What is MECE?

MECE is one term you must be familiar with when preparing for the case interview and joining the consulting industry. The term stands for “Mutually Exclusive, Collectively Exhaustive,” and it is a fundamental concept in consulting. If you have spent any time at all preparing for the case interview, you have become aware of the frameworks utilized when structuring your approach to the case… it must be MECE! Consultants work, eat, drink, and sleep this concept – it’s a must-know for anyone thinking of joining the industry.

So…What is MECE?

Simply put, MECE is a problem-structuring principle that organizes data efficiently and comprehensively by adhering to the following two rules:

1- Mutually Exclusive: Topics or concepts that do not overlap

2- Collectively Exhaustive: All topics / concepts when added 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 component parts 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 analyze and solution in a structured way.

The Problem with Not Being MECE

When new consultants present anything – slides, models, or even just verbal suggestions – a common critique from supervisors is, “That’s not MECE!” Good news is that you can easily avoid this 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 beautiful financial model that looks at which age segment responded best to multiple inputs: recruitment, treatment, and follow-up. And you build your categories using conditional filters on the following age groups:

• 0-20
• 20-40
• 40-60
• 60-80
• 80-100
• 100-120

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? It is! 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 associated topics 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 food group: you are assigned to meats, a 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… because your topics overlap!

Meats, proteins, and steaks are all groups of food, but there are clear overlaps (e.g., a Filet Mignon or New York Steak). Instead, a better approach would be dividing up into Mutually Exclusive topics, 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 topics 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 analyze and consider.

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 analysis, All Foods is impressed that all the different types of food under the sun have been considered. You have a structured, MECE approach!

“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 analyze all key customer groups and then identify your most valuable customer group. With this knowledge, the client can focus more resources on acquiring those kinds of customers (e.g., credit card companies)
• Product targeting – Use MECE to do total cost allocation on your products and then identify which are the most profitable. When you do, your client can focus more promotional space/sales force time/marketing resources on driving demand for those products (e.g., candy companies)
• Operational activities – Use MECE to determine which operational steps consume the most resources to identify ways to improve efficiency (cost and time). With this knowledge, your client can devote more time and resources to improving the “heaviest” burden sections (e.g., 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 would it be difficult to focus?

As external consultants, we come from the outside, without the burden of all the issues that exist with running a business day-to-day. There are governmental regulations, staffing issues, customer lawsuits, team dynamics, internal politics, and marketing messages. SO. MANY. DECISIONS go into making businesses what they are. It is powerful to have a new set of eyes (read: a consultant) come in and efficiently structure a problem… MECE!

MECE Applied

Alan Colberg – now CEO of Assurant – once 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 have difficulty answering (rather simple) strategy 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!

And why does a company need to focus? Companies have limited resources. Even super cash-rich companies, like Microsoft or Apple, must choose how to allocate resources. And this is even more true 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 brings us to the ultimate test of focus: the case interview.

MECE in the Case Interview

After working through how MECE is used in practice, it’s important to share about how it’s used in the case interview. Case interviews are (somewhat terrifying) 30-minute accelerated glimpses into the 6-month process normally used to work through a client project.

First – you can have as many topics as you want in a real-life MECE structure – and the client may want you to take a robust approach to analyze a variety of different topics. 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 cannot be 100% collectively exhaustive inside a case interview. You don’t have the time, and you’ll quickly lose the interviewer’s patience as well if you try to be! Therefore, inside a case interview, focusing on being “ME” – mutually exclusive – helps you get the most distance out of your structure. If you repeat yourself (e.g., by putting competitors under Market and under their own category) you waste precious, precious time and will likely be told that “your structure was weak – it wasn’t MECE.”

The biggest area of concern we find when coaching consulting applicants through structuring is this issue of “ME:” 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 candidate can check to ensure they are taking a MECE approach.

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.

A MECE Example for Case Interviews

As an example, let’s refer to the Market Study framework – and the competitors topic. The Market Study framework has 5 potential 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 you try in this bucket to ask about who the players are in this market… well then you might have just overlapped with a “Competitors” bucket you have later on in the structure.

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 efficiently solving the case without being repetitive.

Conclusion

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!

Related Content:

• MECE Framework: Case Interview Example
• The Pyramid Principle
• Case Interview structure