An issue tree is a tool used to visualize and solve complex problems. Commonly used in strategic thinking, it can be applied to a variety of business situations, such as when you are trying to solve complex issues, make a decision, untangle complex situations, or come up with a new idea. In this blog post, we will discuss what an issue tree is, the basic principles or basic rules and how to unleash the power of an issue tree in strategic thinking. We'll also provide some examples of how issue trees can be used and address some key questions.
What are issue trees?
Issue trees, sometimes referred to as "issue maps", are a logical structure and powerful tool that help you to identify the different elements of a problem in order to help solve it. They are commonly used in hypothesis based problem solving and are actually considered a type of hypothesis tree. Issue trees start by defining what the problem is and then asking a series of "why" questions until you can't ask it anymore. The beauty of an issue tree is that it can be used to help solve virtually any problem. Simply put, it's problem-solving process.
When to use issue trees?
An issue tree is used when you’re trying to figure out what the root cause of a complex issue is or the WHY – for example, US growth rates are declining and you’re trying to figure out why – is it related to market trends? Is it product related? Is it brand related or customer experience related? For issue trees, you’re asking questions related to “WHY” something is happening, trying to get to the root of the problem, which will either validate or refute your hypothesis.
How to use issue trees?
There are three main steps to crafting multi-layer issue trees:
The first step is to identify the main problem or issue that you want to address. Visually this comes to life at the top of your tree. For example, "sales have been steadily declining in Austin, Texas".
The second step is to define the problem space - said otherwise, to brainstorm causes or root issues to the problem. Visually this comes to life as sub-branches to your main problem statement at the top. For example, one branch might be "market trends are declining", another branch might be "lack of product innovation", while another might be "customer experience lacking". For each branch, you then want to ask "why" until you can't ask it any longer. This will inform your sub-branches. For example, under "market trends are declining", one sub-branch might be "competition higher", another might be "overall spend in the niche is declining", etc. Ultimately, you're trying to drill down to the root issues.
The third and final step is to identify what you think the root problem(s) are and outline the data or facts you need to find to either prove or disprove them. This is the same process used in hypothesis-driven thinking. This will inform your work plan or road map.
MECE principle (Mutually Exclusive Collectively Exhaustive)
Ultimately an issue tree should apply the MECE principle. MECE is a popular decision-making process technique, created by McKinsey & Company vis a vis Barbara Minto. MECE is a great tool for analyzing and solving problems and stands for Mutually Exclusive and Collectively Exhaustive. In other words, it helps you break down a problem into smaller, more manageable pieces, similar to what you're doing with an issue tree.
The 80/20 principle is another important principle when designing an issue tree. Also known as the Pareto Principle, the Law of 80/20 states that roughly 80% of outcomes come from 20% of inputs. An example of this is when 20% of your customers often represent 80% of your sales. Once you've identified the problem space or potential root issues, you can use 80/20 to hypothesize the most relevant issues or key issues.
Issue Tree Examples
Let's take a look at an example of how multi-layer issue trees can be used. To be clear, multi-layer issues trees normally encompass a 1st layer, a 2nd layer, a 3rd layer and onward. As displayed in graphic a, suppose there has been a decline in US growth rates. You might start by asking the following key questions:
Is this issue market share related?
Is this issue product related?
Is this issue brand related?
The above components are known as "primary issues". Once you have asked these questions, you can then brainstorm all of the possible sub-issues that could branch off from each one. For example, if you're thinking that this issue is related to one of the product lines you may ask: Which product is causing the most damage? How are our distribution channels affecting this decline?
By asking these questions, you can start to develop a work plan to figure out which of these issues is correct. That will give you your complete issue tree.
A second example would be:
Problem: Profitability is down
Potential issues/branches: Fixed costs are up, Variable costs are up
Sub-issues: For fixed costs --> Leasing costs are up, insurance costs are up, property taxes are up, labor costs are up, etc. Note: Fixed costs are those that remain the same regardless of volume. Variable costs --> commissions are higher, packaging supplies are more expensive, piece-rate labor costs are higher, credit card fees are higher, etc. Note: Variable costs are those costs that fluctuate as volume fluctuates.
As you can see, issue trees are a great tool for your strategic thinking toolkit. Issue trees can also help if you're in the Consulting space preparing for an interview or onboarding. They're often at the crux of real case interviews and your employer will be looking at how you can apply them effectively to problem-solve.
Looking to level up your strategic thinking? Sign up for a free hypothesis problem-solving guide that includes an issue tree template and hypothesis tree template that will help you take that first step into your strategic thinking journey.
Decision Trees, Decision Trees, and more Decision Trees
Decision Trees are different from issues trees but are also a popular framework to apply when trying to solve a problem. Often people confuse decision trees and issue trees. To keep it simple, a decision tree is used as part of the decision-making process when you're trying to make a decision, an issue tree is used when you're trying to uncover a root cause. If you're a decision maker, both of these tools will help.
Interested in learning more about issue trees and hypothesis-driven thinking? Check out this blog!
FAQs
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Yes, management consulting firms used them all the time - issue trees are a helpful tool within the umbrella of hypothesis driven problem-solving which is the bread and butter or many of the big fives consultancies including McKinsey and Company, Bain, BCG, and more. Preparing to ace your consulting interview? Dreams of joining a consulting firm? Leap frog business school and master your issue tree and hypothesis based problem solving skills through this Masterclass.
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See above. In short, an issue tree is an important tool that can be used to help structure and organize the different elements of a relevant issue. It is often used in business settings to help identify the root cause (think, root cause analysis) of a problem or to develop potential solutions. If you are facing a complex problem, consider using issue trees to help you better understand the situation and to develop a plan of action for any real issue you might be facing. It's one of a variety of powerful business concepts that will make you a better strategic thinking and help you arrive at an actual solution.
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A root cause analysis is a process aimed at getting to the source of a problem - the goal is essentially the same as that of an issue tree.
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Yes, but that's a level 201 concept, not covered in this blog post.
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Both solution trees and issue trees are useful tools for problem-solving. However, it’s important to know when to use each one. If you’re trying to find a quick fix to a simple problem, you are probably safe to bypass the issue tree and go directly to a solution tree. However, if you want to get to the bottom of a complex problem and be sure to find the root cause, then an issue tree is what you need. Both types of trees can be applied to work examples and also real-life examples that occur in everyday life.
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To start an issue tree, first identify the main problem. This will be your "trunk". From there, create a complete list of all the potential "why" questions that could contribute to this problem. These will be your 2nd layer of branches. There you have it - the start of your issue tree!
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There are a few key principles that make a good issue tree. First, as a rule of thumb, the initial structure of the tree should be comprehensive. It should cover all of the potential issues that could be causing the problem. Second, the tree should be organized in a way that is easy to understand, each branch of the tree clearly labeled and easy to follow. Finally, the tree should be concise. It should not include any unnecessary information or superfluous branches. By following these guidelines, you can ensure that your issue tree is effective and helpful in solving problems.
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A profitability framework is a specific type of issue tree that's also used to measure and improve their profitability. The framework provides a clear and concise way to track progress, identify areas of opportunity, and make decisions that will improve the bottom line. The benefits of using a profitability framework are numerous, but perhaps the most important is that it gives businesses a comprehensive view of the levers that drive financial performance. Facing a profitability issue? Trying to figure out where to allocate resources or how to grow the business? This framework will be your best friend.
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We talked about decision trees above. A sister to the decision tree is the decision matrix which is a tool related to a decision tree that can be used to help make decisions. It can be used to compare potential ideas and to evaluate the pros and cons of each option. This is different from hypothesis driven thinking.
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Nine times out of ten, no they don't. it's a fundamental skill that's missed in the Business School curriculum but you can master it through taking this masterclass.
About the Author
Lindsay provides growth and advisory services to purpose-driven brands. Named a global innovation leader and Women to Watch, you will find her at the intersection of strategy, storytelling and innovation. When she’s not collaborating with clients, she’s hitting TEDx and other stages across North America to deliver keynotes on the future of consumerism, strategy and innovation. Prior to advising and providing strategy consulting services, Lindsay spent six years at lululemon crafting their global growth strategy, exploring new marketplace opportunities, strategizing new ideas and growing the company into the number one yoga wear player in the world. Her experiences culminate in what she refers to as her sweet spot - where strategy, innovation and insights intersect, where the rational meets the emotive, where facts meet insights and where logic meets creativity.
