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How important is the rule that You cannot be off the answer for more than 20%?

Market sizing
Recent activity on Oct 30, 2021
3 Answers
4.9 k Views
Wojciech asked on Jan 31, 2020

Dear Team,

I've solved the case about petrol stations in Paris on my own and got a completely different answer. Out of my curiosity, I have verified the real number of petrol stations in Paris (French government shares the list of petrol stations in each municipality) and the real number of stations in all municipalities Metropole Grand Paris is 408. That is far less then specified in case solution, so we are definitely out of the principle "Don't be more then 20% off if you wanna be in the right ballpark". Could you please explain the importance of that principle?

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Udayan
Expert
Content Creator
updated an answer on Feb 01, 2020
Top rated Case & PEI coach/Multiple real offers/McKinsey EM in New York /6 years McKinsey recruiting experience

A lot of times when questions like this are asked, the interviewer does not know the answer themself. The aim of market sizing questions is to test your ability to break down ambiguous problems such as number of petrol stations into more concrete elements such as ratio of petrol stations to cars. Once you outline an approach and follow it to it's logical conclusion, you should arrive at what is a reasonable answer

The final step in this is 'sense-checking' to see if the answer makes sense. For example if you find that there are 100 petrol stations in all of France or 10,000,000 those are not reasonable answers. If you realize this you go back to your approach/assumptions and tweak what may have gotten the random numbers. It is less relevant how far off you are (10%, 20%, 50%) vs how logically sound your approach is and whether you manged to pick up on the fact that your answer is far off.

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Anonymous A updated the answer on Oct 30, 2021

It is not really important because it is impossible to get a correct number without using real data. It is about showing your ability to break down a problem, use numbers effectively and that you have a degree of showmanship. Because the thing about consultants is that they do not have some secret knowledge their clients do not have, but they need to convince their clients that they do. Suppose you just estimate the number from the start. In that case, you are most likely not worse off than if you estimate the different elements and do some fancy math before giving the answer but using such an approach hides the fact that you are just guessing behind some math and pretty graphics. And that is what the job of a consultant is about in the end. 

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Vlad
Expert
replied on Jan 31, 2020
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

That's the first time I hear about that principle, so I can assure you it's not important.

What's more important is that the numbers should make sense. Eg if you are calculating the luggage carts at the airport terminal and you get let's say 10.000 - looks like the numbers don't make any sense and most probably you've done a mistake

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