
  phenomena into smaller more manageable pieces
• MECE stands for
• Mutually Exclusive (no double counting)
• Collectively Exhaustive (got them all)
• Bounded
• Unbounded

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Deductive logical arguments

• Two or more hypotheses are linked together in a
  chain of logic
• to create a new hypothesis, or
• predict an event
• A key feature of this form of logic is that, if
  all the elements are supported, then the
  resulting hypothesis is proven

Various people substitute different terms such
as general truths (Persig), ideas, and
assertions.
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A simple example of deductive logic
The if, and and thuss are typically left
off.
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A more managerial example of deductive logic
FMCGs Fast Moving Consumer Goods (e.g.
cereals, snack foods, detergents)
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Inductive logical arguments

• Two or more observations are grouped together to
  imply that a hypothesis is likely to be true
• The key features of this form of logic are
• Each observation is consistent with, but not
  absolute proof of, the over-riding hypothesis
• Refuting one observation may weaken the overall
  argument, but does not falsify it

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A managerial example of inductive logic
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Some Practical Hints

• for when you are structuring your logic

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Be clear about the theme and order at each
level

• Each tier or branch within a pyramid has a unique
  conceptual theme
• E.g. I can breakdown BHP Billitons profits by
  country, type of mineral, or stage in the value
  chain
• The ordering of items within a branch should
  follow a logical pattern

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Dont reinvent the wheel

• There are sequences of logic that reappear in
  numerous problems
• You need to manage a balancing act
• Not reinventing the wheel
  while at the same
  time
  Not forcing
  every problem into the same solution
• Generic frameworks should be the starting point,
  not the final solution

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Approaches to building a pyramid

• The Top-Down Approach
• The Bottom-Up Approach
• Then merge the two

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The Top-Down Approach

• Begin with the initial problem (or, a
  hypothetical solution to that problem)
• How would you convince a sceptical audience?
• Work down the pyramid imagining how you would
  prove each point

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Beware when you start at the top The problem
is not always the problem

• The problem, as initially stated,
• is often only a symptom, and
• frequently is biased to a particular solution
• Spend time upfront questioning the question

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The Bottom-Up Approach

• Write down all the facts and arguments that you
  ( others) feel are important (the de Bono
  Red Hat gut feel)
• Begin to identify how they relate to one another
• Start to fill in the gaps

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A big cautionary note

• There is never just one unique and perfect
  pyramid for any problem
• BUT
• Some pyramids are flawed
• Others may not be as efficient

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Tools to help you

• LOW Technology approaches
• Use large pieces of paper (A3) or white boards
• Pyramids can get large complex very quickly
• Spreading them across multiple page makes it hard
  to see the overall picture
• For the bottom-up approach I put each fact or
  idea on
• Business cards / index cards, or
• Boxes/cells in a Powerpoint presentation or an
  Excel spreadsheet
• That makes it easier to rearrange chunks of the
  logic
• HIGH technology approaches
• There are a variety of software packages (of
  varying quality)
• FreeMind is free http//freemind.sourceforge.net
  /h3_0
• Reason!able is cheap 33 - http//www.goreason.co
  m/
• MindMap is more expensive again 99 -
  http//www.conceptdraw.com/en/products/mindmap/mai
  n.php

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Now I want to walk you through a more complicated
example

• The merger between
• the Melbourne Business School, and
• the Mt Eliza Business School
• From the perspective of the MBS

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Now lets try the Whitecane exercise

• Gather into your syndicates
• Take 20 minutes to develop a pyramid based on the
  facts provided
• Limit yourselves mainly to the assertions
  supplied
• You will probably want to add intermediate
  thoughts, and
• Possibly break up some of the paragraphs, but
• Those are the facts you have to deal with (i.e.
  dont add any more)
• When you return, be prepared to present your
  pyramid

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A second exercise (your assignment) PaperCo

• Do this one individually as an assignment
• Develop a pyramid based on the facts provided
• The same instructions apply
• You will probably want to add intermediate
  thoughts, and
• Possibly break up some of the paragraphs, but
• Those are all the facts you have to deal with
  (i.e. dont add any more)
• Submit your pyramid to the instructor by 500 PM,
  Monday, 31 October
• It may be in the form of a Powerpoint document,
  and Excel spreadsheet, or one of the commercial
  mapping packages but the relationships must be
  clearly indicated