Understanding the Limitations of Strategic Forecasting

No One Wants to Forecast Anymore Retailers and manufacturers put a lot of resources into developing accurate forecasts to support their businesses. They use forecasts to drive decisions regarding many aspects of their operations, from capital expenditures to raw material purchases to product allocation. Since forecasting is such a key element in these businesses’ processes, you would think that the people who take on the role of forecasting would be important players in these businesses, and that companies would provide significant support for these people in their work. But I don’t think this is the case. I don’t think anyone wants to forecast anymore. When forecasts are inaccurate, it is easy to blame the people who provided the forecast. Rarely does anyone consider the obstacles that planners need to overcome or compensate for in most planning environments. Instead, planners – and anyone else who provides input into the forecasts – are seen as incompetent, and their processes and practices are frequently criticized and questioned. The reality in most cases is that there are constraints somewhere else in the system that are preventing anyone from creating accurate forecasts. But instead of investigating these constraints, it’s easier to blame the people providing the forecasts. So, forecasting has become radioactive. No wonder no one wants to forecast. It takes work to investigate these constraints and correct them. But until these are investigated, analyzed and corrected, the forecasts that these constraints impact will continue to be inaccurate. Low ongoing fill rates, gaming forecasts to meet financial goals, supply planning failures and aspirational forecasts are common examples of constraints that undermine accurate forecasting. We need a more holistic approach to improving forecasts. Inaccurate forecasts have many causes. Blaming the people who are trying to forecast accurately without also investigating the constraints these people face will only discourage anyone who wants to try to predict future demand. And this will mean that despite all the focus on generating accurate forecasts, we will continue to misjudge demand, disappoint our customers, and discourage anyone who want to improve the business via accurate forecasts.

Here’s something most people won’t tell you: forecasting is part math, part psychology, part street fight. I’ve built forecasts that looked airtight—until reality threw them a left hook. I’ve also seen models that were technically perfect… and completely useless because they didn’t match how the business actually operates. Over the years, here are 11 rules I live by: - 1. Reality first, model second. Talk to operators before you model. - 2. Inputs > outputs. Garbage in = garbage out, no matter how pretty the output. - 3. Always model ranges, not points. Certainty is an illusion. - 4. Document assumptions religiously. If you can’t explain it, you can’t defend it. - 5. Version control everything. No one wins the “which file is right?” game. - 6. Stress-test aggressively. If your worst case doesn’t make you sweat, it’s not realistic. - 7. Balance growth with cash burn. Too many forecasts die here. - 8. Align with operating cadence. If Sales forecasts quarterly, you do too. - 9. Account for seasonality. Businesses aren’t linear. - 10. Communicate with clarity. No CFO wins points for “complex but correct.” - 11. Forecasting is a process, not an event. Build it into the culture. Here’s the funny part: bad forecasts usually aren’t wrong because of Excel. They’re wrong because of blind spots—organizational, behavioral, or political. That’s why I coach finance pros to build forecasting as an operating muscle, not a spreadsheet exercise. So let me ask: If your board asked today, “How much confidence do we have in this forecast?”—would you feel ready? If not, it’s time to sharpen your game.

The strategic planning industry is a $47 billion empire. And it’s built on the illusion that you can predict the future by scheduling a half-day offsite and writing a bunch of slides no one opens again. Gartner’s report says: 87% of strategic plans are obsolete within 90 days. Not outdated. Obsolete. Let that sink in. 🔹 68% of employees can’t connect their work to strategy (HBR) 🔹 42% of leadership time is wasted on plans that never materialize (McKinsey) 🔹 Agile teams outperform traditional planners by 2x on revenue (MIT Sloan) The issue? It’s not bad planning, it’s misunderstanding what planning is. Enter the EP!C Management Model. Because thriving companies don’t just write plans. They build responsive systems. Here’s how we flip the script: 1. Environmental Pulse Checks Weekly insight loops from the frontline. One retail client avoided $2M in lost inventory by listening to store staff—something their strategy deck missed entirely. 2. Priority Stacking Limit to three org-wide priorities per quarter. One tech org improved execution speed by 58% just by cutting the noise. 3. Impact Mapping Tie every task to a measurable outcome. If you can’t explain why a project exists in one sentence, maybe it shouldn’t. 4. 90-Day Rhythms No more annual fantasy forecasting. → Set 3–5 measurable outcomes → Review monthly, adjust honestly → Reallocate fast The result? 3.2x faster growth than annual plan clingers. (McKinsey, 2024) This is what EP!C managers do, they don’t just lead teams, they steward clarity. They build systems where strategy and culture meet in the middle, not in silos. 📌 If your strategic plan hasn’t matched reality in a while, maybe it’s time to stop guessing—and start adapting. Follow Matt Ley for more and repost for your network. #management #leadership