The pyramide principle - logic and structure in thinking and writing

After working 10 years in management consulting., I use the Pyramide Principle a lot. The Pyramid Principle is a structured approach to communication, often used for writing and presentations, developed by Barbara Minto at McKinsey & Company. It emphasizes presenting ideas in a top-down, pyramid-like structure, starting with the main point or recommendation and then supporting it with logically grouped, detailed arguments and evidence.

Key Components of the Pyramid Principle:

1. Start with the main message: Begin with a concise, compelling summary of your central point or recommendation. This captures the reader's or audience’s attention and establishes a clear direction.

2. Group supporting ideas logically: Organize supporting points into groups that address different aspects of the main message. Each group should have a clear theme and contribute to explaining or proving the main point.

3. Provide supporting evidence: Within each group, include specific details, data, or examples that reinforce your supporting ideas. This gives depth to each group and justifies why it contributes to the main message.

4. Follow a logical order (MECE): The Pyramid Principle emphasizes being MECE (Mutually Exclusive, Collectively Exhaustive). This means:

   • Mutually Exclusive: Each point should be distinct and non-overlapping.

   • Collectively Exhaustive: The points should collectively cover all relevant aspects of the main message.

This principle can be used in solving all kinds of business problems, including increasing revenues, reducing costs, improveing support functions, attracting talent etc.

Here is a video explaining the concept:

Strategy - a value creation approach

In business, fall is often the time to make plans for next year, often including adjusting or coming up with new strategies.

Few business concepts has a variation different connotations than strategy. From meaning a small plan to overcome a tiny obstacle or problem to creating a comprehensive guide for doing business. Strategy is about looking forward seeing the future and planning for it.

Startegy, at its best, is simply a plan to create value. Here is short, informative HBR-video explaining this value creation concept:

The starting point is how much and which value the company creates for its customers, employees and suppliers. Strategy then is for example, making working for the company more attractive through imporoved working conditions or more interesting tasks, increasing the employee value. Increasing the product quality for example, will increase customer value and hence willingness to pay for the company’s products and services.

Strategy vs plans: Understanding the key differences

Autumn is often a period where businesses review their strategies related to a new business year coming up. Or is it really their strategies they are reviewing?

In business and life, strategy and plans are often used interchangeably, but they serve distinct purposes.

• Strategy is the big picture. It defines the long-term vision and overarching goals. It's about making decisions on where to focus your efforts, understanding the competitive landscape, and identifying how to achieve sustainable success. Strategies guide the "why" and "what" behind your actions.

• Plans, on the other hand, are the step-by-step details. They outline the specific actions, timelines, and resources required to implement the strategy. Plans answer the "how" and "when" to execute the strategic vision.

In short, a strategy is the "destination," while a plan is the "roadmap" to get there. Both are essential, but knowing the difference ensures clarity and focus on achieving your goals.

As Steve Jobs once put it: “Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because once you get there, you can move mountains.”

Investment decisions

We've all been there. Worked our way through Excel sheet after Excel sheet with various assumptions and assessments of an investment decision. Such analyzes are, to put it mildly, not an exact science and the decision itself is very often driven by prejudice and bias. I have even experienced working with an investment analysis for a large Norwegian company that was to invest in a new, expensive digital platform, where the mandate was that the investment decision had already been made and that it should now only be considered home. Businesses make investments mainly based on the following goals: Increased business income: buy other businesses, invest in product development, invest in marketing, buy a customer base (SaaS). Increased efficiency/reduced costs: Invest in machinery and equipment, invest in efficiency projects, R&D. Increased quality: invest in increased quality in products, services, production, systems and organisation. Reduced risk: invest in HSE, management systems, control systems Sustainability: invest in measures that make the business more sustainable, such as reduced emissions and waste. This contributes to both improved reputation and sustainability in general