February 14, 2011

Remember, Forecasting is ONLY a Tool.

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In today’s volatile environment, random external events challenge the traditional techniques used to manage them. Many businesses, however, still rely almost exclusively on traditional forecasting tools
and models to predict where they will be in the future, leaving little room for these unexpected events. Exclusive use of these tools to predict business outcomes could be a recipe for disaster.

You simply cannot assume that the future will be an extension of the past. To do so would suggest that past successes will determine future wins. In an all-things-remaining-equal environment you might
be able to get away with this. But the fact is that as a business looks forward in time, all things are not equal. The only thing we can count on is facing uncertainty at an accelerating pace with significant impact on our organizations.

I am not suggesting that predictive tools and methodologies do not play a valuable role in business. They do. They offer one version of an outcome. But that outcome may likely be wrong. We have all seen how unexpected forces in the market cause a predicted outcome to fall short of expectations.

Think of the trend line version of your future as a baseline view from which you need to be prepared to move when things start to go haywire. I admit that in the rarest of circumstances a random event may create a windfall for a company; when it does, rejoice. And then prepare yourself for a shock that will take you in the opposite direction.
Successful organizations understand the need to learn from the past and apply that learning to future scenarios. They also know that we can count on facing predictable uncertainty at an accelerating pace, causing organizational discontinuity. They must lead into an uncertain future by introducing new ideas, concepts and tools to prevent organizational mortality. Those that don’t, continue to toil on in the mistaken belief that the actions behind past successes will continue to work in the future.

This momentum management results in the demise of organizations. The issue is not whether it will happen, but when.

Cheers,
Roy


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Strategy Creation | Leadership | Permalink
Posted 2.14.11 at 06:00 am by Roy Osing | Read Comments (0) | Leave a Comment