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Business Forecasting and Innovation
Business Organizations, whether small or giant companies, use their intelligent personnel to constantly work on forecasting the future to live in this competitive world. Every process, and any decision that they involve in is based on some sort of forecasting to support their work (Landau, 2018). Companies spend significant time to understand their problem in order to predict possible solutions to help them set successful in their long-term strategies. Some forecasts depend on advanced statistical techniques; some are based on their prior experience, while others simply consider their gut feeling scenario. All in common is that they are doing business forecasting. Business forecasting is a method to predict the future of economic conditions (Landau, 2018). It involves using information gathered from past conditions, and current economy to predict future conditions for a business. Business forecasting is more critical when the future is uncertain. The more the business intelligences give attention on the possible outcome, the more success the business has as it goes forward.
There are several methods to approach business forecasting such qualitative, quantitative methods. Some of the more common forecasting models are:
- Qualitative Forecasting: It is conducted using opinions and judgement of clients and experts. This type of business forecasting is important if one has not enough historical data to conduct any statistically relevant inferences. This is also useful forecasting when there is little to known about the future of an industry.
- Quantitative Forecasting: This is pertinent when there is sufficient and accurate historical data available to forecast the likelihood of future events. This method considers the patterns of the data trends in order to foresee any probable outcomes. Data may include such as sales numbers, expertly collected data, census data, etc. Quantitative forecasting analyses variables to examine cause and effect relationships that can be used to the profit of the business.
- The Average Approach: The average approach states that the predictions of all future values are equal to the mean of the historical data and it is like quantitative forecasting.
- The Naïve Approach: This is the most affordable and is usually considered as a benchmark to compare against more other advanced methods. It is only applicable for time series data, in which forecasts are made which are equal to the last observed value. This approach is very vital in industries or organizations where past patterns are improbable to be replicated in the future.
Future forecasting such as Predicting that the United States would someday have an African-American president with the name of President "Obomi" in 1969 in a fiction called “Stand on Zanzibar”, 40 years before it happens; forecasting self-death by Mark Twain in 1909 are hard to believe and feel like they are coincidence. However, such as the invention of internet might have been thought due to some driving forces that were observed within the communities at the then time. Possibilities of ‘internet’ was first dreamed by Mark Twain in 1898 in his short story called “telelectroscope" which was like the phone system to form a global network for sharing information (Larkin, 2019).This innovation probably was thought due to a wish of interconnecting the societal information instead of just using those traditional communication such as by sending people to a physical location to deliver messages that would take so much time and impossible when the location is far of the reach.
- Landau, P., (2018). Business Forecasting: Why You Need It & How to Do It.
- Larkin, B., (2019). 30 Predictions in History That Came True. https://bestlifeonline.com/historical-predictions/.
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