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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Why You Should Care About The Revenue Forecast

Chapter 9: Paint Your Environment: Part 4

As I argued in the last post, if you want the company to do the right thing, make sure you have a set of numbers to back it up. To fully understand why I think this is critical, lets step back for a moment and look at where a revenue forecast come from.  The Cambridge dictionary online defines a revenue forecast as “a calculation of the amount of money that a company will receive from sales during a particular period.”

In a very real sense, a revenue forecast is a prediction of the future, and a forecast can have a very real impact on the day-to-day activities of employees.  It is tempting to think that these numbers are scientifically derived and reliable, but often they come from sticking a finger in the air, and then justified after-the-fact in Excel.

I heard a cautionary tale from “George” the former VP of marketing at a mid-sized biotechnology company about how a bogus forecast helped propagate a disaster.  Research created an elaborate robotic system to streamline the user experience for one of the flagship product lines.  After a few experiments, they pronounced it ready to ship to customers, and did not need to go through a formal development process.

I cringed when I heard the story.  Product development is always needed to make a new technology robust enough to work consistently in customer hands.

But “ready for customers” is exactly what the CEO wanted to hear.  He was a Scorpion, a “visionary” who felt that the technology should sell itself.  The President and CFO were hungry for revenue growth, and via a process that sounds a lot like groupthink, the executive team convinced themselves that “we should be able to make $10M on this product this year.”  Marketing then back calculated the number of units, service contracts, and consumables that would need to be sold to make the forecast.  (As a point of reference, this represented 25% of the company’s projected revenue growth for the year.)  Then when the product ran into development issues, the same executives went on a headhunt to find out where the number came from.

The rest of the company scrambled to fill the $10M revenue hole.  Timelines for other products were accelerated, and employees throughout the organization put in long weeks to “make it happen.”

Bad management?  Sounds like it.  But there was not a rush of people heading for the door.  Inside the asylum, everyone looks sane.  (See this post on stress and loss of perspective for more.)

How far will your company go to make the numbers?  Where do the numbers come from?  If you can’t control the forecast, what can you control?

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Three Options If Your Personal Values Conflict With Company Culture

Chapter 9: Paint Your Environment Part 2

Your company has a value system, more commonly called a corporate culture.  And as I wrote in Chapter 6,  unless you are the CEO and have carte blanch from the board to clean house, your chances of significantly changing company culture are close to zero. It can be dispiriting to feel that one has no control over the environment, which is why the illusion of control is so prevalent in the workplace.  There is a solution.

Holocaust Survivor Viktor Frankl wrote that “Forces beyond your control can take away everything you possess except one thing, your freedom to choose how you will respond to the situation.”  Thankfully, the worst job imaginable is better than a concentration camp.  The lesson I take from Frankl is this: Having no control is not the same as having no choices. If your personal values are in conflict with the overriding corporate culture, you have three options:

  1. Change your values to match the corporate values. Remember, values are defined by how we act, not by what we aspire to.  Going along to get along equates to accepting the values of the organization.  I did plenty of this in my career, and wrapped it in rationalizations so that I didn’t feel guilty.  I don’t recommend this option, because eventually it will catch up with you.
  2. Leave the company.  Few people entertain this as a short-term solution, and often stay in unhappy situations longer than one would expect. I am lucky that I had the economic freedom to change careers.  The bills need to be paid, and leaving is not always feasible, and for many people is not the right solution.
  3. Use organizational savvy to force the organization to act in accordance with your values.  In other words, use the methods of power politics, financial forecasting, and alliance building to minimize or prevent actions that go against your values.

In the next post I’ll explain The Business Case For Good, which demonstrated how to use a forecast to make the company do the right thing.

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