How good is your business forecasting?

Business forecasting concept

I don’t want to pry, but are you old enough to remember the 6th of April 1974? Whoops, sorry if I have offended you. Even if you weren’t around back then, I am sure you have seen the somewhat grainy images of the TV presenter Katie Boyle at “The Dome” in Brighton announcing that the Swedish pop group ABBA had won the 19th Eurovision Song Contest with their catchy song, “Waterloo”.

Can you imagine being back on the Sussex coast all that time ago? Could you have predicted that 47 years later, in 2021, the little-known Scandinavian songsters would be making global headlines with a reunion album? In case you missed it, ABBA has reformed to produce a 10-song album due out in November. You can get the first two tracks now.

One thing we know about the Eurovision Song Contest is that most of the winners fade into obscurity within a short space of time. History suggests that there is little future for the unfortunate competitors. Whatever happened to “Lordi”, the winner in 2006 or “Ell and Nikki” who won in 2011? Yet, ABBA’s music survived for decades.

Back when they won Eurovision, we might not have forecast they would achieve long-term success. Yet I’m willing to wager that Björn, Benny, Agnetha and Anni-Frid would have been confident they would be going for many years into the future after their Eurovision success. That’s because they knew what they were doing, why they did it, who it was for, and the reasoning behind it. Anyone who has followed the life and times of Benny and Björn knows they have complete clarity about what they are doing and their purpose.

Having such a clear vision enables you to forecast where you are heading. This week I heard a young female entrepreneur talking about how she shaped her business in uncertain circumstances through having a clear idea of what she wanted her future to look like. She succeeded, despite having no written strategy or the usual trappings of business planning that the gurus would have you believe is vital. She visualised her own future rather than depending upon the world around her to create it for her.

Meanwhile, let’s think about what road haulage companies and logistics firms have been doing lately. You’ve probably noticed that some retailers are running short of supplies. Goodness, you can’t even get a milkshake at McDonald’s these days. The reason is the shortage of drivers caused by a combination of Brexit and the Covid pandemic, apparently. But it is neither of those things. Before Brexit happened, anyone could have forecast a shortage of drivers. If Brexit went ahead and many drivers returned to their home countries, we were bound to have a problem. And before Coronavirus was even a blink in the teary-eye of a Chinese bat, we already knew that many truck drivers were approaching retirement age and that the job was not attractive to younger people.

In other words, the future was entirely predictable, resulting in the present driver shortage. But no one seemed to notice. Even if they did, it’s clear the hauliers didn’t act. Otherwise, we wouldn’t have the current difficulty. Rather than create their own future, transport companies appear to have let the world around them produce it for them. And guess what? The haulage firms don’t like where they’ve ended up. I am not sure they had a vision for their future. But if they did, I’m confident it isn’t what they are now facing.

That’s the same for Amazon and Facebook. Both firms are confronting eye-watering fines for failing to stick to GDPR principles. Amazon was fined €746m in July, and earlier this week, Facebook’s WhatsApp was given a fine of €225m. Both firms are contesting the rulings against them, so the only people who will definitely make millions are the law firms involved. However, it was entirely predictable that these companies could end up in this position.

Turn the clocks back several years before GDPR had been in the mind’s eye of an EU lawmaker. Imagine you are on the team at Amazon or WhatsApp, and you had to develop the rules about how you’ll store and protect customer data. Would you create a series of complex, legally worded, difficult to interpret documents that no one would read? Or would you write a simple, straightforward single-page item that left no room for doubt? You already know which way the companies went. They created their own future whereby regulators would step in, and legal claims were inevitable. It was easy to predict, but I am not sure it was the vision that the companies had in mind.

Every business wants to forecast the future. Companies need to know what products and services will be required in years to come. They want to work out what the world will be like in a few years, so they can fit in. However, in all the meetings that I’ve attended where companies are trying to forecast their business future, they spend their entire time thinking about what the government will say, what the economy will do, or how competitors will act. There is a distinct lack of people saying, “how are we going to create our own future?”

I reckon it’s time for us all to take a leaf out of the ABBA songbook. They forecast their own business future by focusing on their music and not worrying about what other people were doing. They had a clear vision, just like that young businesswoman I met this week. In fact, the vision and desire to create their own future is why ABBA ended up with so much “Money, Money, Money” because “The Winner Takes It All”. To forecast your business future, all you have to do when asked to create a vision is say, “I Do, I Do, I Do”. Go on, you can do it, “I Still Have Faith In You”. (That’s ABBA’s latest single, by the way.)

Ultimately, you can forecast your business success if you concentrate on producing a vision for what you are going to do and why you will do it. Forget thinking about what other people will do. You can forecast your future if you create it.

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