Helping the Chronically Overworked Find Life Balance

The Accidental Lie In My Forecast

Chapter 9: Paint Your Environment Part 5

I used to agonize over my revenue forecasts.  I’m sure the scientist in me was holding me back, or rather was driving me to make them incredibly precise. But that didn’t make them more accurate.  I used to get advice from people in the know like “be confident” and “just list your assumptions.”  But I never really got it until my very last product forecast.

I presented the forecast on the phone, using hard copy of the slide deck.  It was a routine launch review for a small product, and I had nudged up the numbers since the previous checkpoint due to favorable market conditions.  I got a surprising amount of pushback from the executive review committee, but I confidently defended the numbers, citing “changing market conditions.”  I was really surprised at how excited the execs were as they signed off.  The next day I discovered why: finance made an error in the last minute slide preparation, such that the revenue was one hundred times higher than it should have been.

I should have caught the mistake, and earlier in my career I would have been panicked and mortified.  But that day, I laughed out loud and never said a word to anyone.  The bar graph was absurd: one huge bar on the right, and a bunch of tiny pancakes to its left.  But I was a hero for my rosy prediction of the future.

I finally got it.  I was so hung up on finding the truth, but there is no truth to be had in a forecast.  Predicting the future is impossible.  And by changing assumptions, a forecast can be made to say anything.

What has been your experience with forecasts?

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Comments

  1. Greg Marcus says:

    The focus of this chapter is to suggest ways to shape an environment that you can’t control. In this post and the last few, am I advocating dishonesty? Does that strike anyone as a bit strange in a book about using values for a better life? Am I ignoring honesty and integrity here?
    Great questions. I am leading up to a point about the truth in a few posts.

  2. Greg Marcus says:

    Part of my reasoning for staying quiet was self preservation. This was a small potatoes project and I didn’t think anyone was going to change the official department or company forecast because of it. And because the execs had so enthusiastically embraced the forecast, I was a bit concerned that they might be embarrassed that they were so easily convinced. I decided to let sleeping dogs lie.

  3. Alan Dance says:

    Did you not notice the fine print in the marketing job description ‘Must possess the ability to accurately and consistently predict the future for a period equal or greater than the anticipated tenure in the position’.

    The irony being that if anyone who could really do that applied for a product management job, you would reject them instantly as being clearly mad for not choosing to run a billion dollar hedge fund from the front porch of their beachfront mansion in Maui instead.

    • Greg Marcus says:

      Alan – you’ve found me out. I didn’t leave product management to become a stay-at-home dad – I’m secretly running a hedge fund!

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