What if the Forecasts are Wrong?
Right now, our 2020 business forecasts are wrong. Every one of them. If you’re Walmart, a grocery chain or Amazon, you didn’t see this hiring spree coming. If you’re flying – or more accurately, grounded – in “non-essential” business class, you clearly didn’t see a work-from-home order coming, if it’s even possible for your business.
Even as leaders are looking at the worst profit and loss statements they’ve ever seen, the entrenched business instinct is to start forecasting again – for the next three months, six months, or possibly the next year. But what if it’s wrong?
- What if you’re optimistic about returning to work, the markets rebounding – and the forecast is wrong?
- What if you’re skeptical, deeply hunkered down, and then things move faster than anticipated and you’re caught flat-footed – again getting the forecast wrong?
“What if” questions are important to ask, but they are also a misuse of energy when applied to forecasting. Forecasts are not strategies, and strategies that are tethered to meeting forecasts are ripe for disappointment – as Wall Street is notorious at pointing out.
A definition of forecast is this: to calculate or predict something that is likely to occur; an estimate. Even companies like ours that are data-centric can’t predict what’s going to happen in the future, even with the best models.
This puts a lot of leaders on edge and has them asking: with so much out of our control right now, what can we control?
In our experience – a lot, actually.
Here are four things every business can control:
WHAT WE MAKE
This disruptive pause in the market is providing time for many leaders to reflect on what they make. It’s bringing into question that rote statement – we make what we make because it’s what we’ve always made. But is it what customers still want? Can you make it better? If your business has the wherewithal to make, build, craft, or engineer something, then it has the capability to make something better and, if necessary, something different that provides value.
My new friend Evan is a perfect example of questioning what he makes. He runs Central Standard Craft Distillery in Milwaukee and, like many in his industry, he saw the need to pivot their operation to produce disinfectant spray and hand sanitizer. When the pandemic is officially behind us, he will have two lines of business – spirits and sanitizers.
WHY WE MAKE IT
Obviously most companies make what they do because it sells. But in order for it to sell, insights from customers and users are needed to confirm that opportunity. When was the last time you heard directly from users about your product? What they like and don’t like, the challenges they’re facing and the solutions they need or desire? By gleaning clear insights from actual customers, you’ll kick-start a process of innovative thinking and prototyping. Ultimately, this is why we should make the things we do – to solve problems and make people’s lives better.
HOW WE MAKE IT
All makers follow a process however rigid or loose it is. But many follow a pattern over a process. Typically that pattern is driven by efficiency (reducing cost) rather than ingenuity (adding value). Human-centered design (HCD) is a proven process that embraces both efficiency and added value by convening cross-functional teams with different perspectives to shape an offering – from idea to end product – fueled by user insights and experiences.
Making great products that people desire is about avoiding complacency, staying curious and nimble, and refusing to accept – or forecast – that what worked once before will automatically work again.
WHERE WE’LL GO NEXT
Practicing human-centered design as a product developer opens the door to new ways of thinking and creating. It is a springboard to new ideas and directions. In our experience, most innovative products aren’t typically game changing or revolutionary developments – although they can be. Most innovation comes from looking at core products and services through a new lens. Ask the “what if” questions, listen to your stakeholders, and then take action.
These are the things we can control that give us peace of mind no matter the forecast.
We can easily trip ourselves up based on the terminology we use, so keep this in mind: Forecasts should not be confused with goals. You won’t take quite the beating by missing your goals like you will by missing your forecast. Coming up short on a goal is an opportunity to retool the strategy, to listen more closely to the user, and to reconvene that nimble, cross-functional team that will unlock new and better ideas.
We’re hearing a lot of “we’re in this together” sentiments right now, which is necessary and appropriate. As leaders, we also have an opportunity to carry that message through our organizations and inspire new ways of working together. A way that gives us all a bit more skin in the game, more comfort, and perhaps a little more control as we walk into a future that is unknown for all of us.