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Forecasts Do Not Need to Be Exact. They Need to Be Decision-Relevant
“Our forecast needs to get better, we want more accurate numbers.” I hear this regularly. At first glance it sounds logical.
In corporate steering, though, accuracy is not an end in itself. To get ever more precise, teams invest time, effort and resources. And in doing so they often lose exactly what a forecast is meant to deliver: orientation and speed.
Put differently: if a company turns over millions, a deviation of a few hundred thousand is not the problem. What matters is whether that deviation would have changed a management decision.
Forecasts are not a competition in precision. They are a tool for understanding uncertainty, not for eliminating it.
A forecast is good when it delivers the right signals at the right time. When it helps you react early, set priorities and recognise alternatives.
Better a forecast that triggers an action than one that merely turns out to have been right.