How to overcome the forecasting paradox.

Forecasting is hard - we get it. Aiming for spot on forecasts as early as possible is crucial but you’re often without the information you need to build something that you’re confident is accurate. Welcome to the Forecasting Paradox, a tricky balance between when you forecast and how accurate those forecasts are.

The Forecasting Paradox Simplified

Here’s the gist of why forecasting can feel like you’re being pulled in two directions:

  • Objective excellence: The primary aim is to excel in your role by generating accurate forecasts. Precision is typically regarded as the benchmark of a skilled forecaster, reflecting directly on their competency and effectiveness.
  • The premature prediction dilemma: Naturally, forecasting entails making projections based on available data. The dilemma arises because the further in advance you attempt to forecast, the less concrete data you possess, thus amplifying uncertainty.
  • The late forecast trade-off: As the designated date approaches (e.g., the close of a quarter), your forecasts inherently become more accurate, benefiting from a wealth of relevant data. However, this late-stage precision diminishes in strategic value to your organization, as the opportunity for actionable decision-making has substantially narrowed.
  • The paradoxical outcome: To significantly contribute to your company and, by extension, perform your role more effectively, you must reconcile with the notion of issuing earlier forecasts. These forecasts may be less accurate, thereby seemingly undermining your performance, yet they are indispensably more valuable.

Here it is illustrated 2 quarters out:


Forecasting is tricky because of a big contradiction: if you forecast too early, it might not be very accurate, but it's more valuable to your company. If you wait until the last minute to get it just right, it might be too late to be useful. 

Here's how to get better at forecasting, even though it seems like a catch-22:

  • Accept uncertainty: Understand that forecasts won’t always be spot on. It’s about getting better over time, not being perfect from the start.
  • Keep improving: Use each forecast as a learning opportunity. The goal is to get better each time, not nail it on the first try.
  • Explain your forecasts: When you share your forecasts, especially the early ones, tell people about the assumptions you made and the uncertainties involved.
  • Give a range: Instead of one exact number, provide a range of possible outcomes. This shows you understand there’s some guesswork involved.
  • Use tools and data: Make the most of modern technology and data analysis to help you make more informed forecasts.
  • Work together: Good forecasting isn’t a solo job. Collaborate with others in your company to gather more insights and data.
  • Learn from the past: Look back at your previous forecasts. See where you were off and why, so you can do better next time.

Remember, forecasting is more about being helpful early on, even if you're not 100% right, than being perfect too late to make a difference.

Stay in the know