Models are often the best tool to inform a better understanding of the situation, dynamics, options and decision-making. I’ve created hundreds of models, some spanning just a few lines of an Excel spreadsheet, others that took months to build, were hundreds of Excel pages, and drove the strategic direction of multi-billion companies.

The final product, beyond the recommendations, of many strategy projects, is a robust model that represented the abstraction of the scope of reality that was the focal of the problem solving. A core competency for strategic leaders is understanding how to utilize analytic models properly. We’ll go over some of the best practices they teach in the top business schools and strategy firms.

An analytical model is a data representation of a situation or system. Analytical models are primarily used to better understand a situation and inform decisions. There are four main elements to any analytical model, which include:

1. Output

Models are typically created to answer a particular question, and the answer to this question is the output of the model.

2. Parameters

The base assumptions of a model make up the parameters of a model. Assumptions are typically based on some sort of historical data or informed by facts. A model is only as good as the parameters and assumptions that drive it.

3. Decisions

Most analytical models are created to help make decisions, and potential decisions should be represented as a main part of any model.

4. Calculations

The calculations of a model are performed on inputs (i.e., parameters and decisions), to create the output of the model.

CLICK HERE FOR MORE ON CREATING AN ANALYTICAL MODEL

MCKINSEY PROBLEM SOLVING COURSE - LEARN MORE & ENROLL

Learn more about the best self-paced course on McKinsey Problem Solving

DOWNLOAD STRATEGY PRESENTATION TEMPLATES

THE $150 VALUE PACK - 600 SLIDES
168-PAGE COMPENDIUM OF STRATEGY FRAMEWORKS & TEMPLATES
186-PAGE HR & ORG STRATEGY PRESENTATION
100-PAGE SALES PLAN PRESENTATION
121-PAGE STRATEGIC PLAN & COMPANY OVERVIEW PRESENTATION
114-PAGE MARKET & COMPETITIVE ANALYSIS PRESENTATION
18-PAGE BUSINESS MODEL TEMPLATE

JOE NEWSUM COACHING

Learn more about Joe Newsum, the author of all this free content and a McKinsey Alum. I provide a suite of coaching and training services to realize the potential in you, your team, and your business. Learn more about me and my coaching philosophy.