Working With McKinsey

What is a problem statement?

Put simply, the problem statement clearly defines - in a concise but comprehensive way - the key business problem that needs to be solved. Even though it's called a problem "statement", it's usually in the form of a question. The engagement team's goal is to find the most impactful answers to that question. Problem statements are most often addressed and solved through the use of hypothesis-driven.

Why is the problem statement important?

If the team and client are not aligned on the key problem that needs to be solved, there will be a lot of wasted time, effort, and resources. Imagine what would happen if you spend weeks, days, or even hours solving a tough problem only to learn that your client or McKinsey boss was actually expecting you to solve a different problem.

What does it mean for a problem statement to be "SMART"?

As you can see from the first exhibit, SMART is an acronym for Specific, Measurable, Action-oriented, Relevant, and Time-bound. A good problem statement should be all of those things. The challenge is to balance being thorough with being concise.

Some examples from problem statements that are not SMART:

Not specific: "better manage the business..." - this is too generic and doesn't suggest where the greatest impact might be, how, or by when to capture it
Not measurable: "reverse our deteriorating performance..." - without specifying what metrics (or KPIs - Key Performance Indicators) best reflect "performance", it's impossible to assess whether or not we've made progress
Not action-oriented: "increase sales and decrease costs..." - while these are both appealing goals for any company, they have to be actionable to create impact
Not relevant: "increase profits by raising prices..." - this sounds good, but not if the client is selling a commodity that sells at market prices. The problem statement has to be relevant to the client and their key problem(s)
Not time-bound: "eventually increase profits by 10%..." - a specific deadline is needed to motivate people to action, hold them accountable, and know if the project was successful

What else should inform a problem statement?

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