Why You’ll Fail Your Case If Your Structure Isn’t MECE

  • Last Updated May, 2020
MECE Principle

If you’ve attended a recruiting presentation by a consulting firm, you probably heard the term MECE. Maybe one of the presenters even defined it. 

If the MECE principle didn’t stick in your mind, don’t worry. It’s one of those things you need to think about a few times to fully understand. 

In this article, we’re going to define MECE, provide some examples of MECE issue trees, and talk about why it’s important to consulting cases. 

By the time you reach the end of this page, you will be a MECE machine and be able to create MECE frameworks for your case interviews, every single time.

If you’ve just started looking into a potential career in consulting, start here for an introduction to consulting and Case Interview Prep for an introduction to consulting and case interviews. 

But if you’re here to find out what MECE means, you’re in the right place. Let’s get started!

MECE Definition

MECE stands for mutually exclusive and collectively exhaustive. Consultants use it to talk about the way they break down a whole into its component parts. 

Let’s take one part of this definition at a time.

MECE definition

Mutually Exclusive (ME)

Mutually exclusive means breaking a whole down into distinct components that don’t overlap.

For example – the undergraduate population on a college campus can be broken down into freshmen, sophomores, juniors, and seniors.

Those four groups should not have any overlap because you can’t be both a freshman and a sophomore. 

Compare that breakdown to a breakdown of the undergrads as jocks, geeks, frat boys/sorority girls, partiers and loners.

One student could easily fall into more than one category.

A soccer player who liked to party and was a member of a sorority would be counted 3 times, so if you added up the number of students in each category you’d get a number larger than undergraduates enrolled at the school.

You might need to be careful about your definitions to ensure your categories are mutually exclusive.

Let’s go back to our breakdown of undergrads by their year in school to see why.

How many completed credits qualifies a student as a sophomore?

If a student brought in credit from several advanced placement classes taken in high school, they may qualify as a sophomore in the second semester of their first year. 

If a student failed a couple of classes, they might not count as a sophomore until they finished their 3rd semester of study.

But as long as the definitions put each student in one and only one bucket, this breakdown of undergraduates would count as mutually exclusive.

MECE principle

Collectively Exhaustive (CE)

Collectively exhaustive means that the segments used to breakdown the overall population are comprehensive or, in other words, include all the relevant parts of the group being analyzed.

Let’s take our example of the undergrads on a college campus again. 

Suppose a couple of the majors at the school required 5 years to complete a degree. 

Maybe the engineering and education students are required to do a year of full-time co-operative work before they can graduate. 

You might add “5th-year student” as a category to your breakdown of the student population or you could change your definitions to factor in how to deal with co-op experience in categorizing students. 

Either option works as long as each student finds himself or herself accounted for by a category.

Another way people frequently think about the concept of MECE is to ensure a breakdown has no gaps and no overlaps.

Here are some examples of MECE categories for a group of people:

Age

0-20 years, 21-40 years, 41-60 years, 61-80 years, 81- 100 years, over 100.

Gender

Male, female, non-binary.

Country of Birth

United States, Canada, England, etc.

Highest Level of Education Achieved

Not a high school graduate, received a high school diploma, did some college-level work, received a college diploma, received a graduate degree

Highest Level of Education Achieved

$0-20,000, $20,001-40,000, $40,001-60,000, $60,001-80,000, $80,001+

Why Is MECE Important in Management Consulting Cases?

Consultants need MECE breakdowns of groups for 2 types of work: market sizing and case frameworks.

Why MECE Is Important for Market Sizing

Consultants often need to size the market for a product or service as part of deciding whether entering the market will be a worthwhile investment for a client. 

If they break the market into groups with overlap, they will double-count customers and therefore overestimate the size of the market.

But if they break the market into MECE groups, they will come up with an accurate estimate of its size.

For example, if you broke the market for cellular phones into women, people over the age of 35, and businesses, one individual might fall into multiple buckets. A 38-year-old woman who needed a work phone to be provided by her employer might fall into all 3 buckets.

This breakdown is not MECE.

MECE principle - examples

 

If you used those categories to analyze the market, you’d triple-count her spend on cell phone equipment.

Breaking a market into MECE buckets ensures that if you correctly estimate the population in each bucket and the size of the revenue from a typical customer in each bucket, you’ll be able to tally them up to a reasonable estimate of the size of the entire market.

Why MECE Is Important for Case Frameworks

To solve business problems, consultants break down the key components of the problem for further study and analysis. Such a break-down can be represented by an issue tree. 

One of the most frequently-used breakdowns is the profitability formula:

Profit Formula Business Framework

Profits = Revenues – Costs

The breakdown of profits into revenues and costs is MECE. 

Every component of profitability is being considered and there is no overlap between the categories. 

Now, imagine that you’re breaking profitability down further:

Revenues = Price x Unit volume

Costs = Fixed + Variable

Now, you have 4 MECE components to analyze. If you have a team of 4 consultants assigned to a case on improving client profitability, you could assign one person look into opportunities to increase price, one to look into increasing unit volume sold, one to look into reducing fixed costs, and one to look into reducing variable costs. 

If you broke down the work this way, each consultant would be able to complete their work without overlapping with someone else’s work. 

This is important since consultants typically put in long hours and don’t want to waste time duplicating effort.

Of course, there are other MECE ways the team could break down their work on a client profitability problem. 

If the client had 3 lines of business, then 3 consultants could each take one line of business and investigate ways to improve its profitability. 

The 4th consultant could look at new business opportunities. This breakdown would also be MECE.

The best way to breakdown any problem depends on the factors that are most likely to lead to a solution to the client’s business problem.

What would not work is if the team mixed the two ways of breaking down the problem. That’s when you end up with groups that aren’t MECE.

If one consultant looked into pricing issues, one looked into fixed costs, and the remaining 2 consultants looked into 2 of the 3 business units, there would be both overlap in the work the consultants undertook and parts of the cost structure and of the client’s business that no one was responsible for.

More Examples of MECE Segmentation

MECE Examples from Everyday Life

Davis Nguyen, our fearless leader at MyConsultingOffer.org, came up with the following segmentation to practice creating MECE groups when he was getting ready for his consulting interviews:

What are the factors to consider when deciding whether to marry your girlfriend?

Obviously, Davis is not a hopeless romantic following his heart. 

Here’s what he came up with:

He broke the decision of whether to marry his girlfriend into physical factors and non-physical factors. This breakdown is MECE.

Then he broke each of those factors down further. 

 

Physical factors:

  • Do I find my girlfriend attractive to look at?
  • Do I find my girlfriend attractive beyond just to look at?

Non-physical factors:

  • Do I like her personality?
  • Does she get along with other important people in my life?
  • Does she help me grow?
  • Do we have long-term compatibility?
  • Do we have the financial resources to get married now?

Davis’s segmentation of the factors to consider when deciding whether to marry his girlfriend is very thorough and is also MECE. It’s not hard to see why he made a better consultant than husband at that point in his life. 🙂

MECE Examples from Business Situations

Businesses can be segmented in multiple different MECE ways. You can break their revenues down by product, customer type, or customer geography. 

Here's a MECE example of Apple's revenue segmented by product:

MECE Principle - example 1

Here’s a MECE example of Apple’s revenue segmented by type of customer:

MECE principle - example 2

Here’s a MECE example of Apple’s revenue segmented by region:

MECE Principle - example 3

Each of these business segments can be broken down further. Again, the right segmentation is the one most relevant to understanding the problem you’re trying to solve.

Consulting Firms Look for MECE Segmentation in Case Interview Frameworks

Back in our introduction to case interview prep, we talked about the fact that consulting firms look for structured problem solvers when they recruit. 

Each client is different and so are the solutions to their business problems, so consulting firms need people who can solve any problem, not just one they’ve seen in a textbook. 

How do you show your interviewers you can solve any problem?

A key part of that is providing a MECE breakdown of the case study problem. 

This MECE breakdown will ensure that you probe all aspects of the problem (because it is collectively exhausting) and that you don’t waste time going over one aspect of the problem multiple times (because it’s mutually exclusive).

Practice breaking down markets, business problems or decisions you see in everyday life as Davis did. You’ll get practice in creating MECE groups and improve your casing skills.

Tricks for Making Sure Your Frameworks Are MECE

One important trick to make sure you come up with MECE frameworks for analyzing cases is to start with a hypothesis – a question that you can answer yes or no to. 

Davis could have asked the question: Do I love my girlfriend? 

This might have led him to a more romantic list of issues to think about. 

Instead, he framed his thinking by asking whether he should marry her. 

By doing this, he forced himself to focus on sub-questions that could be answered with a yes or no and after he “gathered data” on all the questions he’d brainstormed, he’d feel ready to make the big decision.

Here are some examples of how you can frame business problems as hypothesis-driven questions:

  • Can the client profitably enter this market?
  • Can the client earn back the investment they must make to enter the market in 2 years?
  • Can the client cut costs by $x million dollars?
  • Can the client increase revenues by 10%?

Hypothesis-driven questions lead to frameworks that ensure that you probe the right issues rather than talking about a business problem for 30 minutes only to find that you still don’t have a recommendation to make to the client/interviewer.

Are Consultants Always MECE?

Consultants always try to be MECE, but that doesn’t mean they always are.

There might be a small segment of the client’s business that’s left out of an analysis because it’s just not sizeable enough to change the decision being considered.

But don’t let yourself break the MECE rule just because you didn’t think carefully enough.

Sometimes consultants forget about being MECE when they build their websites.

As you can see in the graphic below, one of our competitors has a heading for Case Interview Prep and another for Math, but Math is part of Case Interview Prep.

Math should be a subsection of Case Interview Prep, not it’s own heading; it’s not MECE.

not mutually exclusive and collectively exhausting

Another heading is labeled New Consultants and the one next to it is General Career.

Being a new consultant is part of a general career in consulting, so that’s also not a MECE breakdown of topics.

Luckily, you’re on our website, not our competitor’s, so you’ll get examples of good MECE segmentation.

After reading this page, you should have a good understanding of what mutually exclusive, collectively exhausting means.

You’ll now be able to break down markets into MECE segments and create MECE frameworks to solve case problems.

Still have questions?

If you have more questions about the concept of MECE, leave them in the comments below. One of My Consulting Offer’s case coaches will answer them.

People interested in this topic have also found the following pages helpful:

How To Pass the Case Interview Without Spending Hundreds of Hours Preparing

My Consulting Offer has helped over 400 people get jobs in consulting. 

For example, here is how Brenda was able to get a BCG offer when she only had 1 week to prepare…

 
 
 
 
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