forecasting

3 Steps to a More 'Predictable' Organization

3 Steps to a More 'Predictable' Organization
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Guest Writer
Veteran CEO; CEO, Black Box; Founder, Khorus
3 min read
Opinions expressed by Entrepreneur contributors are their own.

Predicting revenue is a process that sales teams have used for decades to help company leaders make more informed decisions about the future. So, why not expand this practice to the rest of the organization? By asking all employees to forecast their own performances based on whatever goals and metrics are critical to their jobs, CEOs and leaders would have a crystal ball of sorts.

Related: Forecasting Business Success Through the Lens of the Product and the Brand

And an asset that huge would enable them to move forward with confidence, make strategic course-corrections and react more nimbly and effectively as issues arise.

Here are three steps CEOs can take to marshal the predictive power of their teams:

1. Start with quarterly goals.

Before employees can predict their performance, goals must be set. This procedure starts with a set of corporate goals developed by the CEO. The leadership team then sets its own supporting goals, and the procedure continues down the organizational ladder until employees have a small handful of objectives they are expected to meet in the quarter. This well-known cascading structure establishes alignment and focus for all employees, letting them know not only what they should be working on but also how they are supporting the company’s objectives.

2. Gather predictive insight on those goals every week. 

The employee’s set of quarterly goals is, in essence, the initial forecast of performance. The employee says, “These are the goals I believe I can attain to contribute to the wider success of the company.”

With that first forecast, it’s time for the second step: The employee must update the forecast each week, stating how likely he or she is to attain the goal within the quarter. Asking employees for quality perceptions is important, as well. For example, the software development team members may believe they can finish the new product within the quarter, but they may not believe that the quality is up to par. This is critical information that the leadership team needs right away, not at the end of the quarter when nothing can be done about it. This “canary in a coal mine” effect is extremely valuable.

This is why the weekly cadence of prediction is vital, as the accuracy of a prediction can rapidly decay based on unexpected factors. No plan survives first contact with the enemy, as Prussian general Helmuth von Moltke said. Or as Mike Tyson put it, “Everyone has a plan until they get punched in the mouth.”

Related: Startup Business Forecasts Are Not Black Magic, Just Smart Business

3. Review employee predictions weekly.

CEOs and management teams should examine the forecasts provided by employees every week (preferably with open-ended comments). Ideally, they’ll have a platform that captures and aggregates weekly goal likelihood and quality ratings. This should enable leaders to quickly spot goals that may be in jeopardy and intervene to keep them on track if possible.

Implementing such a system requires strong leadership from the CEO and an established culture of trust. Employees must feel confident in reporting each week their actual likelihood of accomplishing specific tasks and the resulting quality. And they should feel comfortable publicly acknowledging when their forecasts turn out to be way off base.

Expanding forecasting beyond sales to include all company functions is the future. CEOs and leaders who embrace it will be much more successful.

Related: Sales Forecasting -- by Reps, at Least -- Is Dead

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