The one that knows the future can’t lose! Why is forecasting important part of your business?

There is a movie called Edge of tomorrow, it is an American SCi Fi movie starring Tom Cruise. The film takes place in a future where Earth is invaded by an alien race with ability to manipulate and control the time & Humans are fighting the enemy without knowing about this ability. There is a scene that Emily Blunt which know about this ability explain it to Tom Cruise, she says below quote:

An enemy that knows the future can’t lose!!!

It is a brilliant quote. imagine if you be able to know the future or predict it 100% accurate!! that would be a cool gift and just I am getting really excited just by thinking about what can be done with that gift!

It is a solid fact that many organizations have failed because of lack of forecasting or faulty forecasting on which the planning was based, as such in the operations of modern management, it is absolutely important & necessary aid to forecast & plan and proper forecasting is the backbone of any effective operations considering today`s competitive business environment & lack of Economic stability.

So I would like to translate above quote to below:

The one that knows the future can’t lose!!!

Of course it is impossible to know the future & also it is impossible to predict it 100% accurate. But if you be able to predict it better than the others, then you would have an advantage compare to others that makes you unbeatable & successful.

In Business world, forecasting is like predicting the future but not like fortunetellers using Oracle or Tarot card decks :), The forecast is intelligent assumptions based on reliable data, proper market research and deep understanding the market & believe me guys, not everyone can do it properly!

It takes years of experience & many practice to learn and be come a master of this game changing advantage.

 Forecast failure has so many casualties and so many people lost their jobs, many companies went under. The consequences of bad forecasting are really harsh and sometimes can destroy years of success swiftly and instantly.

Just have look on following to see how important in this topic and what giants and idols died & became Victim of bad Forecast:

  • Lehman Brothers: Was a global financial services firm, Lehman was the fourth-largest investment bank in the United States. On September 15, 2008, the firm filed for Chapter 11 bankruptcy protection following the massive exodus of most of its clients, drastic losses in its stock, and devaluation of assets by credit rating agencies. Lehman’s bankruptcy filing is the largest in US history. CEO : Richard S. Fuld, Jr. Fuld was nicknamed the “Gorilla” on Wall Street for his competitiveness. Fuld worked for Lehman for nearly 40 years served as CEO from 1994 through the firm’s collapse in 2008, Fuld was the longest-tenured CEO on Wall Street. Fuld had steered Lehman through the 1997 Asian Financial Crisis, a period where the firm’s share price dropped to $22 in 1998. Lehman had a yearly loss of $102 million in 1993, but after Fuld became CEO the firm had fourteen straight years of profits, including one of $4.2 billion in 2007. Fuld ranked number one on their Worst American CEOs of All Time list & was also named in Time magazine’s list of “25 People to Blame for the Financial Crisis”
  • Walgreens : Largest drug retailing chain in the United States. The company operated 8,217 stores in all 50 states. EVP and CFO : Wade Miquelon – The reason for Wade Miquelon’s recent, sudden departure from Walgreens,was a drastically wrong financial forecast. Miquelon had forecast in April that the drugstore chain’s pharmacy division would show $8.5 billion in sales for fiscal-year 2016. Three months later, he reduced the forecast by somewhat more than a rounding error: $1.1 billion. So Forecasting Error Cost Walgreen’s CFO His Job.
  • Hewlett Packard, SVP : Eric Cador – Confidence was running so high with Eric Cador. He was certain that HP’s PC success would translate to the tablet market. “In the PC world, with fewer ways of differentiating HP’s products from our competitors, we became No. 1; in the tablet world we’re going to become better than No. 1. We call it No. 1-plus.” Not so much. In our review we panned the TouchPad’s sluggish performance, weak battery life and skimp app selection. HP would kill off the TouchPad and all webOS hardware just 7 weeks later after staggeringly weak sales he said.    Bonus: From HP chairman Ray Lane in Sept 2011, after the Touchpad was discontinued: “You cannot develop serious portable applications on Android.”
  • Black Berry, CEO : Thorsten Heins – He stepped down as CEO of BB and was replaced by John S. Chen on November 4, 2013. During his time as CEO, the company continued to struggle in a rapidly changing market. In 2012, Heins was named Cantech Letter’s 2012 TSX Executive of the Year and ranked a year later as third on a list of the worst CEOs of 2013.      “In five years I don’t think there’ll be a reason to have a tablet anymore.” said Heinsin 2013. Tablet sales are still very much on the demand & growing.

Above are only some of many examples of Bad Forecast.

So to sum up, Forecasting implies the act of making a detailed analysis of the future and making intelligent assumptions which proper planning is impossible without have an accurate Forecast. So the better you forecast, you will have much better change of success in your business.

Always remember : 

The one that knows the future can’t lose!!!

I will try to write more about how to have proper & accurate Forecasting in coming posts.


Iman Soltani

P.s: Reference :

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