Back in 2017, with YayPay's Executive team, we had a coaching session led by Don Schiavone.

Don was talking about this principle - Mutually Exclusive, Collectively Exhaustive (MECE). That's when I first learned the name of this.

What I also realized in the middle of the session is that I was very much surprised by two facts

  1. This describes and explains exactly how I have thought since I was a kid, which was a pleasant surprise for me
  2. It appears that this kind of thinking is not what everyone does by default, which I thought was the case

The basic idea of this principle is following:

When you are analyzing and categorizing something in your mind, you need to make sure that this final list of categories is exactly MECE. Mutually exclusive means that these categories do not overlap, and Collectively Exhaustive means that this categorization describes the whole picture, a complete set of possibilities.

Mutually exclusive forces you to pick the criteria under which you are making this categorization (e.g., color, size), and Collectively Exhaustive - it makes sure you don't leave the gaps in the category description.

This principle is best applied to any situation where you need to build a tree-view structure of categories of something.

For example, when you categorize apples, you can say that the apples can be red and yellow. This will be mutually exclusive but not collectively exhaustive - because there are more colors. To make it MECE in this example, we just need to add "Other" to the list of options.

McKinsey invented MECE, and is actively using it for their business consulting, mainly to analyze complex problems in a company.

So let's take one of the more business-related examples. Say you want to understand what expense categories you have for all the different things you spend your money on. You could create a list like this: