The MECE principle, which stands for Mutually Exclusive and Collectively Exhaustive, can be applied to problem-solving by ensuring that when breaking down a problem, the categories or groups are mutually exclusive, meaning they do not overlap, and collectively exhaustive, meaning they cover all possible options. This helps to avoid missing out on any potential solutions or considering the same solution twice. In the context of the provided content, the MECE principle is applied in breaking down company profits into distinct, non-overlapping categories (Revenue and Costs), and further breaking down these categories into all possible components (Units sold, Price per unit, Fixed cost, and Variable cost).
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Using a math formula can work really well to break down a framework in a MECE way because math formulas are MECE by nature, the consultants say. For example, to calculate company profits, keep in mind that Profits = Revenue - Costs, where Revenue is Units sold and Price per unit and Costs is Fixed cost and Variable cost.