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Quote #11

Primary skill of most organisations is setting and hitting forecasts

Eric Ries

What does it mean?

Established organisations tend to focus on planning and forecasting as opposed to action and delivery. As businesses like predictability and seek stability for quarterly reporting, forecast accuracy from a manager is seen as a core skill, and managers find themselves dedicating a lot of time preparing and sharing slide presentations.

Why do we believe it’s important?

Such focus on planning and forecasting has unintended consequences. Managers may limit their external ambitions and appetite for transformational growth. As a result, we often see companies resorting to “vanity metrics” - these indicators that make everything look good but ultimately say nothing about performance and what to do next. This ultimately impacts on the delivery of key initiatives, including digital transformation, as there is little incentive for action and high incentive for maintaining status quo.

To avoid this pitfall and successfully deliver digital transformations, it is critical to achieve the right balance between analysis (forecasting) and action (achievement). This is about getting just enough analytical insights to define assumptions, forecast and targets, then quickly execute starting with prototyping.

Prototype-based experiments help obtain real-world feedback and derive “actionable metrics” to validate or refute assumptions and inform decisions on next steps. This is key to build confidence and execute effectively.

How do we put it into practice?

We apply a “show me not tell me” approach, aiming to deliver an end-to-end solution from strategy to delivery. After identifying the way forward with just enough analysis, we quickly move to the prototype phase to prove we can deliver the initial business case with real-world data. We start by clearly defining assumptions that we need to test. We develop the prototype, and seek customer feedback, to inform 'prove, pivot or stop' decisions.

We also look out for "vanity metrics" in strategic planning - these numbers that appear to show progress, but are not actually linked to value creation. For example, the number of product features delivered does not itself result in competitive differentiation, customer retention or higher margins (yet we find this is a common metric).

For a global entertainment company, we designed and delivered an industry-leading technology to transform retail. This involved a 12-week “Design and Proof of Concept” to show the art of the possible for the next-generation Point of Sales terminals. Key to our success was to focus on showing progress, getting feedback and agreeing on what to focus on next through weekly demonstrations with key stakeholders and data. The initial business case was continuously updated based on the product design evolution and releases. This solution was successfully adopted by the staff in shops.

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