We’re constantly attempting to forecast the future, asking questions ranging from the mundane—“What will tomorrow’s weather be like?”—to the substantial—“Will the economy collapse?” or “Is inflation expected to decline?”. In the professional realm, our predictions may seem comparatively minor, as we speculate whether business targets will be met or the number of new users we’ll attract. In this piece, I’ve outlined techniques to enhance your forecasting skills, emphasizing flexibility in thinking, understanding base cases, and problem decomposition. However, I aim to shine a spotlight on the reasons forecasts from different individuals or teams diverge.
While the truth is singular, estimates and forecasts are varied. Why is there a discrepancy in projections made by different individuals or groups? Viewing forecasting as an input-model-output mechanism, variations often arise because forecasters possess different sets of information or employ distinct predictive models. Typically, discrepancies originate in the forecaster’s approach to problem decomposition and their valuation of influencing factors. But what causes individuals, even those with access to identical information and similar methodologies, to generate drastically different forecasts?
The crux of the matter is the forecaster’s underlying agenda. Individuals are not necessarily rewarded for the accuracy of their forecasts, but may instead receive rewards for surpassing expectations, disseminating positive news, or securing necessary resources. These agendas and incentives were inherently skewed forecasts. For instance, advocating for more team resources may necessitate setting loftier goals. To spur your team into action, presenting optimistic figures may be the key. Conversely, managing external expectations might require a more conservative forecast. The impact of these subtle manipulations on the final forecasts is significant and often surprising.
Maintaining personal agendas isn’t inherently detrimental; in fact, it’s often essential. However, it’s crucial not to deceive ourselves in the process. Prioritizing truth and reality is fundamental. If adjustments are required to align forecasts with personal agendas, that’s acceptable. However, in doing so, take a moment to reflect: besides serving individual interests, do these adjustments contribute positively to overarching objectives? Next time you notice diverging forecasts, pause for a moment. Take a step back to comprehend not only the agendas of others but also your own. In this moment of reflection, it’s essential to maintain authenticity and remain true to yourself.