MECE is one concept you must be aware of when preparing for the case interview and joining the consulting industry. The term stands for “Mutually Exclusive, Collectively Exhaustive” and it is a seminal concept in consulting. Consultants work, eat, drink, and sleep this concept – it’s a must-know for anyone thinking of joining the industry.
So…What is MECE?
If you have spent any time at all preparing for the case interview, you have become well aware of the frameworks utilized when structuring your approach to the case. Simply put, MECE is a problem-structuring principle that organizes data efficiently and comprehensively by adhering to the following two rules:
1- Mutually Exclusive: Identifying blocks of data related to each other that do not overlap
2- Collectively Exhaustive: All blocks of data when summed together address the entirety of the problem at hand
Why MECE is Important to Consultants
Want to know why consultants (and consulting firms) get paid the big bucks? Consultants break down big, hairy problems into bite-sized components, and quickly identify key drivers that lead to maximum impact. Deconstructing a client’s biggest problem into smaller buckets of key issues enables consultants to identify causes of a problem. Then, they can prioritize actionable solutions.
The Problem with Not Being MECE
When new consultants present anything – slides, models, or even just verbal suggestions – supervisors commonly say, “That’s not MECE!” It’s funny, however – you can easily avoid this ultimate derogatory statement about your work.
MECE Example In Action
Say you’re working for a pharmaceutical company who is reviewing data on the results of a drug trial. You build a big honking financial model that looks at which age segment responded best to multiple inputs – recruitment, treatment, follow-up. And you build your categories using conditional filters on the following groups:
Do you see the MECE problem here?
You might have – especially if you’re 20, or 40, or 60. Because if you are – which group do you fall into?
In real data analysis, the answers get skewed with inaccurate, non-MECE groupings. Here, depending on the way you built your analysis, you will either be double counting the border ages, or leaving them out entirely. You’ll be over-counting or under-counting results.
Might not seem like a big deal? Look…it probably won’t change the answer. But the consulting process isn’t only about being MECE to get a pure answer – it’s about building trust with the client. And a VERY easy way to lose trust is to make a MECE mistake – when a client catches one of those, it brings your full recommendation under scrutiny.
Now that you know what MECE is and why it’s important, let’s spend some time breaking down the concept!
Part 1: Mutually Exclusive
The first principle of MECE involves identifying blocks of data related to each other that do not overlap. This means that the buckets of key issues are completely and undeniably independent of each other. Think of a Venn diagram where the circles do not overlap.
As an example, imagine you are a consultant and your client is All Foods Corporation. All Foods produces various types of food and is looking for its next hit market category and has hired your consulting firm to figure out which food to produce next.
You huddle with your team and each person is assigned a different type of food – you are assigned to meats, one teammate is assigned to proteins, and another is assigned to steaks. Think of all the confusion, redundant work, and inefficient use of time that would cause!
Meats, proteins, and steaks are all types of food, but there are clear overlaps amongst them, such as a Filet Mignon or New York Steak. Instead, a better approach would be dividing up into Mutually Exclusive subsets of data, such as meats, grains, and vegetables. Since there aren’t any foods that can simultaneously be two of these categories at once, your team ensures that each person is looking into a unique set of data.
Part 2: Collectively Exhaustive
To recap, Collectively Exhaustive means that all blocks of data when summed together address the entirety of the problem at hand. Put another way, a Collectively Exhaustive structure will have all relevant issues bucketed that cover the entire scope of what needs to be looked at. You are, in essence, “exhausting” the set of things to look at.
Let’s think back to All Foods and the project your team was hired to work on. While meat, grains, and vegetables may be categories that are Mutually Exclusive, they don’t cover all types of food. For instance, which of the three buckets would an apple fall under? Or eggs? The answer is none of them.
If your client expects a thorough investigation of all possibilities, there are certainly other buckets of food that need to be added. You huddle up with your team and decide to divide into six groups: fruit, vegetables, meat/poultry/fish, dairy, grains, and other. Later on as your team presents its deliverable, All Foods is impressed that all the different types of food under the sun have been considered. Your project is on its way to becoming a success!
“ME” vs. “CE” – Which is More Important in the “Real World”?
Though the answer to this question will largely vary depending on the problem at hand, if you had to choose one over the other, being Collectively Exhaustive should be a higher priority than being Mutually Exclusive when you are working on a client project.
Especially at the beginning of your case interview or case project, you want to be sure you are covering the wide range of all potential options. By doing so, you ensure that somewhere along the big hairy problem that you are facing, your answer to your client’s issue is in your framework somewhere.
On the flip side, if you are Mutually Exclusive in your blocks of data but are not Collectively Exhaustive, you may be saving time by not examining overlapping sets of information. However, the best possible answer to your client’s solution may not even be included in what you are investigating!
MECE in Practice
MECE categories are used for all kinds of critical business decisions. Below, we highlight the practical importance of MECE segmentation:
- Customer targeting – use MECE to identify your most valuable customer group. This way, you focus more resources on acquiring those kinds of customers (ex: credit card companies)
- Product targeting – use MECE to do total cost allocation on your products to identify which are the most profitable. When you do, you focus more promotional space/sales force time/marketing resources on driving demand for those products (ex: candy companies)
- Operational activities – use MECE to determine which operational steps consume what resources to identify ways to improve efficiency (cost and time). If you do, you devote more time and resources to improving the “heaviest” burden sections (ex: quick serve restaurants)
You would be amazed at how many big – think, multi-billion dollar – corporations do not understand the power of this. MECE is the number one tool consultants use to help them focus. And why do they need to focus?
Because we come in from the outside, without the luxury of thinking about all of the issues that exist with running a business day-to-day. There are governmental regulations, and staffing issues, and customer lawsuits, and marketing messages. SO.MANY.DECISIONS go into making businesses what they are.
I remember having a 1:1 with our office head, Alan Colberg – now CEO of Assurant – where he shared about his journey in consulting. He had gone out into the real world where he was leading a business, and then he came back to Bain. He said that it was so hard to stay focused on what was important when he was running a business day-to-day, because there was so much noise to consider.
That helped me understand why these massive organizations couldn’t answer simple questions. In the kickoff interview, we would say, “what is your most valuable geography” or “what is your most valuable customer segment” or “what is your most valuable product” – and they would not have an answer!
So, why do they need to focus? Companies have limited resources. Even super cash-rich companies, like Microsoft or Apple, have to choose how to allocate resources. And even more so when your industry is low-margin, or your company is under attack from competitors – there is much to be gained by the focus that MECE brings.
Which bring us to the ultimate test of focus: the case interview.
MECE in the Case Interview
After working through the information about how MECE is used in practice, it’s important to share about how it’s used in the case interview. Case interviews are terrifying 30-minute accelerated glimpses into the 6-month process normally used to solve a case.
First – in practice, you can have as many segments as you want in a real-life MECE structure – three or four might be too restrictive in real life (maybe you’d want 6 or 8 or even 20). But in the case interview, you have limitations – time, energy, data – and you need to be speedy. So…the rule in case interviews is that you can have a minimum of 3 MECE categories – and a maximum of 5.
Second – whereas the “CE” is more important in real life, you just cannot be collectively exhaustive inside a case interview. You don’t have the time, and you’ll quickly lose the interviewer’s patience as well. Therefore, inside a case interview, being “ME” – mutually exclusive – helps get you the most distance out of your structure. If you repeat yourself – by putting competitors under Market and also under their own category – you waste precious, precious time.
The biggest area of concern we find when coaching consulting applicants through structuring is this issue: overlapping areas. One way we help solve that is to ensure that every single category is supported by 2-4 specific metrics. That way, the student can check to ensure they are taking a MECE approach.
A MECE Example for Case Interviews
As an example, let’s refer back to the Market Study framework – and the competitors example. The Market Study framework has 5 optional categories: Market, Competitors, Customers, Company, and Product/Service.
If for the “Market” bucket you look at the size of the market, the growth rate of the market, the more granular growth rate of specific key geographies in the market, and the % market share held by different players of the market – those are all ME.
But if for the “Competitors” bucket you went into the data – not just “who are the competitors” – you would discover that you would want the same data, the % market share held by different players in the market.
You have a choice to make, when using this – or any – framework: put the requested data in one category, but never more than one. That way, you ensure you remain “ME” and can get focused on solving the case.
The MECE principle is an effective and crucial tool for those preparing for case interviews, consultants already in the field, and for life in general. It helps you be more focused. Plus, consulting teams can be better organized when searching for the right data, resulting in better solutions and happier clients.
The next time you find yourself facing a complex problem, give MECE a try. We guarantee if you correctly apply this principle, your answer will be in your framework somewhere!
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