How much? How many? When? Where? How long will it take? How long will it last? These questions provide leaders with essential planning information, but each is subject to the fatal flaws of forecasting.
Having worked with many executives that appear to have a natural instinct for forecasting the future, I found success is due to intense interest, experience, education (formal and self education), and effective communications. Here is what they know:
- GIGO, coined during the advent of the computer age, corrupted results and reports due to this simple data problem; garbage in, garbage out. Qualify the information you are using.
- ASSUME corrupts facts, making an “A–” out of “U” and “ME”. Verify all assumptions.
- Weighted Forecasting comes from high value placed on producing high numbers. “Kill the messenger”, inexperience, and forecasts out of sync with operating cycles are culprits. Plan for realistic forecasts and adjust the timing to the situation.
- Moving On, the tendency to develop a forecast to meet demands then let it go. Without relationships to objectives, it becomes a test, a painful experience; something to be forgotten. Integrate it into your communications.
One client questioned every research piece we prepared. How did this apply to his organization? What did this data tell him? Why was it prepared this way? How did other organizations use the information? What did we recommend for him specifically? We answered and they took the lead position in their field.
Larger, established organizations typically have systems for forecasting. They include baseline, break-even, last year plus/minus, planned growth, benchmark, and target. These systems consider estimates, industry trends, past performance, program development, and recruitment. To qualify the results and meet objectives, the best executives adjust their forecast and recommit resources to meet inherent operational changes. They do it by developing the timing and manageability of their forecast system.
In other words, make it yours. If you have busy, regular deadlines, consider your forecast to be a sign post to what is coming up around the corner. Then, begin to push the horizon further by opening communications with your stakeholders, talking about trends, opportunities, and foreseeable problems.
Whether you are handling revenue streams, client interactions and event participation; or preparing a financial projection for major funding; effective forecasting is one of your best tools for success.