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How 'Yesterday’s Weather' affects business | MarketResearch.com

Posted by Paul Ricketts

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Jan 7, 2013 5:28:00 PM

 

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Everybody likes to talk about the weather. It’s a fair bet that commenting on it and speculating about it account for a fairly significant percentage of the world’s conversations on any given day. There is an oft-quoted saying (attributed to many different comedians and broadcasters) that if you have no other information, no research, you can fairly accurately predict the weather tomorrow by simply saying that it will be substantially similar to the weather today. And you know what? You’ll be right a lot.

Using this method here in New York City over the past week, you would’ve been correct five out of the seven days. It was mainly chilly this past week, but we had a low pressure system come in Saturday and leave Sunday; so only those two days were not “substantially similar” to the days that preceded them. Five out of seven—that’s better than 70%! (Several sources I’ve seen put the actual accuracy percentage of the yesterday’s-weather method in the mid 60s, or about two-thirds of the time.)

Based on that observation, the term Yesterday’s Weather has become short hand in some programming and management circles for planning based on specific past experience. For example, in planning a project, all things being equal, you probably be able to accomplish the same amount of work tomorrow as you did today. However, too many businesses substitute this quirky conventional wisdom for real strategy and forecasting, assuming that their markets will probably behave tomorrow as they did today.

This forecasting method can be as facile as projecting a linear growth rate based on the past couple few years or quarters. Or it may be preparing for a move into an adjacent market just by hiring some old hands who used to work in that sector a few years ago. In fact there’s a hint of “yesterday’s weather” in a lot of strategic business planning.

But ask yourself: What kind of confidence do you really have about your future when one-third of the time you’re going to be wrong? What happens to your plan when a cold front rolls in (like a regulatory change) or a storm whips up (like a disruptive technology)? When you’re planning your picnic, it’s only prudent to check the forecast from the professionals who are constantly scanning the skies, examining satellite images, and monitoring the wind and pressure and humidity data. When you’re planning your next business initiative, it’s only prudent to look to what professional forecasters who have taken months to put together research studies on the future of your sector—looking at the products, competitors, regulations, and consumer behaviors that are going to shape tomorrow’s market conditions.

Don’t let the complacency of yesterday’s weather leave you out in the cold tomorrow. Check the forecasts. See what the market meteorologists at MarketResearch.com can tell you about your picnic plans.

 

Topics: Market Research