CFO Magazine recently included an article entitled “Imperfect Futures“, describing the growing challenge of forecasting in an uncertain economy. It's never been easy but maybe never before, this hard.
There is a valuable perspective in this article worth considering. It's also a clear reminder that a 3-tier forecast may always be best: Best, Worst and Middle or High, Low & Middle. Each forecast should be accompanied by a game plan that describes how you will determine which forecast is most applicable and what the action steps are to make sure that costs and revenues are in line.
The article also discusses new predictive models that companies like Ford are using to get a cross-section of opinions about the movement of certain variables, with the expectation that a broader range of insight will lead to a more realistic result. A simple idea that could bear fruit in any middle market company.