Trends, Forecasts and Predictions

If you're looking for a definitive list of trends to keep an eye on I'm sorry to disappoint, but this is not it.

Each year I read any number of reports and articles that attempt to cast some light on the future - most of it directional, some of it fairly precise.  Irrespective, most of it's not very good.  I inevitably find myself wondering more about the thought process of the writer, and less about the forward-looking outlook.

A few years back I found myself in an impromptu debate with the CEO of my firm when I presented some systems, software and services market forecasts partly based on some work done by IDC.  He was of the opinion that IDC was a rear view mirror research company, and lacked any credible capacity to predict unexpected occurrences in the industry, e.g. like a disruptive innovation.  I agreed, but stated that as they captured the conventional thinking of the herd, their outlook at least had the value of presenting the wisdom of the crowd (albeit, an edited wisdom).

He did not agree one bit, as evidenced by the pulsating vein I could see on his forehead from my position at the podium 30 feet away.  He planted an enormous stake in the ground at my feet, and as I looked around the room at my colleagues a few minutes later (it was not a swift execution) I could almost visualize a few of them roasting marshmallows on the open flame that had ignited.  The point graciously conceded, I continued with my presentation, allowing the smoke to clear.


There's a lot to be said for being forward-looking.  It's hard to move forward in business unless you have some expectation or opinion about the future.  But acting on someone's view of the future is akin to acting on a stock tip: it's risky.  I liked how Warren Buffet responded to an undergraduate at a large presentation he gave when he was asked how he forecasts macroeconomic effects.  Buffet's response: I don't - it's simply not knowable.


To me, forward-looking views come in three varieties, each with its own pluses and minuses:

• Trends are directional tendencies.  They look out years into the future.  They offer a high degree of wiggle room as there is no attempt to be quantitatively precise with regard to speed or extent.  There not always easy to spot, and those who make a practice of picking them do not bat 1,000 (John Naisbitt's wildly popular bestselling Megatrends largely hit the mark, but not entirely).
• Forecasts are estimates of future conditions.  They're typically based on quantitative models, and usually confined to short term outlooks (from days for weather, to several quarters for economic variables like GDP).  I've observed that people like forecasts because they are concrete and specific.  And therein lies the problem: they are only as valid as the models on which they are based.  Those models are imperfect in that they invariably rely on assumptions that are a placeholder for knowing.  Remember: the vast majority of economists and Wall Street prognosticators, all equipped with exquisite forward-looking models, missed the 2007 financial crisis entirely.  
• Predictions are a statement of what will happen.  They require little in the way of time or expertise to make, and they don't rely on complex models.  Predictors are notoriously wrong.  Just look at the annual track record of investment picks - you're still better off closing your eyes and buying an index than you are buying the majority of mutual funds within the investment category.  And Nostradamus?  His celebration aside, try understanding his predictions as they were originally written - as quatrains - and compare these to their interpretations.  If ever there was a leap of faith, it is these.

My advice: read everything you can find on the trends in the business(es) that you invest in or follow.  Recognize that the value of forecasting lies in stating a possible future - not a guaranteed one.  When it comes to predictions you will suffer no harm if you regard them as entertainment, enjoyed in the company of others over a glass of good wine.

How I Learned the Practice of Execution

When I became a new sales manager I learned from a master -  Mark Stevenson.  Mark rose within the ranks of Xerox during the 1960s and 1970s.  He was a taskmaster, a motivator, and brilliant with customers.  I consider him one of the finest sales and marketing executives I've known.  His long suit was execution.  In his own visceral and unrelenting way he taught his managers three lessons that have stayed with me.

1. Manage the activities that lead to outcomes.
2. Never confuse activities with outcomes.
3. You can't expect what you don't inspect.

He devised a management system that every sales person and manager at every level of the organization was required to use.  It gave you no choice but to learn how to execute on the revenue side.  I see those same principles embedded in today's CRM and SFA systems, and used by particularly effective managers and executives.  No sales or marketing manager can go wrong knowing them.

So, here is what Mark taught me.

Manage Activities, Not Outcomes: Sales pipeline may be a significant predictor of sales but, contrary to conventional wisdom, it is not what creates sales.  What truly drives sales are the activities that generate revenue opportunities and move them through the sales cycle - prospecting, calls, benchmarks, demos, proposals and similar sales-advancing activities.

Mark's view was that your pipeline - or funnel - was a reflection of how well you planned and executed.  He insisted that attempting to manage pipeline was like attempting to manage the bathroom scale to control one's weight.  (As an aside, Mark did not like the depiction of vertical funnels as he believed they created the mistaken impression that gravity would do some of the work.  As a result, they were always displayed horizontally.)

When his VP's reviewed their sales outlook with Mark he expected them to know the planned activities for every prospect in their pipeline, no matter where it was in the funnel - names, timelines, details - and codify it in writing.  He could not possibly review thousands of prospects, so he would pick several at random.  If you were not prepared he let you know in no uncertain terms.  To say that this kept everyone on their toes is an understatement.  His process cascaded down through each management level to every sales rep in the organization.  Tedious?  Yes.  But it engendered an enormous level of disciplined, concrete planning across the organization.  

Here's the surprise.  Most everyone not only liked his system; they loved it.  They loved it because it worked.  It kept them focused on the right things, and the right things led to results.

Never Confuse Activity with Outcomes: While Mark firmly believed that outcomes could only be achieved by managing the activities that spawn them, he took great pains to ensure that managers did not fall into the trap of doing activities for their own sake.  There had to be a predetermined payoff.

This was most evident when marketers reviewed their progress with him.  A manager might describe how a seminar series had resulted in a doubling of normal attendance, and offer details to prove that attendees fit the desired buyer profile.  Mark would congratulate the presenter and then ask, what did you accomplish?  After  a few moments of uncertain silence the presenter might begin to summarize what was just shown.  Mark would put up a hand and say, I know, you had over 300 attendees, but I want to know what happened following this.  How many sales calls have been made?  How much has pipeline increased?  How much revenue is forecasted this quarter from them?  How many competitors will we displace?

Mark cared about three outcomes: revenue, growth, and satisfied customers.  Everything you presented to him had to concretely demonstrate one or more of these payoffs.  He set the bar high for his organization: everything everyone did had to attain those outcomes, or had to achieve a concrete milestone towards achieving them.

People in his organization not only learned the distinction between activities and outcomes, but learned an important principle: every planned activity has to have a payoff beyond its own completion.

You Can't Expect What You Don't Inspect: If you haven't already gathered, Mark was not the kind of executive to put the organization on autopilot.  He believed in luck, but he didn't believe in counting on it.

Mark was not the kind of manager to let you treat your plans and forecast like a tax return, sending it in and keeping your fingers crossed that you weren't audited.  He wanted accountability.  Reviews occurred monthly.  They were focused, concrete, and specific.  Everyone entered those reviews knowing that they had to have a clear line of sight to their objectives, and had to describe an executable plan of tangible, time-lined, budget-constrained actions to increase the odds of achieving those outcomes.

Though his management system was like being dunked in ice water for new sales people and managers, most of them not only caught on within 90 or 120 days, but many would go on to perform at the top of their game.

... Such is the wisdom of Mark Stevenson - an executive who embedded the principles of good execution across his organization.