Why MECE Matters?

Setting up a software to work for your team requires many disciplines:

• strategy
• communciation
• change management
• acknowledgement of trade-offs

Our first discussions with a client are often around their process and the trade-offs inherent in one tech stack architecture VS a different option. A concept that we often refer to is called “Mutually Exclusive, Collectively Exhaustive” or MECE.  It’s not just relevant to your CRM and Revenue Operations - it’s relevant to the how information is organized and decisions are made. Practicing it has a huge impact in business (and even life) decisions.

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Without a MECE framework, information can be missing or - just as likely - duplicative.  Either one is a significant problem.  MECE gives us a “true north” for information and data.

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What is MECE?

First, let’s give the formal definition:

• Mutually exclusive: Two events that cannot occur at the same time (their intersection is empty).
• Collectively exhaustive: A set of events or categories that covers all possibilities (their union is the universal set).

Said differently, when breaking down problems or organizing ideas, ensure categories don’t overlap (mutually exclusive) and nothing is left out (collectively exhaustive).  Information should have one source of truth, and all those sources combined are the sum of the information needed.

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Now, let’s talk about why that can be extremely difficult, and how it relates to your technology stack and Revenue Operations.

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MECE Examples

Once you understand MECE, you’ll see the need for it - and often the lack of discipline around it - in many examples.  Here are just a few we’ve seen:

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• CRM Lead Sources - The default lead sources are often something like: Phone, Web, Tradeshow, Contact Form, etc. If a prospect first meets you at a tradeshow and then calls the office, which is it?  The Lead Source “Phone” is generally horrible because it’s not a source - it’s a means of communication. Kill it - and then kill “Contact Form.”  Lead Sources should be how prospects find you - not how they contact you (more on why Lead Sources matter).
• Opportunity Stages - The default Stages for Salesforce are: Prospecting, Qualification, Needs Analysis, Value Proposition, Decision Makers, Perception Analysis, Proposal/Price Quote, Negotiation/Review, Closed Won, and Closed Lost. Aside from the fact that this is too many stages and to granular, can you tell the distinct difference between the “Needs Analysis” stage and the “Perception Analysis” stage?   Or “Qualification” and “Needs Analysis.”  If MECE exists here, it’s highly open to interpretation.
• Revenue Attribution - Every dollar your business generates is worth the same amount, whether from customer or a new prospect. Many companies only closely track net new revenue - meaning it is not collectively exhaustive. When they do expand it to all revenue, we often see an overlap where upsells/retention is counted twice - meaning it is not mutually exclusive. More on how to properly track revenue attribution here.
• Sales Compensation - Ocassionally, we see disputes over sales commissions between reps - especially when the client has a self-service component to the sales cycle. For example, they may give each rep zip codes. However, what if two reps are speaking to two different people, the company signs up online, and its unclear who at the company initiated? The zip codes mean we are collectively exhaustive, but without additional information, this comp plan is not mutually exclusive.

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Now that you have the context, hopefully, it is clear why MECE is important for process and the organization of information. In short, processes without MECE are confusing and muddled ones where your employees and managers can come to different conclusions.

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Don’t listen to us - listen to Barbara and Aristotle

There is a late-twentieth century McKinsey consultant, Barbara Minto, who is often credited for this concept. She introduced MECE explicitly as a problem-structuring principle in her Pyramid Principle.  She deserves all credit she receives, and if you’ve never heard her name, read about the first female MBA McKinsey ever hired.  The Pyramid Principle utilizes the MECE framework in a way that Ms. Minto can articulate best:

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The great value of the technique is that it forces you to pull out of your head information that you weren’t aware was there, and then helps you to develop and shape it until the thinking is crystal clear. Until you do that, you can’t make good decisions on slides or video.”

- Barbara Minto

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However, the overall concept is much, much older.  Classical logic from philosophy class will include a version of Aristotle (~4th century BCE) talking about MECE. Every proposition must be either an affirmation or a negation; it cannot be both. This was later formalized in set theory and probability in the 19th century. It’s a guide for structured thinking.

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Salesforce, Hubspot and other CRMs don’t make it easy

In 1999, when Salesforce was founded, the key innovation was moving the CRM from a hosted machine to the cloud. This was a game-changer.  It allowed for real-time access to client data from any computer, anywhere in the world, by any employee.  However, Salesforce borrowed pretty heavily from the overall architecture, fields and drop-down menus of the incumbent CRMs like ACT! and SAP. As other CRMs like Hubspot and Pipedrive added their own innovations, these elements also didn’t change much.

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Consequently, CRMs come “out of the box” with many processes, fields and pick-lists that don’t really follow MECE.  Or at the very least, don’t provide any guidance to ensure that users follow it. You can see two such examples above with Lead Sources and Opportunity Stages. Let’s add another example - address.  Every lead, contacts and account has its own address by default. However, the only address that many businesses care about is the one used for billing. We see so much confusion over the right billing address - simply because the address field is there by default and gets populated.

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In client engagements, we may bring up MECE once or - at the risk of sounding too academic - we may not bring it up at all.  But the reality is that every process we look at is going to have to pass the MECE filter.

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