A recurring theme of The Business Forecasting Deal (both this blog and the book) is that forecasting is a huge waste of management time. This doesn't mean that forecasting is pointless, irrelevant, or entirely useless in running our organizations. It only means that the amount of time, money, and human effort spent on forecasting is not commensurate with the amount of benefit achieved. We tend to spend way too many resources on forecasting while failing to achieve the desired (or necessary!) level of accuracy.

Working on a problem (like bad forecasting) doesn't necessarily make it any better. Process participants often make the forecasting worse, so how do we go about "excusing" them from process?

If you suspect a particular individual or group is contaminating the forecasting process and making the forecast worse, your first step is to gather the data and conduct forecast value added (FVA) analysis to confirm that this is true. That may be the easy part! The next step is to convince those in power within your organization that the process needs to be changed.

Suppose you find that inputs from field sales is just making the forecast worse. You probably won’t get any complaints from the sales reps themselves if you tell them they no longer have to forecast. Few people want to provide forecasts, or be held accountable for their numbers.

You might be able to suggest a better use of their time – perhaps asking that the sales force communicate when there are significant things impacting customer demand. But there is no need to for them to communicate all the little ups and downs that tend to cancel each other out. Rather than spend non-value adding time on forecasting, might it be better use of sales rep time to play golf with customers -- building relationships and making sales! (And why not play golf with the forecasters, too, to build those relationships?)

Nobody is likely to change anything without solid data and analysis. But upper management should be willing to accept facts, and ultimately, it is in their interest to get better forecasts. It is also in everyone’s interest to have the sales force out making more sales, rather than spending time making the forecast worse.

If the individual or group causing the problem is in executive management, this may be more of a challenge, and will be discussed next time.