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August 7, 2021

Why forecasting is for businesses that really can’t live in the moment

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Why forecasting is for businesses that really can’t live in the moment.

Forecasting has long been standard practice for businesses across all industries and sectors.
Every business-related publication, including the likes of well-respected blogs like Harvard Business Review, has dedicated thousands of words to explaining exactly why proper forecasting is necessary—and indeed crucial—to the financial and operational success of your company.

Traditional business strategies claim to provide us with the ideal tools and methodologies to build the perfect, airtight plan. They offer us analysis in demand and forecasting models, structured SWOT analysis, decision-making frameworks, and a host of other seemingly essential approaches.

I agree that these are mature and logical strategies that can assist businesses to chart their future paths. But unfortunately, that’s as far as my support for forecasting reaches.
Even Harvard Business Review has admitted in one of its effective forecasting guides that prediction is only possible in a world in which actions have been preordained.

This world-leading business publication states outright that no amount of present action can influence future outcomes, as the future unfolds in significant and usually quite unexpected ways. The occurrence of the Covid-19 pandemic is a perfect example.

Considering this, I believe that while forecasting can be a mildly helpful tool in charting future courses for growing businesses, it’s definitely not a useful approach for predicting or adapting to the future.

In short, forecasting is for businesses that can’t live in the moment, and instead spend their team fruitlessly attempting to predict the future. All while forsaking current opportunities and advantages in their paths.

Here’s why.

Reaction to the unexpected is an ideal business plan

According to Roy Osing, the traditional approach to forecasting doesn’t touch on the principle of responding to the unexpected —and that doesn’t work to your advantage.
Successful companies are those who can adapt rapidly to surprise events they weren’t anticipating at all. Companies that die are the ones that fail to adapt, regardless of how proficient they were at drafting forecasts.
Chances are you’ve never seen a plan unfold in exactly the way you expected it to. This simply isn’t possible, nor is it realistic. Instead of forecasting, try Osing’s planning on the run model — Plan, Execute, Learn, Respond, Execute — with the present instead of banking on an uncertain future.

Quick reactions trump planned reactions

The world of business is fluid, imperfect, and ever-changing. It can’t be predicted or even explained by trend analyzes, which is why even your best-made plans will hardly ever work.

Businesses that are always trying to live in the future instead of in the moment will simply never be able to keep up.

The ability to react quickly and proactively to change will fare better for your business than trying to make the ‘perfect’ moves based on shaky forecasts. As long as you’re making many imperfect moves at a rapid pace, you’re setting yourself up for growth. Or at least progress in a positive direction.

Failure is a valuable teacher — and forecasting can’t prevent it anyway

Let’s face it. Businesses research the future and constantly create forecasts in a desperate bid to evade the risk of failure. It’s completely understandable that every entrepreneur wants to achieve success. But at the same time, success only encourages you to stay within your current boundaries and parameters.

If you’re achieving success in the present, you may feel the temptation to rest on your laurels. You may assume that you can achieve the same level of success in the future by doing exactly the same thing.

In most cases, nothing could be further from the truth. The truth is that no amount of forecasting can prevent failure, so it seems fruitless to avoid it.

Forecasting is prone to all sorts of corrupting influences anyway, including bad data, excessive optimism, and a general lack of transparency.
Failure forces you out of your comfort zone and prompts you to devise innovative and often unexpected solutions to challenges and crises.

I’m sure you can imagine which scenario promotes faster, more sustainable growth in the long run. Live in the moment, try your best to adapt to current challenges, and remain willing to learn from your failures at all times.

Accept uncertainty and live in the present

So, what’s a business to do in the face of uncertainty if they have no control over predicting the future?

According to Forbes the only way forward is to be better prepared for disasters and unexpected developments. Statistical modeling can give you a general idea of what to expect in the coming weeks and months. But don’t get carried away. It really is just a general idea and nothing more.

Businesses are better off accepting that the world is uncertain, learning how to use data to assess the current levels of uncertainty they face, and augmenting this uncertainty range. This can be done using innovative and time-appropriate solutions.

The rest, as they say, is up to fate.

— Addisson Shaw is a passionate writer with a background in data science. Her writing focuses on the wonders of technology in marketing and business management. During her free time, Addisson loves exploring the outdoors and enjoys going on hikes with her friends.

• Posted 8.7.21 at 06:51 am by Roy Osing
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