Forecasting vs. Goal Setting: There's a Hands-down Winner in the Race for Results

July 10, 2014
# min read
Paradigm Associates LLC

As we head further into the year, here are some thoughts on the differences between forecasting and goal-setting that can give a fresh perspective on "what now, where do we go from here?" This may be especially relevant since the wrenching changes over the last few years have made many gun-shy about forecasting anything.

Anyone who has ever been involved in the process of preparing annual budgets knows what I mean if I say the usual approach is to look at what was done last year and add 5%, or 10% if pressed to be really aggressive. Of course my description is a bit "tongue-in-cheek," but there is an element of truth, isn't there?

Let's look at the difference between forecasting and goal setting. The budgeting I mentioned above was more akin to forecasting. When we forecast something, don't we typically look at where we've been and where we are currently and make a projection of where we think we'll be at some point in the not-too-distant future; perhaps taking into account anticipated environmental changes? Said another way, isn't forecasting usually a process of projecting, often conservatively, where we expect to be at some point, given our current concept of what is possible for us and our organization?

In 1961 President Kennedy set a goal for the nation "to put a man on the moon and return him safely to earth by the end of the decade." I call it a goal, not a forecast, because there was no way anyone would have forecast that achievement. No one knew in 1961 how we'd put a man on the moon. No one knew the role computers would play in the achievement. What we knew was that we were in a "space race" with the Soviet Union, that the U.S. wasn't ahead at the time, and that to get ahead, we'd need to accomplish something very dramatic. And while we didn't know how we'd do it, President Kennedy committed us to doing it anyway.

In a nutshell, that's the difference between forecasting and goal setting. Forecasting looks to a "logical future," where the future is a straight extension of the line from past to present, perhaps with some deviations for expected external changes. Goal setting starts with what you want in the future. It looks to a "willed future," where the future is what we choose or will it to be and then commit to making it happen, no matter what.

My observation and experience tell me an often unrecognized assumption behind forecasting is that we don't have much control over what happens. "Well, even if some things go wrong, we should still be able to hit this number." Goal setting assumes we do have control or influence over what happens, or at least over how we respond to what happens. And it looks for ways around those things over which we don't have control. "Earthquakes don't count," so to speak. You can imagine the impact of either of those two attitudes on what gets accomplished.

I'd venture to say that two of the more important jobs of a CEO and leadership team in any company are first, to reframe the concept of what is possible for their organization and second, to communicate and enroll the rest of the organization in achieving those greater possibilities. President Kennedy reframed the concepts what was possible for the nation and our space program. And we put a man on the moon in 1969.

Think of the ways those two attitudes of goal-setter and forecaster impact how an organization fares during an economic downturn. (Substitute any other adverse conditions for economic downturn; e.g. tight labor market, inflation, strong competition, rising fuel costs, etc.) Here in Las Vegas the drop in home sales and prices brought a corresponding drop in the number of practicing Realtors in town. Yet others took new looks at what they could do and organized bus tours to the foreclosures on the market. Just think of how those Realtors who stayed and developed new ways to sell homes will be positioned for an upturn in the market.

I don't think it's too overly simplistic to conclude that forecasters tend to see obstacles as reasons not to do something, when goal-setters see obstacles just as that - obstacles to be overcome. And with that my wishes for a successful year, however you choose to define your success.

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