Always Trust But Verify Your Critical Business Data

I was recently involved with a client’s business planning process for 2012 through 2014. You know the one, the typical 2 year process where after the first 12 months of forecasting, the data really starts to get fuzzy.

When I asked my client why they were so confident about the first 12 months and so ambiguous about the second 12 months, her reply was “we always go by our gut instincts that far out”. I then asked what results this “gut instinct” had gotten her organization. To this, she replied, “that’s why you’re here”.

From there, it was pretty straight forward. The client’s first 12 months of data was iron clad. Sales revenue, expenses, contingency planning, headcount…all buttoned up nicely. The second 12 months, not even a shred of data. When I asked her why, she replied, “I never ask for data that far out.” That’s when things started to click for her….

In forecasting or any kind of business planning, your results are going to be as good as the data you build your model with. As a manager or executive, demand proof of data and look closely at the assumptions. Data is easy to produce; accuracy is the tougher piece, so look at the assumptions and see if they make sense. If it’s a new program, encourage a simulation or better still, a pilot. You can learn a ton from live pilot programs, all before you go “really” live.

Using the “trust but verify” method with your team will streamline your planning process and yield more accurate and better results.

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