FORECASTING CHANGES

Senior Lecturer Anita Lehtinen-Toivola

HAAGA-HELIA University of Applied Sciences

THE NATURE OF THE DATA/ INFORMATION OF THE FUTURE

• Certain information

= only one alternative

• Probable information

= one alternative beyond others

• Uncertain information

= several equal alternatives

• Wild card

= unidentified variables and alternatives

FORECASTING

(Saffo 2007)

”Forecasting looks at how hidden

currents in the present signal

possible changes in direction”

”The primary goal of forecasting is

to identify the full range of

possibilities”

”Forecaster’s task is to map

uncertainty”

”The goal of forecasting is not to

predict the future but to tell you

what you need to know to take

meaningful action in the

present”

FUTURES THINKING RESTS ON ASSUMPTIONS (Based on Jeremy Glenn and Wendell Bell)

• You cannot know the future, but a range of possible futures can be known.

• Probabilities can be made; we can be more certain about the sunrise than about the rise of the stock market.

• No single method should be trusted by itself; hence, cross-referencing methods improve foresight.

• Not everything that will exist has existed or does exist; that is, since future time will be new time, new things may exists that have never existed before.

• Some futures are more desirable than others.

• Futures thinking is essential for intelligent and informed human action. We need to know the consequences of our actions before we decide on taking actions. But, because the future is unobservable and non-evidential, this creates an epistemological paradox for futures studies.

SOME DEFINITIONS

• Early warning sign

= ”an early warning sign is an observation, a signal, a message or some other item that is or can be seen as an expression, an indication, a proof, or a sign of the existence of some future or incipient positive or negative issue. ” (Nikander)

• Emerging issue

= potential issue

• Scenario

= the full description of a future state and the path to that future (Lindgren & Bandhold)

• Trend

= long-term, often irreversible changes (Lindgren & Bandhold)

• Wild card

= ”sudden, urgent, unfamiliar changes in the firm’s perspective which threaten either a major profit reversal or a loss of a major opportunity” (Ansoff)

• Weak signal

= ”a factor of change hardly perceptible at present, but which will constitute a strong trend in the future” (Godet)

”In a rapidly changing environment the biggest competitive threat is the steady pace ... combined with the inability of management to foresee these changes” (Ilmola & Kuusi)

WEAK AND STRONG SIGNALS

WEAK SIGNALS

• ”Strange things that exist today and that can tell about big trends in the future. By using weak signals we can try to anticipate and create the future” (Hiltunen)

• Noticed by an employee, supervisor, customer ...

• Very small mistakes, first reclamations, discussions in the parliament, new legislation, discussions with friends, events, articles ...

STRONG SIGNALS

• The amount of accidents at work has

increasded

• The amount of retired people has increased

• The amount of reclamations has increased

• Long-term sickness absence

• Planned downsizing

• Reduced cost efficiency ...

FORESIGHT DIAMOND

10.9.2012 Anita Lehtinen-Toivola 9

METHODS

(Lindgren & Bandhold)

METHOD EXAMPLES

Media-based methods Media scanning, trend-tracker groups, keyword analysis …

Interview-based methods Delphi surveys, opinion polls, executive groups, expert panels, guruing …

Timeline-based methods Trend extrapolation, analogies, long wave …

Intuitive, generative methods Brainstorming, headlines and posters, imaging, future window …

Actor-oriented methods Competitor analysis, value-chain analysis, actor analysis …

Consequence-focused methods Consequence tree, single impact analysis, scenarios …

Systems methods Uncertainty analysis, cross-impact analysis, causal mapping …

SOURCES OF EARLY WARNING SIGNS

(Nikander)

A person

A group

A firm

A document

A situation

Not definable

FORECASTING IN THE STRATEGIC PLANNING

(Company: Ensto / Haverinen 2008)

THE GLOBAL GARDENING PASSIONS

(Kairos Future 2010)

CHALLENGES IN FORECASTING (Company: Ensto / Haverinen 2008)

FILTERS OF WEAK SIGNALS HINDER FORESIGHT

(Based on Igor Ansoff)

Environment

Data Perception

Information

Action Surveillance filter

Mentality filter Power filter

Highly competitive

and turbulent

business environment Ability to foresee sudden

opportunities and

emerging early warnings

Evaluating early,

unstructured and

conflicting data

Strategic planning and

decision making

”A person’s, group’s, or an organization’s

understanding of a situation ... mental

processes of scanning, framing,

interpreting, and constructing a conception

of the situation at hand” (Ilmola)

” Sensemaking is the process of creating

situational awareness and

understanding in situations of high

complexity or uncertainty in order to make

decisions” (Klein)

”There are differences in human

experience and observation” (Aaltonen)

SENSE MAKING

IT IS IMPORTANT TO FORESEE THE ALTERNATIVE

FUTURES, BECAUSE

What and how is detected,

affect what is selected.

What has not been observed can not been

Selected.

Selecting guides our operations.

”If we could be able to see what others

don’t see”

(Stracey 1993)

The best way to predict your future

is to create it