Jeremy Hope [Archive.org URL]

The mistake that most [finance teams] make is assuming that forecasts are about predicting and controlling future outcomes. The purpose of forecasting is to inform decision making (to help shape future outcomes), not to predict the future. In reality, forecasting is necessary only because organizations cannot react instantly to changing events. That’s why fast reaction is more important than (even accurate) prediction – because accuracy is rarely achieved. Indeed, the only certainty about a forecast is that it will be wrong. The question is by how much. Narrowing that variation comes from learning, experience, decent information systems, and ultimately, judgment.

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