Peter Drucker once commented that “trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window.” Though we agree with Drucker that forecasting is hard, managers are constantly asked to predict the future — be it to project future product sales, anticipate company profits, or plan for investment returns. Good forecasts hold the key to good plans. Simply complaining about the difficulty does not help.
Nonetheless, few forecasters receive any formal training, or even expert apprenticeship. Too many companies treat the forecasting process like a carnival game of guessing someone’s weight. And given the frequency of sandbagged (deliberately underestimated) sales forecasts and managed earnings, we even wonder how often the scale is rigged. This lack of attention to the quality of forecasting is a shame, because an effective vehicle for looking ahead can make all the difference in the success of a long-term investment or strategic decision.
Competence in forecasting does not mean being able to predict the future with certainty