Better Thinking

Issue Tree / Problem Tree

The Issue Tree is a structured analysis tool that breaks down complex problems into smaller, manageable parts in a tree-like structure to identify root causes and solutions.

Categories
Strategic AnalysisProblem Solving
Target Users
ManagersConsultantsProduct ManagerStudents
Applicable
Complex problem-solvingstrategy planningconsulting analysisresearch
#problem decomposition #logic tree #consulting method #strategy tool

What is an Issue Tree

Definition

An Issue Tree is a structured problem-solving tool that breaks down a complex issue into smaller, mutually exclusive and collectively exhaustive (MECE) components, allowing analysts to identify the root cause.

Simple Example

Imagine peeling an onion: you start with the surface problem and keep asking “why” until you reach the core. For instance, “Profit decline” can be broken down into “Revenue decrease” and “Cost increase,” then further into “Customer loss” or “Higher raw material prices.”

Origin and Key Figures

  • Background: Widely used in consulting, especially by McKinsey.
  • Promoter: No single founder, but McKinsey institutionalized its usage.
  • Users: Consultants, strategists, managers.
  • Case: McKinsey applied issue trees to identify that a client’s profit drop was due to excessive customer churn.

How to Use an Issue Tree

  1. Define the Core Problem
    • Be specific and measurable.
    • Example: “Profit decline” instead of “Company is not doing well.”
  2. Build First-Level Branches
  3. Drill Down Further
    • Continue decomposing until reaching actionable sub-issues.
  4. Analyze and Validate
    • Use data to test each branch’s impact.
  5. Design Solutions
    • Address the root causes directly.

Case Studies

  • Business Example

    Problem: Profit decline

    Issue Tree: Profit = Revenue – Cost → Revenue down & Cost up → Revenue down = fewer customers + lower price

    Insight: Main issue was customer churn, solution focused on retention.

  • Personal Example

    Problem: Poor academic performance

    Issue Tree: Low grades → insufficient study time, poor methods, low focus

    Insight: Root cause was time management, so fixing schedules improved results.

Pros and Limitations

Pros

  • Clear logic for complex problems
  • Easy visualization for communication

Cons

  • Requires strong analytical skills
  • Time-consuming and data-dependent

Recommended Resources

Books

  • The McKinsey Way — Explains consulting problem-solving approaches
  • The Pyramid Principle by Barbara Minto — Covers structured thinking

Other Resources

  • McKinsey case study archives
  • BCG problem-solving frameworks