Guillermo:  Are you aware that last year Americans spent $40 billion on dog training?

Jay: Well, that’s not true

Guillermo:  I was surprised as you are

Jay:  No you were surprised because it’s not true

Guillermo: What is this multi-billion dollar industry missing?

Jay Pritchett:  Multi-billion dollars

Guillermo: I have devised a revolutionary way to communicate . . .

Jay has number sense.  He isn’t an expert in dog training nor is that his business.  Yet, he has a broad enough understanding of business to know that Guillermo’s claims don’t make sense.

Recently, on ABC’s World News, Dianne Sawyer stated, “as of tonight, it [The Occupy Wall Street Movement] has spread to more than 250 American cities, more than a thousand countries — every continent but Antarctica.” (October 10, 2011)

Some people, upon hearing that statement were probably impressed by the movement’s growth and support.

Critics of Sawyer and the movement were quick to jump on her error.  Her statement reflected a number that is five times greater than the total number of countries in the entire world.

It’s unlikely that Diane Sawyer believes that there are that many countries.  She was probably rushed and possibly reading from a cue card.  But, someone gave her that number.  Unlike Jay Pritchett, that person didn’t apply simple number sense to determine whether the data seemed reasonable.  And Sawyer, for whatever reason, didn’t do a quick reality check on the fact she was reporting.

Number sense sits at the intersection of business acumen and critical thinking. 

In the case of Sawyer’s comment, you don’t have to be a geography expert to realize something is wrong with her number.  Some simple logic would cast suspicion. 

·         Sawyer’s statement excluded Antarctica leaving just six continents to house one thousand countries. 

·         The remaining six continents would each need to have around 166 countries on average. 

·         Even if you don’t know much about the other continents, you probably know that your continent has far fewer than 166 countries.  Therefore, the remaining five would have to average MORE than 166 countries each to make up for yours. 

·         Without knowing specifics, you probably also have some ballpark guesses about other continents either those closest to you or those really big ones with relatively few countries such as North America and Australia.

·         That leaves an even higher requirement for the few remaining continents that you know little about.

It quickly becomes clear that one thousand is an outrageous number.  That thought process was probably even more elaborate than most people would need.

That’s an application of number sense.  It’s not about knowing detailed numbers.  It’s about having a few general numbers/facts on hand and the ability to use them to reason through a problem.

Successful leaders have good number sense.  They can tell if the size of a projected market for their product seems reasonable.  They can quickly think through the bottom line impact of small changes in their business model. 

As a leader, part of your business acumen development should focus on number sense.  By getting familiar with some basic facts and using those facts to vet the claims that you hear you’ll be able quickly to discern good data from data that isn’t credible.

Here are some facts that would probably create a good foundation for your number sense:

General

What is the population of your country? 

What is the population of the countries in which you do business?  About what percent are adults versus children?

What is the population of the world (currently approx. 6.97 billion people)

What is the GDP of your country?

How many households are in your country?

How many people are in your country’s workforce?

Business

What is the size of your company’s customer base?

What is the size of your industry’s customer base?

How many of each of your products are sold in a given year?

How many employees do you have in your company?

What are your company’s annual revenues?

Do you need to look up all the details to know if a fact or figure seems reasonable, especially one that might not be specific to your job, role, or business?  If so, it might be time to brush up on your number sense.