The last decade has been filled with unexpected events, from the global financial crisis to Brexit to the election of President Donald Trump. The reputations of polling companies have taken a public beating, and data gathered from surveys, interviews, and focus groups may fall under increased scrutiny as a result.
Given the current climate of volatility, how can consumer insight professionals, research analysts, and marketers choose the right forecasting methods and make meaningful predictions with confidence?
The new report Prediction and Planning in an Uncertain World by the MRS Delphi Group addresses this important question, providing expert views from Jane Frost, CEO of MRS, and Jake Steadman, Senior Director of International and Agency Research at Twitter.
A Big Challenge with High Stakes
The MRS report argues that forecasting and planning have only become more important as disruption and volatility have increased. This is due to three reasons:
- Innovation is more costly and requires larger teams with sophisticated training. Determining where to invest limited resources is critical for an organization's survival.
- Consumer preferences shift and fragment into smaller groups, each with different needs, making it more and more complex to please future customers.
- Volatility has not disappeared. In the midst of political extremism, nationalism, climate change, and migration, it’s difficult to distinguish true warning signs from extraneous noise based on instinct or gut feel alone.
Steps to Achieve an Effective Approach
According to the report, many companies struggle to find the sweet spot for forecasting — some organizations fail to react until too late, and others switch tactics too often. However, a number of specific action steps can help organizations avoid these common mistakes.
To start, use multiple sources of data and analysis when making forecasts, spotting trends, and creating a strategic plan. Regularly compare internal opinions and projections against outside benchmarks and viewpoints.
If you haven’t been surprised at least once during the research process, Frost says, you may not be challenging yourself enough. “The lesson of the last year or so should be that if you rely on a single method, you run a strong risk of calling it wrong,” she notes. “The best way to map out future scenarios is to adopt a wide range of eclectic sources.”
As an example, Disney continuously tracks 40 different sources of data, including internal sales and customer metrics as well as external trends.
When combining multiple sources, it’s also important to factor in the limitations of data. Pause to consider which data may be incomplete or have systemic biases. Not all sources should be treated equally.
Another important action step is to communicate degrees of uncertainty to stakeholders to help them understand the possibility of alternate scenarios, rather than following one hypothetical outcome into the future.
The report also suggests “avoiding short-termism.” Resist the temptation to respond too much to immediate stimuli and deploy knee-jerk copycat tactics. Instead, focus on long-term planning and building a deep understanding of the customer.
Remember that research predictions do not provide absolute certainty — especially in an era of disruption and volatility — but they can reduce risk and help decision makers develop plans that have a greater chance for success.