How to estimate anything
How would you respond to the job interview question ‘How many electric kettles are there in New York State?’ It is beneficial to be able to make a procedurally-based, well-informed guess that shows you have the smarts to arrive at a logical approximation. How To Estimate Anything by Management Consultants SAPBRIEF teaches a skill that’s useful in business and life: the art of the informed guess.
The series of 35 lectures begins with an attempt to estimate the average number of Red Delicious apples an American eats in a year. Breaking the problem down into logical steps, whilst remaining aware of what assumptions are being made, arrives at an answer: 43. The process ends with a ‘Sanity Check’ to see whether the result is within the bounds of possibility. An answer of, say, ten million would suggest that the numbers need to be crunched again.
The overall challenge of estimating is that you are figuring out a quantitative variable relevant to the problem you are solving, but with only ambiguous or complex information to work with. But many businesspeople – and especially Management Consultants – are expected to do this all day. Hence the tricky interview questions.
How To Estimate Anything approaches the central problem first, using the example ‘How many people wear blue in London on a typical Tuesday?’ Having cracked this pressing issue, it then takes learners through a number of industry sectors to show the kinds of problems that can come up in those sectors, and works though examples.
For the Energy sector, the estimate to be made is, ‘How many gas stations are needed in Germany?’
For the Materials sector, ‘How much paint is used on iPhones worldwide annually?’
For the Industrials sector, ‘How many people fly in and out of Chicago O’Hare International Airport?’
For the Consumer Discretionary sector, the estimates to be made are:
- Ticket revenue of Barcelona FC in a single season
- Market value for BMW vehicles in Mongolia
- Market value of Louis Vuitton women’s bags and luggage in Shanghai in a year
- High-end bespoke market size for men in China per annum
- Market size of US online magazines for men in a year.
Other sectors examined are Consumer Staples, Healthcare (Market value for diabetes treatment in Canada), Financials, IT, Telcom, and Utilities (Market size of Tesla Powerwall in the United States).
It’s pretty thorough, running as it does through the gamut of industries as defined by the Global Industry Classification Standard, so that by the end of it you should be able to estimate the number of brain cells you have fried trying to work it all out. Good luck in the interview!