Logic in Thinking and Writing How to Guide 1224360227640851 9

Copyright EQuest Consulting Pty Ltd 2006

Logic in Thinking and WritingHow to Guide

Jan 2006Version 1.2

Logic in Thinking and Writing – How To Guide – Version 1.2

Copyright © EQuest Consulting Pty Ltd 2006

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Acknowledgements:

Elements of the material presented in this pack have been developed from:

“The Minto Pyramid Principle - Logic in Writing, Thinking and Problem Solving” by Barbara Minto (1996)

“The Fifth Discipline Fieldbook” by Peter Senge, Richard Ross, Bryan Smith, Charlotte Roberts and Art Kleiner (1994)

“Requisite Organisation” by Elliott Jacques (1998)

“Complexity” by Roger Lewin (1989)

“Teach Yourself to Think” by Edward De Bono (1995)



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Contents

Section I: Thinking and the Thought Process

Section II: SIP, A Vehicle for Thinking and

Communication

Section III: Unity and SIP

Section IV: Constructing a SIP Document – Logic in

Thinking

Section V: Constructing a SIP Document – Logic in

Writing

Section VI: Communicating with a SIP

Section VII: Constructing a SIP Document and

Presentation



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Section I – Thinking and the Thought Process

A. What is Thinking?

B. What Makes Thinking Difficult

C. Approaches to the Thought Process

D. The ‘Unity’ Thought Process

“Thinking Is the Hardest Work There Is......That’s Why So Few People Do It”

- Henry Ford

“Thinking Is the Hardest Work There Is......That’s Why So Few People Do It”

- Henry Ford



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A. What is Thinking?

What is thinking? The answer is that no one really knows, but we do know the purpose of thinking, and that is to stop thinking:

The human brain tries its hardest to simplify life by setting up routine patterns of perception and action. Once you identify the pattern you flow along it without further effort. For example, if you had to think through which order to put on 6 pieces of clothing you would never leave the house as you need to sort through 47,000 combinations, but we get dressed quickly each day

The problem we have is that in business, this mechanism kicks in all too frequently. That is, when managers are faced with a problem / opportunity they implicitly rely on these patterns of perception (which have developed from a combination of their skills, experience and knowledge) to solve it – this is NOT thinking

Thinking is the discipline of restraining the natural impulses and forcing the brain to deal with what is in front of it, not what it ‘perceives’ is in front of it



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B. What Makes Thinking Difficult?

“Birds fly, when they get tired they land. Man thinks, when he gets tired he says ‘I understand’” (Japanese proverb)

Thinking is made more difficult by the confusion of two forms of complexity: Detail complexity – the type of complexity that occurs due to

the number of variables; and Dynamic complexity - The type of complexity that occurs due

to the nature of the interrelationships between variables (or elements of a system)

The ‘thought’ task of detail complex situations is based around ‘how’ to bring the detail together and create order

The ‘thought’ task of dynamically complex situations is based around ‘identifying’ the variables and ‘understanding’ the interrelationships between them



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C. Approaches to the Thought Process

Left to Right Start at the beginning and work our way through

to the end (this is easier because you always move into an area you already know)

Outcomes are whatever we end up with

Bottom Up Primarily concerned with how to pull

information together People naturally start at a level of detail they

are comfortable with, but not necessarily related to the problem / opportunity

Limits the development of insight Commonly results in ‘boiling the ocean’

Right to Left Start at the end (outcomes) and work back to

the beginning identifying how to get there (this is more difficult because you have to ‘think’ about where you are going)

Outcomes are planned and rarely adjusted

Top Down Primarily concerned with the develop of

insight (interrelationship between variables) Requires starting at the level of problem /

opportunity and working down

Natural for Most People Natural for Few People



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D. The ‘Unity’ Thought Process

The ‘Unity’ methodology integrates both ‘Right to Left’ and ‘Top Down’ ‘Right to Left’ because the objective of the methodology is to deliver business

outcomes. Given that this is the case then it is also the best place to start The resulting discussions should be focused explicitly around ‘what do we need to do to

achieve y’ rather than let’s build x and hope we get y

‘Top Down’ because (a) value is added through the development of insight into a business not by helping them collate data and (b) businesses are focused on solving dynamically complex problem / opportunities which are not resolved with bottom-up methodologies



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Section II – SIP, A Vehicle for Thinking and Communicating

What is SIP?

Situation, Implication and Proposal

How Is SIP Used?

“As a general rule for thinking, if you cannot describe in writing to be understood by someone else about your decision problem and what you are

doing as a process about it, then you do not know what you are doing.”– Dr Hossein Arsham

“As a general rule for thinking, if you cannot describe in writing to be understood by someone else about your decision problem and what you are

doing as a process about it, then you do not know what you are doing.”– Dr Hossein Arsham

SIP

Proposal

ProposalImplicationSituation

What this is all about

Why this is important

for us

What we suggest we do about it



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A. What is SIP?

The elements of a SIP document are Situation, Implication and Proposal

A proposal is the essence of collaborative thinking and communication, but needs context to be relevant and is therefore supported by a situation and implication

SIP is a structured story which is a vehicle through which your thinking is communicated to others ie: it facilitates the intellectual challenge of getting ones thinking onto paper in a way that is easily communicated and understood

The wording of a SIP story is the vehicle for the thoughts, and as such can only be chosen after the logic has been developed. People who appear to ‘go around in circles’ when writing documents do so because the thinking is not complete

The effectiveness of a SIP document therefore results primarily from:

The logical presentation of ideas that enable clarity and comprehension for thinking

The unassailable logic of the thoughts that it presents

The way in which it deals with ‘perception’ through the simplicity, specificity* and clarity of language (*in a world that occurs in conversation, semantics are everything)



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B. Situation, Implication and Proposal

The situation consists of a statement(s) about a subject with which all stakeholders are likely to agree

The implication is the business impact of a particular situation

The proposal is a description of the intended action that is a logical response to the implication(s)



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The situation consists of a statement(s) about the subject with which all stakeholders are likely to agree

The situation comes at the front of the story to either lock down what you know or to create a shared and accepted understanding by the audience

In any situation where the facts are either previously unknown or ambiguous, a strong situation enables you to create common understanding.

The situation may consist of:

Undisputed facts defined in commonly used terms, which are numerated where possible (physicals or financials)

Anecdotal evidence about the subject that will be accepted as true

Situation statements are free from opinion, emotions (adjectives) etc

Note if you have to make assumptions in your situation, then state them clearly. Clearly stated assumptions that are wrong are better than no assumptions at all, and allow for solution by design rather than argument

“We can have facts without thinking but we cannot have thinking without facts”

- John Dewey

“We can have facts without thinking but we cannot have thinking without facts”

- John Dewey



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The implication is the business impact of a particular situation

The implication is the problem / opportunity. For example the situation may be that we have high process variance in a factory. This in itself is may not be a problem / opportunity. It is when we illustrate that the high process variance is causing (quantifiable) higher than acceptable levels of waste that we have a problem / opportunity

The implication should always have a financial value



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The proposal is a description of the intended action that is a logical response to the implication(s)

The proposal must specifically address the implication

Proposals for action that are generic rarely lead to successful outcomes because there is no such thing as a generic problem / opportunity (all they indicate is lazy thinking!)

“The significant problems we have cannot be solved at the same level of thinking with which we created them”

- Albert Einstein

“The significant problems we have cannot be solved at the same level of thinking with which we created them”

- Albert Einstein



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Story Example

Situation

Bill production has 90 bill cycles per month that are scheduled around systems constraints and contractual arrangements

The volume of accounts distributed varies by up to 50k per day and the timing of expected payments varies from 15 to 29 days

Implication

The variation in volumes contributes to variation in workflows for both the front and back office which impact customer satisfaction and costs by reducing service levels at peak times and requiring a buffer to be built into the schedule to protect against unexpected variance which adds 10% ($4m pa) to staff costs

The variation in expected payment means that 85% of all payments are received after 16 days driving a capital cost of $6m pa

Proposal

Smooth out bill volumes across the calendar month to reduce the variation of workflows, reduce costs and improve customer satisfaction

Enforce the 15 day payment period



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C. How Is a SIP Used?

A SIP document will alter in terms of content during the Unity lifecycle, but is used for three purposes:

1. As a vehicle that forces the author to lock down his or her thinking/understanding at a point in time to enable reiteration

2. The SIP story may be used as a series of hypotheses to guide analytic activity; and

3. The SIP is the basis of all presentations



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1. As a vehicle that forces the author to lock down his or her thinking / understanding at a point in time to enable reiteration*

A high level SIP story may be developed from the barest of details gathered during an meeting/interview/workshop etc

Writing down, learning and re-telling your SIP story to yourself / team /stakeholders is the fastest way to test the logic of your thinking, challenge any preconceived notions, reiterate and improve your thinking

Separation of situation from implication provides the insight of clarifying the problem / opportunity that is to be solved

Understanding the ‘real’ problem / opportunity is vital to the logical order of the process for developing a solution



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Why do you reiterate?

…BECAUSE YOU ARE NEVER, EVER COMPLETELY CORRECT THE FIRST TIME!!!

Albert Einstein said, "I think and think for months and years, ninety-nine times, the conclusion is false. The hundredth time I am right. It's not that I'm so smart, it's just that I stay with problems longer.“

The only way to reiterate is to lock down your thinking (in SIP format) as often as possible and use your peers and stakeholders to challenge that thinking

Value Increase Per Reiteration

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Number of ReiterationsV

alu

e/In

sig

ht

Start

Goal

Reiteration is the key ingredient of value creation



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2. The SIP story may be used as a series of hypotheses which guide analytic activity

A well constructed SIP clarifies the problem / opportunity and disaggregates it into its logical components

If the SIP has been put together from workshops/interviews (ie not factually proven) it is in fact a series of hypotheses

Proving or disproving these hypotheses should then become the focus of analytic activity - it helps us to avoid “boiling the ocean”

The analytic activity is focused because the hypotheses are provided context by the story format

As an issue/idea is disproved the story must be reiterated and developed



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A well constructed story clarifies the problem / opportunity and disaggregates it into its logical components enabling focused analytic activity

SituationBill production has 90 bill cycles per month that are scheduled around systems constraints and contractual arrangements that create variation in the volume of accounts distributed and the timing of expected payments

Implication

The variation in volumes contribute to revenue collection delays and variation in workflows for both the front and back office which impact customer satisfaction and costs

Each months bill production process requires 90 bill cycles to generate the bills for 3m accounts

The monthly billing cycle is scheduled against constraints that include set ‘pay by’ dates in ICMS and a contractual requirement with ABC to limit the number of images sent to print each per day to 550k

The scheduling system creates daily variation in the volume of accounts by ‘run date’ and ‘pay by date’ and the expected revenue due by ‘pay by’ date

The scheduling of ‘pay by’ dates beyond 15 days delays revenue collection and impacts XYZ’s cash flowIt is likely that variation in the volume of accounts distributed by statement date may be driving variability of calls into 123/126

It is likely that variation in the volume of accounts distributed by statement date may be driving variability of calls into 128

PROVE

PROVE

PROVE

PROVE

PROVE

PROVE



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Ghost Pack Structure

Title Page

“Front Page”

Governing Thought Situation Lead Implication Lead Proposal Lead

Lead ASituation Lead Lead A Lead B Lead C

Lead B Lead CImplication Lead

Lead A Lead B

Lead A

Lead B

Solution Lead Lead A Lead B

Lead A Lead B



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3. The SIP is the basis of all presentations

Presentations are not simply to deliver recommendations they are the vehicle through which thinking is communicated

Presentations should have a governing thought - the main message that you want your audience to carry away with them

Ordering a presentation with a logical situation and implication, followed by a proposal that answers the problem / opportunity, is more likely to constructively engage an audience than a presentation that enables content to be disputed



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Section III – Unity and SIP

Unity is a powerful business methodology

The Unity methodology is predicated on the progressive synthesis of business solutions throughout the methodology lifecycle

This progressive synthesis is represented in the form of artefacts which capture the information required for the Requirements, Design and Business Case (RDB)

The RDB is not however, a vehicle for thinking or communication

Therefore each progression of the RDB will be accompanied by a SIP document



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Section IV - Constructing a SIP Document – Logic in Thinking

A. The Importance of Logic in Thinking?

B. MECE – Mutually Exclusive and Collectively Exhaustive

C. The Top Down Approach to Creating Logical Groupings

D. The Bottom Up Approach to Creating Logical Groupings

E. Types of Groupings

F. Deductive and Inductive Logic

“I might be wrong, but I am not confused”

- Anonymous

“I might be wrong, but I am not confused”

- Anonymous



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A. The Importance of Logic in Thinking

*Miller, George A. The Psychology of Communication: Seven Essays (Basic Books: Pa.) 1967

The Way We Think What We Use to Help Us Tools & Techniques

We can only remember seven things, plus or minus two*

We summarise lists into higher order groupings

• Levels of abstraction

• Logical Grouping

We create meaning only with relativity

We take our higher order groupings and compare them

We think in terms of wholes rather than parts (Problem solving and insight development is faster and easier when we explicitly create a structure for our mind to work with)

• MECE

• Structural, Time and Degree Orders

We draw conclusions by associating ideas

We impose logical order to the parts of a whole to draw conclusions

We limited the number of ideas and pre-sort them to support communication and comprehension

• Deductive and Inductive Logic

• Pyramid Principle

• SIP



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Example - Problems with a Monthly Report

Buyers are unhappy with the sales and inventory system reports because:

- Report frequency is inappropriate

- Inventory data is unreliable

- Inventory data comes to late

- Inventory data cannot be matched to sales data

- Buyers want reports with better formats

- Buyers do not want meaningless data

- Buyers want exceptions highlighted

- Buyers do not want to do manual calculations

Note: This is what is referred to as a laundry list. Ie: a random list of ideas that has not been pre-sorted to enable comprehension by the reader



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Example Rewritten:

The sales and inventory system produces an inadequate monthly report

It contains unreliable data

It presents it in an unwieldy format

It is issued too late to permit action Easier toComprehend



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Degree order grouping (to be discussed later) was used to rework the example

Report frequency is inappropriate

Inventory data comes to late

Inventory data is unreliable

Inventory data cannot be matched to sales data

Buyers do not want meaningless data

Buyers want reports with better formats

Buyers want exceptions highlighted

Buyers do not want to do manual calculations

1. Bad timing

2. Poor data

Complaint Common Characteristic

3. Unhelpful format



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B. MECE – Mutually Exclusive and Collectively Exhaustive

MECE is a tool for ensuring that there are no gaps within and no overlaps between our groupings

1

5

3

21

23

4

6

MECENot MECE



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Ensuring the subject we are dealing with has been structured in a MECE fashion enables quality thinking

Separate groups of issues may be dealt with individually

If anything is missing it will be recognised more easily

We can view the whole picture and reduce the need to search for and ask additional questions

Least important issues and noise can be put aside to focus on those that have the biggest impact

We can remember the conclusions far more easily



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C. The Top Down Approach to Creating Logical Groupings

The Top Down approach to creating logical groupings is to begin with a predefined MECE structure, such as a logic tree, which is progressively detailed

This is effective when very little is known about the situation

The limitation of this approach is that it may create unnecessary work as ‘everything’ is examined

A further limitation of this approach is that it means that issues and ideas are put into pre-defined baskets which may inhibit the development of insight



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A Top Down approach to creating logical grouping is the process of creating MECE logic trees

Type Description Elements Outputs

Deductive Starts with problem definition and divides it into components

Actions, assertions, criteria, questions, topics

Key actions, assertions, criteria, questions, topics

Hypothesis

Postulates a solution hypothesis and develops a necessary and sufficient rationale to validate or disprove it

Reasons Key issues

Issue Phrases key issues so that they can be answered Yes or No and sequences them in a logical order showing the dependent action

Issues Actions

Types of Logic Trees



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A “deductive” logic tree starts with a problem / opportunity definition and divides it into components. The ends of the tree can be used to divide the basic question into issues

Howcan ABC improve ROI?

Increaseprofit

Reduce investment

Reduce fixed investment

Reduce working capital

Increase revenue

Reduce

cost

Increase volume

Increase price

Improve product mix

Reduce R&D cost

Reduce production costReduce marketing cost

Reduce overhead cost

Reduce stocks

Reduce debtors

Extend creditors

IssuesDeductive Logic Tree For ROI



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A “hypothesis” logic tree postulates a solution hypothesis and develops a necessary and sufficient rationale to validate or disprove it

Company X must increase the market share of its core product

The best way to reverse declining profit is to increase market share

The best way to establish a large customer base is to increase the market share of the core product

Will increasing market share will be too costly?

Will increasing market share require large price reductions?

Is a large customer base important for the success of future products?

REASONS KEY ISSUESHYPOTHESIS

EXAMPLEHypothesis Logic Tree



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An issue logic tree phrases key issues so that they can be answered Yes or No and sequences them in a logical order showing the dependent action

Does company X have a clear business strategy?

Is it able to implement this strategy?

Does it have the resources and skills to develop its own strategy?

Maintain client relationship

Propose an implementation program

Propose a strategy study for the company

Yes

Yes

Yes

No

No

No

EXAMPLEIssue Logic Tree



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Tenets of Issue Analysis

Issue analysis is based on tenets that make it a powerful tool for sequencing and programming problem / opportunity solving resources We have clients because clients have issues which

aggregate to problem / opportunities Issue solving must be fact based to be persuasive and to

avoid following erroneous norms Testing norms/hypothesis with facts will ensure resulting

arguments are persuasive and problem / opportunity solving process if efficient

There is a sequencing to problem / opportunity solving that is efficient and focused



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There is rarely a perfect approach and one should only invest sufficient time in investigating the problem / opportunity structure to highlight the leverage points

Logic tree check list Components are MECE - Mutually Exclusive, Collectively Exhaustive -

(no gaps, no overlaps) Logic tree is useful ie. it focuses on the action leverage points of the

problem / opportunity Splits follow a logical hierarchy Elements within splits are logically consistent Remember the 80 - 20 rule, 20% of the effort leads to 80% of the results



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A thinking map to link the analysis planning to the issues to be resolved to solve the problem / opportunity

Thinking Map

Issues

The key questions (approximately 2-5) which must be resolved

Sub-Issues

Important elements (approximately 2-5) for each issue

Hypothesis

One or more hypothesised ‘best guess’ answers to each sub-issue to be proven or disproved through analysis to point the way to the analysis required

Analysis

Analysis required to prove or disprove the hypotheses in the prior column

Data Sources

The source of means of obtaining the data required to complete the analysis

End Products

A description of the end product to be delivered - best described as a ghost exhibit

Responsibilities

The person who will obtain the data, undertake the analysis and generate the end product

Timing

The time required (in days or weeks) to gather the data, complete the analysis, and generate the end product

Note that the order will change depending on the type of logic tree used



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Issues and sub-issues should fully delineate the basic questions in a logically ordered way

Thinking Map

Issues


Sub-Issues

Important elements (approximately 2-5) for each question

Hypothesis Analysis Data Sources

End Products

Responsib-ilities

Timing

Issues and sub issues should be:

1. MECE (Mutually Exclusive Collectively Exhaustive)

2. Logically organised

Sub-issues under appropriate issues

Sequenced logically

3. Manageable in number

2-5 issues

2-5 sub-issues per issue

4. Key so whats


Important elements (approximately 2-5) for each question

Description

Example



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Hypotheses are used to drive the process by leveraging stakeholders beliefs to identify the analysis required to solve the issues

Thinking Map

Analysis Data Sources

End Products

Responsib-ilities

Timing

Hypothesis should be

1. A ‘best guess’ answer to each sub-issue

2. A forcing device for developing analyses, but not a

‘prejudged’ answer

3. Chosen to challenge important existing assumptions or

biases (eg adopt a different ‘world view’)

Issues Sub-Issues

Description

Example

Hypothesis

One hypothesised ‘best guess’ answer to each sub-issue, to be proven or disproved through analysis

Significant opportunities exist to improve value of business to an acceptable level by adopting normal industry manufacturing practices



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Teams should select analyses that test the hypothesis and for which data sources can be found

Thinking Map

Analysis Data Sources End Products

Respon-sibilities

TimingIssues Sub-Issues

Hypothesis

Description

Example

Activities required to prove or disprove the hypothesis in the prior column

Identify manufacturing practices of industry leaders

Compare with our practices

Develop pro forma financial statements with and without manufacturing changes

Estimate DCF value

The source ormeans of obtaining the data required to complete the analysis

Trade journalsInterviewManagers (names)Competitors

(name)Customers

(names)

Financial DataInternal at (specify)Annual reports

(years)Trade associations

Analysis and data sources should:

1. Prove or disprove the hypotheses

2. Draw on information:

That is objective rather than subjective

From reliable sources

3. Be feasible based on

existing information, staff,

time, and budgets



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Explicitly defined end products, responsibilities and timing should serve as an analytical guide for the team and a scheduling and management tool for the project leader

Thinking Map

Analysis Data Sources

End Products

Responsib-ilities

TimingIssues Sub-Issues

Hypothesis

End products should:

1. Establish explicit objectives for team members performing analyses

2. Serve as a check that analyses, once completed, support a coherent presentation

3. Aid managing consultant in preparing advance draft of presentation

4. Be strategically assigned to a person or persons and have an estimated time for completion

A description of the end product to be delivered

Cash flow forecast and estimated value of changes

Description

Example

The person who will obtain the data, undertake the analysis and generate the end product

The time required (in days or weeks) to gather the data, complete the analysis, and generate the end product

Bach associate(name)

Business unit manager(name)

2 weeks after development of list of potential manufact-uring improve-ments



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D. The Bottom Up Approach to Creating Logical Groupings

The Bottom Up approach to creating logical groupings is to end with a MECE structure, but to begin with a laundry list of issues which may be obtained from interviews / workshops etc

This approach is powerful in developing insight as it forces the identification of the common characteristics of what may otherwise have been considered disparate issues

A MECE structure may be created as the issues are progressively grouped and raised up levels of abstraction

The limitation of this approach is need to overcome ‘organisational noise’ and identify the core ideas



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In a Bottom Up approach a laundry list of issues is collected from workshops, interviews etc with stakeholders











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The laundry list is group according to common characteristics









1. Bad timing

2. Poor data


3. Unhelpful format



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A logic tree can be constructed to test MECE thinking


Bad Timing Poor Data Unhelpful Format



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The limitation of this approach is need to overcome ‘organisational noise’ and identify the core ideas

In the previous slides we saw that there were eight issues but only three ideas

In an ‘live’ situation many of these issues may be considered noise, symptoms of a problem / opportunity

The key task therefore is to distinguish between the noise and the core idea that it may infer

Making the Bottom Up approach effective therefore is dependent on the process of aggregation of the multitude of issues into a small number of core ideas from which to structure your thinking



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Managing the movement of ideas between levels of abstraction is a powerful device for identifying exactly what you are talking about

The objective is to partition a big idea or problem / opportunity into its smaller components (or vica versa) making the idea easier to understand or the problem / opportunity easier to solve

The basic idea behind this is that at some level either the problem / opportunity or its solution becomes relatively clear

Issues:1. The size of the market

(volume) Is static

2. Our share of the marketis static

3. Competitive forces arepushing prices down

Up One Level:Price and volume are elements of

revenue, and the issues suggest that

current and potential revenue is

declining

Core Idea:The market is unattractive



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E. Types of Groupings

The three ways by which the mind can group ideas are:

A. Structural Order is used when you are trying to describe a real or conceptual object, picture, diagram or process

B. Degree Order is used when issues or ideas are classified as being alike because they possess a characteristic in common

C. Time Order is used when the ideas exhibit cause and effect such steps within a process or system

If you cannot find one of these orders in a grouping, it tells you that the ideas do not relate logically, or that your thinking about them is incomplete

The use of logical grouping is essential to insight development because it enables you to comprehend the inter-relationships between ideas



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A. Structural Order is used when you are trying to describe a real or conceptual object, picture, diagram or process

Structural order, at its simplest, means that you will describe the pieces of the object, picture, diagram or process as they appear

To comprehensively describe the entire ‘thing’ you have to describe all of its components

To clearly and accurately describe each of the components you have to describe them independent of one another

The concept of MECE (mutually exclusive and collectively exhaustive) is the test of whether both of these things have been done



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Structural order, at its simplest, means that you will describe the pieces of the object, picture, diagram or process as they appear

Example - Diagram of a car The car can be explained by describing

the: body panelling; the windows; and the wheels

Once there has been a structural breakdown you may look for common characteristics between the components to develop insight. For example if the body had dents, the windows were cracked and the wheels were worn you may conclude that the car was old. This is degree order which we will look at next

It should be noted that having created a MECE breakdown, you may move to looking for degree order insight with the knowledge that the imposition of structural order has permitted you to check for flaws and omissions



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B. Degree Order is used when issues or ideas are classified as being alike because they possess a characteristic in common

Degree order is the order imposed upon a grouping when it brings together a set of things you have classified as being alike because they possess a characteristic in common

Presentation of degree order grouping is always the strongest first ie: the idea or issue that most possesses the common characteristic



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Example - Problems with a Monthly Report

Buyers are unhappy with the sales and inventory system reports









Note: This is what is referred to as a laundry list. Ie: a random list of ideas that has not been pre-sorted to enable comprehension by the reader



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Degree order example reworked in common characteristic groupings









1. Bad timing

2. Poor data


3. Unhelpful format



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Example Rewritten:


It contains unreliable data It presents it in an unwieldy format It is issued too late to permit action



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The order that the groupings are presented in reflects a process, and the process is always dependent upon the problem / opportunity or question

QuestionWhy does the system produce a useless monthly report?

Answer2. It gathers unreliable

data3. It presents it in an

unwieldy format 1. It is issued too late

to permit practical

action

QuestionWhy do buyers hate this report?

Answer1. It comes late3. When they get it they can’t find

anything in it2. When they find it,

it is wrong

Question

How are we going to fix the problem?

Answer

3. Decide the data we want and how it should be laid out

2. Make sure that the data included is reliable

1. Make sure we send it out on time



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Exercise

Use degree order to group the following list of issues

Sort the groups into a logical order that answers the question, why is central Auckland becoming a less attractive place to live?

The causes of central Auckland’s decline are many and complex, and include:

Wage rates are no different to the rest of the country

A high crime rate

High rent, energy and land costs

The centres of economic concentration are spreading beyond the CBD

Boy racers causing chaos on the weekend

Traffic congestion that forces up transportation costs

Technological advancements make working from home an alternative



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Exercise

Central Auckland is becoming a less attractive place to live because:

1. It is dangerous (2, 5)

2. Costs have become very high (1,3,6)

3. Attractive alternatives exist (4,7)

Note that this may be the order for provided by parents, whereas a university student may put the order 2, 3, 1



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C. Time Order is used when the ideas exhibit cause and effect such steps within a process or system

The complexity of this method of grouping lies in distinguishing cause from effect, particularly when there exist many levels of cause and effect

The best way to distinguish cause and effect is to put yourself in the process that you are writing about. Ie: visualise what action you must take before you can take the next, or whether you must take it in order to achieve the next

Note that the summary of a set of actions is always the effect of carrying out those actions



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Example – activities within a project plan

The following steps would be undertaken in Phase 1:

1. Interview key management and supervisory personnel

2. Trace and document transactions and workflow

3. Identify all critical functions

4. Analyse organisation structure

5. Understand services and performance measures

6. Assess performance levels of business functions

7. Identify problems and causes

8. Identify and justify potential areas for productivity improvement



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Example – activities within a project plan (rewritten):

In Phase 1 we will identify potential opportunities for productivity improvement: (note the summary is effect of actions)

1. Determine the critical functions of the business (3)

Interview key management and supervisory personnel (1)

Trace and document transactions and workflow (2)

2. Identify weakness in performing those functions (7)

Specify organisation structure (4)

Determine services and performance measures (5)

Assess performance levels (6)

3. Recommend practical ways to change (8)



Page 62

Exercise – Use Time Order to Create a Grouping of Actions

Strategic planning involves the recognition of a timing cycle: Perception of need High cash generation Slower growth and the onset of maturity Development of strategy for creating responsive product/service Market acceptance and high growth Decline/decay Implementation

Tip: ask yourself “what are these issues really inferring?”



Page 63

Exercise - Answer

Strategic planning involves the recognition of a timing cycle:

1. Perception of need

2. Development of strategy for creating responsive product/service

3. Implementation of the strategy

4. Assessment of market reaction

5. Change of strategy to match the reaction



Page 64

F. Deductive and Inductive Logic

Deductive logic allows ideas, or groups of ideas to be presented as a series of successive steps based on reasoning that leads to a “therefore” conclusion

Inductive logic is based on grouping things that are similar in some way and point to a general conclusion



Page 65

Deductive logic allows ideas, or groups of ideas to be presented as a series of successive steps based on reasoning that leads to a “therefore” conclusion

Birds fly I am a bird Therefore I fly

I fly becauseI am a bird

A statement about asituation that exists

A statement about arelated situation that

exists at the same timebut related to the firstbecause it comments on the subject or its

predicate

The implication ofthe two statementsexisting at the same

time



Page 66

Deductive Examples

Men are mortal Socrates is a manTherefore Socrates is

mortal

Volume increases as aresult of doing four

things well

Your present structuremakes it impossible foryou to do any of these

things well

Therefore you shouldcorrect your present

structure

Any company thatmeets these three

criteria is worth buying

Company A meetsthese three criteria

Therefore Company Ais worth buying

It should be noted that sometimes putting every step of reasoning may be too pedantic. The answer is to chain two or more arguments together. This is acceptable if the

audience will grasp and agree with the missing steps



Page 67

The deductive form can vary

Peking is relaxing its attitudes for deliberate foreign policy purposes

This return to normal diplomacy could tilt

power balances in the Far East

In the fact of such changes, the US must stop pretending that China does not exist

Statement Comment onthe Statement

Therefore

Scientists are happy to agree to new ideas when they are simply an extension of old

ones

But they will resist if it means changing the

structure of their thought

Atomic physics did mean changing the

structure of their thought


Therefore

Therefore, they did not readily accept

atomic physics

Comment onthe Statement



Page 68

The deductive form can vary - continued

Under central state planning, the state

alone will decide who is to have what

Thus, the only power worth having is a

share in the existing power

Therefore, the solution to economic or social questions will depend

exclusively on who wields the power

Statement Therefore Therefore

A soft drink company’s bottlers were thought to have a lot going for

them

Based on this assessment analysts predicted earnings

growth

As a result of this prediction, the stock

price rose


Therefore

This led to a spate of long-term buy

recommendations

Therefore



Page 69

Inductive logic is based on grouping things that are similar in some way and point to a general conclusion

French tanks are atthe Polish border

German tanks are atthe Polish border

Russian tanks are atthe Polish border

Poland is about tobe invaded by

tanks

1. Define the ideas in the group2. Look for similarity in subject3. Draw inference based upon similarity



Page 70

Deductive and Inductive Logic – The Difference

If you are thinking deductively, the second point will always comment on the subject or predicate of the first. If it does not you should be able to classify it by the same plural noun (tanks) to test that you have a proper inductive grouping

If neither test is positive, logical argument does not exist



Page 71

Section V - Constructing a SIP Document – Logic in Writing

Pyramid Structures

The Vertical Relationship

The Horizontal Relationship

The skill of writing is to create a context in which other people can think.

- Edwin Schlossberg

The skill of writing is to create a context in which other people can think.

- Edwin Schlossberg



Page 72

A. Pyramid Structures

If you accept that the human mind automatically tries to sort information into groups and order to comprehend it, then

You must group and order ideas in order to communicate them effectively

Grouped ideas form a pyramid at various levels of abstraction Therefore, the clearest written documents present their

information top down and in a pyramidal structure Within a pyramid of ideas there are two logical orders: the vertical

order and the horizontal order The key to ensuring logical clarity is to place ideas within a

pyramid form and test the logical orders



Page 73

Pyramid structures are useful for testing levels of abstraction because they break down and stratify ideas into progressively greater detail

To ensure that the tree is explicitly logical, it must obey two rules:

1. Ideas at any level of the tree must be summaries of the ideas grouped below them

2. Ideas in each grouping must be of the same kind and at the same level of abstraction

3. Ideas in each grouping must be logical (deductive or inductive) order

ROCE

EBITAssets

RevenueCostsFixed Assets Shareholders fundsWorking capital

Price VolumeFixed Variable



Page 74

B. The Vertical RelationshipVertical order within a group of ideas highlights the levels of abstraction by being summaries of the ideas grouped below thereby positioning the reader/audience to respond logically to your ideas

Pigs should be keptas pets

They could be bred tofascinating variations

They are fat

They are beautiful

They aretypicallyEnglish

In types In size In personality In functions

They havegreat curves

They createmodesty inthe owner

They arelinked to the

land

They symbolisethat power is notinconsistent with

kindness

So English theydeserve to be the national

symbol

Like thechalk downs

Like the beech tree

How?

Why?

How?In what way?

How is fat beautiful? How is English beautiful?



Page 75

B. The Horizontal Relationship

There must always be a specific reason for the order by which ideas in each grouping are presented. If there is not, you have not thought about them: You may have missed something because your thinking is not

structured It will be more difficult for your audience/reader to comprehend what

you are trying to communicate

Ideas may be order in four ways:

1. Deductively (major premise, minor premise, conclusion)

2. Chronologically (first, second, third)

3. Structurally (Sydney, Melbourne, Canberra)

4. Comparatively (first most important, second most important, etc)



Page 76

Section VI - Communicating with SIP

A. The Concept of Simplicity

B. The Stages of Communications Development

Stage 1 - Build your story line

Stage 2 - Define your audience strategy

Stage 3 - Develop your end product



Page 77

A. The Concept of Simplicity

The concept of simplicity Simplicity in communication



Page 78

The Concept of Simplicity

Simplicity is a value

Organisations are full of noise, therefore value may be added by simplifying, not complicating (what justification is there for making something complex when it could be simple) a situation

Dealing with complexity is an unnecessary waste of time, attention and mental energy

Simplicity before understanding is simplistic; simplicity after understanding is simple (someone who dismisses something as ‘being too simple’ may simply be demonstrating his or her ignorance of the subject)

Oversimplification means you have simplified the matter to much and left out important aspects

Simplicity is only easy in hindsight



Page 79

Simplicity in Communication

The main aim of communication is clarity and simplicity – therefore a large effort should be expended to achieve this end

Communication is always understood in the context and experience of the receiver – no matter what was intended, therefore the choice of language must take this into account

Complexity can lead to confusion, however too simple a message might lead to mis-interpretation

Oversimplification means you have simplified the matter to much and left out important aspects

P99 pyramid principle



Page 80

B. The Stages of Communications Development

Stage 1 - Build your story line- What questions are you addressing? What are the answers?

Does the answer add value?- How should you state your main conclusion? What is the best

way to support it? Does your story avoid repetition, but cover all the bases?

Stage 2 - Define your audience strategy- What are your audience’s needs and concerns? What do you

want your audience to do or think as a result of your presentation?

Stage 3 - Develop your end product- What do you need to say to set the scene? How can you

ensure that your audience stays with you? Where would visuals help? How can you present your audience with a strong conclusion?



Page 81

Stage 1 - Build Your Story Line

1. Identify your conclusions and recommendations

2. Write a detailed final draft story

3. Decide the governing thought

4. Write your front page



Page 82

1. Identify your conclusions and recommendations

Conclusions are key messages about the subject Limit your conclusions to between 3 and 5 - anymore and you

will find that a few of them are at too low a level of abstraction Recommendations are the actions to be taken based upon your

conclusions Each conclusion may consist of between 3 and 5

recommendations - anymore and you will find that a few of them are at too low a level of abstraction

At this stage your story should have shifted from:

Situation, Implication…. To …

Situation, Implication and Proposal



Page 83

Successful presentations anticipate the audience’s questions and present the answers in a logical and compelling format

Spend some time with your team identifying the range of questions you are likely to encounter. Think about your answers: are they specific enough? Can you back them up with data on the spot? Does your answer further the knowledge of your audience? Will your answers provide enough information to make a decision? The example below is a list of questions and answers anticipated for the presentation on the evaluation of the auto parts market

What are the most promising opportunities in the auto parts market?

Why does the high-value auto parts market warrant our involvement?

Establish an supply accessories boutiques at high value auto dealerships

Establish clearinghouse for hard-to-obtain specialty parts

Establish wholesale facility for after-market discount parts

Central point of purchase for high-value autos is dealership; currently dealerships are very marginally stocked with highly profitable accessories

Question Answers Value Added

Gives broad overview over the team’s recommendations

Let’s the audience know the conclusions which have led to your recommendations

EXAMPLE



Page 84

Order the recommendations, conclusions, and facts supporting your governing thought into a pyramid, where the point at the top reflects the highest level of generalisation and the tiers at the bottom carry the supporting details

EXAMPLEGoverning thought

Recommendations

Conclusions

There are significant opportunities in the

auto parts distribution market

Profit margins on out of production parts

are extraord-

inary

Business volume

would justify

investment

No central clearing house

currently exists;

consumers are on

their own

Establish clearinghouse

for hard-to-obtain specialty

parts

Owners of high-

value autos prefer OEM

accessories

Existing parts

retailers do not

offer full assortm

ent of OEM

accessories

Auto dealership do not

fully exploit their

marketing opportun-

ities

Establish wholesale

facility for after-market discount

parts

‘Discount’ parts not branded -

consumers confused by price/ quality

trade-off

Opportun-ity exists to consolidate discount market and

develop consumer

trust

Current after

market parts

distribution highly

fragmented and

inefficient

Establish and supply

‘accessories boutiques’ at

high-value auto dealerships

Eventually, this pyramid should contain a complete and mutually exhaustive list of your conclusions and the most relevant supporting evidence. In your presentation, resist the temptation to keep your audience in suspense; start your

presentation with your governing thought, rather than leading up to it.



Page 85

2. Write a detailed final draft story

You have successfully structured the problem / opportunity, hurdled the data wall, and arrived at crisp conclusions and recommendations, but you are not yet done. Your team now has to decide how to present this complex material to your audience

It is likely that you will have only developed a word flow for the high level summary of your story (although this may be supported by your pyramid of issues and ideas)

Now is the time to write out the story in full so that you are able to view it in its entirety. Remember the logic must come before the words, therefore, if your preparation has been well structured, the words will come



Page 86

3. Decide the governing thought

The governing thought is the main message that you want your audience to carry away with them

The governing thought is a message at a level of abstraction at which all of the issues that make up the problem / opportunity are covered



Page 87

4. Write Your Front Page

The front page of your SIP document is the highest level summary of the document

The front page will have at least 3, but no more than 5 leads Situation – 1 to 2 leads Implication - 1 to 2 leads Proposal – 1 lead



Page 88

Step 2 - Define Your Audience Strategy

The amount of ‘incorporation’ required before a presentation is dependent upon the relationship of the audience to the topic of the presentation and any related decisions

The content of the presentation must deal to the needs of the audience ie: answer the questions that they would ask

Your audience’s profile and its expected receptivity toward your recommendations should determine the structure and style of your presentation

Given your audience profile and receptivity, you can chose among a number of formats for your presentation



Page 89

The amount of ‘incorporation’ required before a presentation is dependent upon the relationship of the audience to the topic of the presentation and any related decisions

Level of Alignment Description

Stand The individual will do anything to make it happen

Ownership The individual is completely aligned

Support The individual is not completely aligned, but will do anything to help

Buy-in In Principle The individual will support you, as long as they continue to agree with what you are saying

Resistance The individual openly disagrees with you

Sabotage The individual is working against you behind the scenes

Apathy The individual does not care



Page 90

The content of the presentation must deal to the needs of the audience ie: answer the questions that they would ask

Staff MemberStaff Member Area of InterestArea of Interest Likely IssuesLikely Issues Deal with InPresentation

Deal with InPresentation

1.1.

2.2.

3.3.



Page 91

Your audience’s profile and its expected receptivity toward your recommendations should determine the structure and style of your presentation

FormalInformal

FriendlyHostileNeutralUnknown

ConceptsFacts/analysisActions/recommendations

Oral/visual presentationsInformal discussionsFull, written documents

Primary decision makerOpinion leaderOther

Thorough knowledge of subjectLimited knowledge of subjectNo knowledge of subject

Very interestedSomewhat interestedNeutralIndifferent

Willing to changeSomewhat resistant to changeCommitted to not changing

Agreement

DisagreementNeutral

AUDIENCE ANALYSIS CHECKLIST

Overall profile1. Nature of your relationship with

audience

2. Audience’s general attitude toward you

3. Audience’s preferences

Receptivity to this communication

4. Audience’s role in action on communication

5. Audience’s preparation for communication

6. Audience’s probably response to this communication

Mode

Think carefully about the range of options available

Support

Cover important or controversial points thoroughly; do not belabor the obvious - or past mistakes

Style

Reflect the tenor of the organisation in your language and manner

• Unless there is a good strategic reason not to, choose a medium that fits with the style of the audience

• A close working relationship often makes informal communications appropriate

• With a resistant audience, a series of meetings may be needed to air concerns and build a case for change

• An action-oriented audience is less interested in quantitative detail than an analytical oriented audience

• The primary decision maker needs only his own concerns addressed; an opinion leader needs enough information to persuade others; in general, higher levels of management need less detail than lower levels

• Earn the right to be informal - use humour with caution

• A friendly audience may welcome a collaborative tone; a hostile audience may require total objectivity

IMPLICATIONS FOR COMMUNICATIONS DECISIONS



Page 92

Given your audience profile and receptivity, you can chose among a number of formats for your presentation

Exhibit DeckDiscussion Outline (With Or Without Exhibits)

Memorandum Overhead Presentation

Prose Final Report

Videotape Computer

Primary objectives

Size of audience

Benefits

Pitfalls/drawbacks

Confirm data; agree on interpretation

1-10

Generates discussion

Highlight potential problems, key analyses required

Provides no synthesis; is suitable only for working sessions

Stress overall story line

1-10

Provides snapshot of logic

Facilitates discussion

Gets key points across quickly

May lead to unsupported assertions; excessive sublevels

Explain point of view on given issue

Any size

Allows amplification of reasons, nuances implications

May obscure logic if overwritten

Is inappropriate for on-the-spot discussions

Build understanding of argument, gain agreement to recommendations

5-25

Provides scope for extensive analytical support

Helps control meeting

Inhibits discussion

May provide poor record

Can be dull, overwhelming

Ensure understanding of decisions, provide record of engagement

Any size

Communicates to wide audience

Is time consuming, expensive to prepare

May not be read

Convey images; show rather than tell

1-25

Can be high impact, ‘worth 1,000 words’

Can communicate consistent message to many audiences

May be expensive

Inhibits discussion

Assess analytic results/implications

1-3 (more with big screen)

Allows real time problem solving. ‘What ifs?’

Provides no synthesis, is suitable only for working sessions

Outline Memo

Lapvisual

Profits



Page 93

Stage 3 - Develop your end product

The logic pack is the vehicle through which you manage your thinking and analysis, it is not a suitable vehicle for communication

A well-planned presentation includes a hierarchy of data and conclusions supporting a governing thought; features fluid transitions within, and between, tiers of the pyramid, and is framed by an introduction and an ending

A presentation pack should be simple and easy to understand, and as such graphs an models are more effective communicators than text and tables



Page 94

The logic pack is the vehicle through which you manage your thinking and analysis, it is not a suitable vehicle for communication

Title Page

“Front Page”

Governing Thought

Situation Lead Complication Lead Solution Lead

Lead ASituation Lead

Lead A Lead B Lead C

Lead B Lead C Implication Lead

Lead A Lead B

Lead A

Lead B

Proposal Lead

Lead A Lead B

Lead A Lead B



Page 95

A well-planned presentation includes a hierarchy of data and conclusions supporting a governing thought; features fluid transitions within, and between, tiers of the pyramid, and is framed by an introduction and an ending

INTRODUCTION

ENDING

SupportingEvidence

Conclusions

Recommendations

Title Governing thought

Transitions



Page 96

The flow of your presentation greatly benefits from the use of introductions, endings, and careful transitions between sections

Introductions

Introductions serve to set the context for your audience, to remind them of your team’s original mandate, and to get their full attention; typically, and introduction has the following elements

State the situation - ‘The task force was asked to look into opportunities in the auto parts market’.

Explain the relating complications or question ‘The opportunities for out company involvement depend on 3 crucial factors:

size of the marketaccessibility of the marketcost/benefit analysis

Summarise the solution - ‘Our company will be able to profitably access a significant portion of the audio parts market’

Give a preview of the presentation: ‘The team’s findings will be presented in the following order’

Transitions

Transitions link your ideas into a compelling story. Their function is to

Illustrate - ‘For example, for instance, to illustrate’

Add - ‘Moreover, in addition, furthermore, similarly, again, also, secondly, finally’

Contrast - ‘On the other hand, nevertheless, despite, on the contrary, still, however, conversely, instead, but, yet’

Endings

Endings serve to summarise your presentation and set the stage for future action; the main functions are to

Reinforce the main message and supporting conclusions - ‘In summary, opportunities in the auto parts market are concentrated in the following 3 areas’

Provide perspective, e.g.Benefits from taking action:

‘Developing an accessories business for high-value auto dealerships will position our company as an innovator in the auto parts distribution field’

top management role: ‘Dedication at the highest levels of our companies to help auto dealers further expand their retailing operation swill help to build a successful trust-based relationship’

Urgency and timing: ‘Our company should immediately develop a specialty parts clearing house to take advantage of consumer’s dissatisfaction’

Outline next steps: ‘To take advantage of this situation, these actions will be necessary’



Page 97

A presentation pack should be simple and easy to understand, and as such graphs an models are more effective communicators than text and tables

How to do it wrong A better approach

Better still



Page 98

Section VII - Constructing a SIP Document and Presentation

A. The Front Page

B. Subsequent Pages

C. Graphing



Page 99

A. Contents

Situation

Subject title #1

Subject title #2…etc…

Implication

Subject title #3


Proposal

Subject title #5


Contents

20 font bold

16 font bold

16 font regular



Page 100

B. The Front Page

Situation


The volume of accounts distributed varies by up to 50k per day and the timing of expected payments varies from 15 to 29 days

Implication

The variation in volumes contributes to variation in workflows for both the front and back office which impact customer satisfaction and costs by reducing service levels at peak times and requiring a buffer to be built into the schedule to protect against unexpected variance which adds 10% ($4m pa) to staff costs

The variation in expected payment means that 85% of all payments are received after 16 days driving a capital cost of $6m pa

Proposal

Smooth out bill volumes across the calendar month to reduce the variation of workflows, reduce costs and improve customer satisfaction

Enforce the 15 day payment period

Smoothing out bill volumes across the calendar month will reduce costs by $4m pa, improve the customer experience and eliminate up to $6m pa in lost interest

20 font bold

16 font bold

16 font regular

Line spacing maximised to use

page

1cm ‘tab’ indentation from bullet

Windings 2, 6 rows down, 10 columns from the left



Page 101

C. Subsequent Pages

Blah blah blah

Blah blah blah

Situation


20 font bold

18 font bold

16 font regular



Page 102

D. Graphing

Situation

Sales revenue peak in the third quarter

Quartlerly Sales Revenue (2002)

20.427.4

90

20.4

30.6

38.634.6

31.6

0

10

20

30

40

50

60

70

80

90

100

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

Quarters

Re

ven

ue

($

'00

0)

East West

16 font regular

14 font regular

12 font regular

10 font regular

Must have a legend

No unnecessary visual noise

such as gridlines



Page 103

“I keep six honest serving men, (they taught me all I know); their names are What and Why and When and How and Where and Who.”

- Rudyard Kipling



Page 104

EQuest Consulting contact details:Business Development Manager

Tel: 02 9900 9900

EQuest Consulting ABN: 57 092 959 [email protected]

SydneyLevel 8, 153 Walker StreetNorth Sydney NSW 2060T +61 2 9900 9900 F +61 2 9900 9999

MelbourneSt Kilda Road Towers, Suite 443, Level 41 Queens Road, Melbourne VIC 3004T +61 3 9863 8466 F +61 3 9863 8467

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