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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