To put things into perspective, guesstimates are basically a short term structured problem to see your understanding of logical flow and structuring concepts. Like the example that my friend had faced, the interviewer ideally was not looking for a particular number, he was looking at the approach my friend would be putting in to solve the question.
When it comes to guesstimates or case solving, interviewers are primarily looking at the concepts of MECE to get guaranteed results to cases or guesstimates. The MECE principle is a grouping principle for separating a set of objects into mutually exclusive and collectively exhaustive subsets, pronounced by many as "ME-see" and by the author as "Meese" like Greece or niece.
Like I already said the process is given more importance than the final answer. You may have missed the final answer by an extremely large margin but the process you would have followed would have been so structured that it would have highlighted the clarity of thought that you might be having through the end to end process.
Check Out→ How To Crack Guesstimates Questions In An Interview
Steps That Need To Be Followed While Solving A Guesstimate
1. You should have an extremely clear thought process when you are solving a case. Structural clarity and thought process optimisation is something very important.
2. Breaking down the case into smaller pieces and taking them one at a time is extremely important. You ought to be discussing with your interviewer at every stage of the process to see where you are heading with the case and whether that direction is correct or not.
3. Always take whole numbers that are in the multiples of 5 and 10. This will make your calculations. No one needs you to take exact numbers, ball park figures will do. But whole numbers will make your calculations easier.
4. Don’t get confused in the process that you have created for yourself. Coming out of that will be all the more difficult.
5. At the end you need to come up with an answer and more importantly a logical argument supporting that answer thread.
The Crucial Parameters
- Structured Thinking: The significance of this concept cannot be overstated, as it is the foundation for resolving a guesstimate. This is a quality that the interviewer appreciates.
- Clear Communication: Keep the 3Vs in mind: Voice, Veracity, and Vocabulary. When you submit your solution to the interviewer, these characteristics come into play.
- Smart Creativity: Create your own narrative to make modest assumptions, but be rational in your approach.
Also Read→ Guesstimate Questions To Practice For Placements
The Steps For Addressing An Estimate Problem Are Straightforward
Examine the variables that may have an impact on the final quantity and make an educated guess about their values. Confusing? Consider the following scenario:
- Estimate the amount of chocolate (in all forms) consumed in Delhi in a single day.
STEP 1: The Umbrella
This problem can be approached in a variety of ways:
- Calculate the consumption side, including the end consumer, grammes per person, and so on.
- Calculate the production side: bakeries, chocolate factories in Delhi, or predicted chocolate consumption in the country, and extrapolate the consumption of Delhi by awarding it an appropriate share based on population, income, and other factors in comparison to the rest of the country.
Which umbrella would you pick? The response should be based on how easy you believe it is to estimate/obtain the amount for the parameter through general observation. The point isn't to get an exact response. The objective is to improve the approach to such issues.
However, there is a dilemma to this:
1. Do you want to use assumed parameters? (For example, per-person usage)
2. Is it feasible to achieve realistic parameters? (For example, chocolate consumption in the country)
From a competitive standpoint, the first option would be preferable. A three-level classification is typically deemed adequate, and this approach allows you to achieve precisely that. If you're doing it for research purposes, the second technique makes more sense.
Personally, I like the first method because it is more enjoyable and interesting.
STEP 2: The Assumptions
So far, everything has gone well. The next step is to further classify these categories and assign suitable numbers to them. The ‘End Customer' can be broken down in the following ways:
Age Group 1
- Consumers who are heavy, medium, or light
- Diabetic and non-diabetic individuals, and so forth.
Remember that each of the aforementioned classifications could have additional classifications that could be any of the others.
STEP 3: The Numbers
It's time to start guessing after you've chosen your Umbrella and Assumptions. To come up with numbers, use your overall awareness of the environment you're dealing with. The golden guideline is to use numbers that are pleasing to the eye. With a quick Google search, you can get the precise population of Delhi as 18,686,902, but that doesn't sound nearly as appealing as 20,000,000. How many persons should be assigned to each age group? Work in a percentage-based approach. Because we are a youthful country, the 15–40 year age group receives the most weight. Isn't it straightforward?
How To Guesstimate | BCG, Bain PPO Holders, McKinsey Consultant Solve Live Cases
Cracking Consulting Interviews - How To Approach Guesstimate Questions
The Founder and CEO of InsideIIM, Ankit Doshi, gave a session on one of the most important topics when it comes to Consulting - Guesstimates. There are two Guesstimate questions in this video. What's your approach? Tell us in the comments below!
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