WHAT IS STRATEGIC FORECASTING? – A QUICK EXPLAINER

Strategic forecasting is the process of predicting future conditions and trends to guide strategic planning and decision making in an organization. It helps organizations anticipate change, prepare for opportunities and challenges, and navigate uncertainty.

The point of strategic forecasting is not to predict the future with 100% accuracy, but rather to identify plausible scenarios and trends that could impact an organization’s strategy and operations. By considering multiple potential futures, leaders can design robust strategies that will perform well under a range of conditions. Strategic forecasting thus aims to expand perspectives and challenge assumptions about the present and future.

Strategic forecasting draws on both quantitative data, like historical performance metrics and economic indicators, and qualitative insights and judgments from experienced leaders, experts, and stakeholders. Common strategic forecasting methods include trend analysis, scenario planning, the Delphi method of aggregating expert opinions, simulations and modeling, and systems thinking approaches. These tools allow strategic forecasters to map out and weigh uncertainties as well as identify driving forces shaping the future.

The time horizons addressed in strategic forecasting typically range from three to ten years into the future. This bridges the gap between short-term tactical planning focused on today and next year and very long-range speculation 50+ years out. Strategic issues that can benefit from forecasting include shifts in technology, customer demand, competition, regulation, as well as social values and workforce demographics.

Effective strategic forecasting requires more than just generating predictions. Leaders must determine how to act upon the forecasts to position their organization for success. This involves identifying strategic risks and opportunities, stress testing current strategies against multiple scenarios, and developing flexible plans to adapt as the future unfolds. Tracking leading indicators and performance benchmarks allows strategists to monitor accuracy and relevance of forecasts on an ongoing basis.

In today’s fast-changing world, strategic forecasting has become an essential competency for business leaders and strategists across industries. With disruption being the norm, companies cannot afford to simply extrapolate past trends. Through thoughtful, analytical approaches for mapping the future, strategic forecasting provides vital context for strategic decision making under uncertainty in organizations.