Page 61 - The McKinsey Mind

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Designing the Analysis 39

reach an answer of that level of precision very quickly, while
attaining spurious precision would take much longer.
Also, if you can achieve some sort of satisfactory answer in a
short time, then you are much more likely to attempt the analysis
than you would if you had to get an answer to four decimal places.
As one of our alumni puts it:

I find back-of-the-envelope analysis incredibly valuable
TEAMFLY
because it lets you know if you’re in the ballpark. A lot of the
time, all I want to know is whether, say, a new product idea

is going to be worth $5 million, $50 million, or $500 mil-
lion. And some people find it very difficult to get comfort-
able with that. They think, “Oh, I’m going to say $50
million; what if it’s really $75 million?” I don’t care! “But it’s
50 percent off!” they say. I respond that it’s so much more
valuable than not putting together a number at all.

Just as some people want to do every analysis under the sun,
there are people who just have to get their answers correct to four
significant figures. Naras Eechambadi, founder and CEO of

Quaero, Inc., an information-based marketing consultancy, knows
all about that from the inside:
I hire a lot of Ph.D.s and advanced-degree holders, and I

almost have to force them not to look at every error pattern
in the data. All that stuff your professors taught you is great
if you’re talking about health care and you have to worry
about people dying. But this is marketing; we’re just trying
to make a buck. Let’s get the show on the road and stop wor-
rying about all the nuances.
You can spend a lot of time improving the precision of

your models, but eventually you reach the point of dimin-
ishing returns or you lose time to market. We don’t need to

®
Team-Fly