The Necessary Elements Behind Forecasts
Conclusion: Understanding the future would obviously give everyone a real competitive edge, or at the very least reduce wastage and efforts in the wrong direction. Forecasting is intended to reduce risk but the quality of forecasts is the key to getting something useful from them. That statement may seem simplistic but many forecasts do not use standard methodologies, or even methodologies that are clear to an outside observer. For anyone using forecasts to build plans and investments, the forecast should meet two conditions:
Use a clear and transparent methodology with data that is verifiable and from known sources, and:
A forecast model that contains more than one outcome, because a range of possible outcomes within the confines of the forecast, may be more realistic given the variable forces operating in a market.
Unless a forecast meets the two conditions outlined above, what ought to be a powerful instrument with which to organise strategy, is just a scrap of paper.