Tag Archives: Branding

Predicting the Future with Certitude

Wall St @ Fashion Ave

Predicting the Future With Certitude

In one’s personal or business life, it is frequently prudent and necessary to forecast future outcomes.
On an individual or family level, retirement planning would be a good example. In the business world, it is the planning process with its multi-year strategic plans, annual budgets and periodic forecasts that most typically calls on our “mastery of prognostication” (an oxymoron if ever there were one!).

If there is one thing that humans have consistently proven their ineptitude at, it is predicting the future (e.g., what percentage of mortgages are now underwater due to expectations of continuing home price increases? Has the end of the world been rescheduled again? and so on…) But we keep on trying. In business, we have no choice. Stakeholders want to know, need to know, the future, so they in turn can plan.

Now I don’t suggest, just because all budgets, forecasts and projections end up wrong, which they inevitably do, that they shouldn’t be undertaken. I do, however, suggest that the all-too-common process of attempting to come up with “the” number and conveying that number (budgeted revenues, or profits, for example) to stakeholders with certitude is yet another sure way to malign the word and with it, the planning process.

Instead, I offer the following for your consideration and feedback. Forward-looking estimates are not “single-point” exercises. There is no correct figure for what sales might be two years hence. Having sales managers and planners or controllers at odds over what the “right” figure to use in a projection is a highly counter-productive exercise. Intelligent projections of future outcomes result from (1) identifying all the key (limit these!) drivers and assumptions impacting such outcome; (2) projecting an array of outcomes (what-if scenarios) based on variations in the key drivers and assumptions; (3) applying an intelligently guesstimated probability to the various what-if scenarios; (4) projecting a spectrum of outcomes that are driven by the combination’s of stated assumptions and likelihood of their occurrence.

In other words, forecast a range of outcomes based on your strategies, assumptions and estimated probabilities. The good news is that you will have thought through and documented all the key internal and external risks and opportunities, will subsequently be able to analyze where you were off and, most importantly, make timely course corrections.

With respect to stakeholders who, rightfully, want to know “the” number, the communication of the figures is now something along the lines of: “We believe with 80% confidence that we will achieve sales of $x and profits of $y”. Stakeholders will almost undoubtedly challenge as to why the sales projections aren’t higher. You will already have your scenarios at the ready and the sales department’s more optimistic projections (who needs a pessimistic sales team?!) can be communicated, perhaps with the caveat that “while we have developed plans and internal sales goals 15% greater than those in the budget and are striving and incenting our team to achieve those higher numbers, we determined that the likelihood of hitting those goals was 50% – 60% and thus, we used the more conservative figures for purposes of the formal budget”.

This process is far more healthy, necessitates the strategic thinking and consideration of alternatives that all should strive for in a planning process and typically positions the financial team as partners and enablers, rather than adversaries and enforcers, in the development of business plans. Oh, you’ll still be wrong, but this is the “right” way to be wrong!

Lawrence C. DeParis teaches SXN 130: How to Think Like Your CFO

Integration

And diversity. No, I’m not talking about school busing.  I’m talking about your marketing mix … or lack thereof ….

So many startups and entrepreneurs are trying to do it on the cheap … so they say, “I only need a website” …. Or, “I need to do PR first”.  Wrong.  So here’s some questions to think about in response to your comments:

  • If you are only putting up a website or doing PR, what’s your value proposition?
  • What’s your messaging platform?
  • Have you established a brand?
  • Do you know who your audiences are?
  • Do you have a logo?
  • A name for your company?
  • Are they trademarked?

A PR folder/press kit?

Are you starting to get my point?

No one way of promoting your company is “THE ANSWER”.  In the 90’s the big ad agencies and companies had Branding departments.  Branding was the answer. It’s not. It’s part of the marketing mix.  Then it was PR. Because it’s cheaper than advertising (allegedly).  Also part of the marketing mix.  Now it’s social media.  Also part of the marketing mix.

None of these efforts can produce results if it lives in a vacuum. They must all be part of one integrated marketing plan, no matter how small your company is (even if it’s only you).  And a lot of it can be done at no cost or cheaply … like social media – Linked In, Facebook, Twitter.  And don’t forget keeping your website up to date – it’s your first impression and if it’s old and has out-of-date stuff on it, it’s not good.

So remember, you can create an integrated marketing program for yourself – remember the messaging and branding need to be consistent. And that way you will actually be saving money and getting more impact for the dollars you do spend.

Sandra Holtzman teaches CEO 035: Licensing.