Forecasting

For part of my professional career, I have invested energy in helping clients with forecasting. The approach is fairly well established and fraught with impressive nomenclature. "We execute synthesis through triangulation of disparate data sources." "We model uncertainty through Monte Carlo simulation to predict demand taking care to communicate through ranges and distributions that highlight sensitivities." I recently read a couple of great books that have altered my mental model on the purpose of forecasting, namely The Art of the Long View by Peter Schwartz and Scenarios by Kees van der Heijden. Historically I've perceived the intent of forecasting to be prediction. For short-term purposes, this still makes great sense. But for longer term planning, predictive accuracy is often unachievable given the number of variables and high levels of uncertainty. My new perspective is that a more meaningful purpose for long range forecasting should be to create what Peter Schwartz describes as "future memory". The goal of forecasting should shift from demand estimation (prediction) to organizational perception and strategic dialog (future memory). In other words, what are we assuming about the world and what are the implications? What are the big events that would dramatically alter the landscape? To what extent can we influence these? If we can't, how can we be on the lookout and alter course. Related to my previous post on "bounded awareness," one goal of forecasting should be organizational self awareness.