What Is an Issue Tree?
An issue tree is a visual breakdown of a problem into smaller, structured components.
It helps you understand what exactly you need to solve and ensures you don’t miss any important driver.
Think of it as a map from the big question → all possible causes/solutions, laid out in a MECE way.
Why Issue Trees Matter in Consulting
- Forces clear thinking
- Helps you break a large, vague question into manageable parts
- Makes problem-solving faster and more structured
- Shows the client you understand the full picture
- Ensures no overlap or gaps in analysis
Issue trees are one of the most-used tools in both case interviews and real engagements.
How to Build an Issue Tree (Step-by-Step)
1. Start with the core problem statement
Example: “Why is profit declining?”
This is placed at the top/root of the tree.
2. Split the problem into MECE buckets
These become the first-level branches.
Example:
- Revenue issues
- Cost issues
Simple. MECE. Complete.
3. Break each branch further
Go one level deeper to identify sub-causes.
Example under Revenue issues:
- Volume decline
- Price decline
- Product mix change
Example under Cost issues:
- Fixed cost increase
- Variable cost increase
4. Continue until branches are testable
You stop when each branch can be tested with a clear analysis.
Example:
- Volume decline → customer churn, drop in new customers, reduced usage
Each can be tested with data.
5. Prioritize the most likely branches
You don’t investigate everything.
Focus on the largest impact areas (80/20 principle).
Types of Issue Trees
1. Diagnostic Trees (Why something happened)
Used for problems:
- Profit decline
- User churn
- High operational cost
2. Strategic Trees (How to achieve something)
Used for opportunities:
- Grow revenue
- Enter a new market
- Improve customer experience
The logic is the same; the direction changes from why to how.
What Makes a Good Issue Tree?
- MECE at each level
- Clear, simple labels
- No overlapping buckets
- Balanced (not one branch too deep, other too shallow)
- Actionable — each branch leads to a testable analysis
If you cannot test a branch, it’s too vague.
Mini Example
Problem: “How can the company grow revenue?”
Issue Tree:
- Increase price
– Reduce discounts
– Improve value to justify pricing - Increase volume
– Acquire new customers
– Increase usage from existing customers
– Launch new channels
Each of these can then be broken further.
Where Issue Trees Are Used
- Strategy engagements
- Due diligence
- Customer insights
- Operations problems
- Product growth
- Market entry
- Consulting case interviews
Issue trees help you “see the full picture” while still staying structured.