Skip to content
Product cover

Why Forecasts Fail. What to Do Instead

January 1, 2010 | Spyros Makridakis, Robin M. Hogarth, Anil Gaba | Strategy
In 2006 the world economy was booming, partly on the back of triple-A investment innovations. Then, suddenly, the boom ended. What fascinates the authors is the fact that almost no one saw the 2008 economic crisis coming. In this article, the authors come to terms with the reality that, in economics and business, accurate forecasts aren't possible. Therefore, they say, managers need to develop a different attitude about the future.

The key is not to develop precise plans based on predictions but to have emergency plans for a variety
of possibilities. The main thing is to stop believing your predictions about the future and to develop
plans that are sensitive to surprises, whether they are future credit crunches or other unexpected events.

The authors acknowledge that forecasters have produced excellent work over the years--both practical
and academic. But forecasting models are not set up to cope with what they call the "big hairy coconuts"--the unexpected occurrences that are a fact of life in the real world of business. To compensate, they propose what they call "the three A's": Accept, assess and augment. First, managers have to accept that they're operating in an uncertain world; second, they need to assess their level of uncertainty; and third, they need to augment the range of uncertainty to compensate for risk.
Purchase Options

Educator and Student Discounts Available. Learn more »

  BENCHMARKS  
Loading Time: Base Classes  0.0005
My Controller Construct  0.0003
Build Nav  0.0006
Controller Execution Time ( Products / Route )  0.0858
Total Execution Time  0.0863
  GET DATA  
No GET data exists
  MEMORY USAGE  
1.5556 MB
  POST DATA  
No POST data exists
  URI STRING  
store/why-forecasts-fail-what-to-do-instead
  CLASS/METHOD  
products/route
  DATABASE:  MITSLOAN_DEV   QUERIES: 68  (Hide)
0.0003  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'e8e90afbf032c01357ca64ef3ff2e525'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'e8e90afbf032c01357ca64ef3ff2e525'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'e8e90afbf032c01357ca64ef3ff2e525'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'e8e90afbf032c01357ca64ef3ff2e525'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'e8e90afbf032c01357ca64ef3ff2e525'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'e8e90afbf032c01357ca64ef3ff2e525'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'e8e90afbf032c01357ca64ef3ff2e525'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'e8e90afbf032c01357ca64ef3ff2e525'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'e8e90afbf032c01357ca64ef3ff2e525'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'e8e90afbf032c01357ca64ef3ff2e525'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'e8e90afbf032c01357ca64ef3ff2e525'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'e8e90afbf032c01357ca64ef3ff2e525'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'e8e90afbf032c01357ca64ef3ff2e525'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'e8e90afbf032c01357ca64ef3ff2e525'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'e8e90afbf032c01357ca64ef3ff2e525'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'e8e90afbf032c01357ca64ef3ff2e525'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'e8e90afbf032c01357ca64ef3ff2e525'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'e8e90afbf032c01357ca64ef3ff2e525'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'e8e90afbf032c01357ca64ef3ff2e525'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'e8e90afbf032c01357ca64ef3ff2e525'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'e8e90afbf032c01357ca64ef3ff2e525'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'e8e90afbf032c01357ca64ef3ff2e525'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'e8e90afbf032c01357ca64ef3ff2e525'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'e8e90afbf032c01357ca64ef3ff2e525'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'e8e90afbf032c01357ca64ef3ff2e525'
ORDER BY `created_at` DESC 
0.0001  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  'e8e90afbf032c01357ca64ef3ff2e525'
ORDER BY `created_at` DESC 
0.0002  

SELECT SQL_CALC_FOUND_ROWS cat_id
FROM (`product_categories`)
WHERE `status_id` =  'A'
AND `url_friendly` =  'why-forecasts-fail-what-to-do-instead'
AND `parent_id` =  1 
0.0032  

SELECT c.parent_id, c.format_id
                    FROM products AS p, products AS c
                    WHERE p.prod_id = c.parent_id AND
                        c.avail_id IN ('A','B','D') AND
                        c.type_id = 'V' AND
                        (
                            c.sku = 'why-forecasts-fail-what-to-do-instead' OR
                            if(c.format_id = 'Certificate', '', p.url_friendly) = 'why-forecasts-fail-what-to-do-instead'
                        )
                    LIMIT 1 
0.0001  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  831 
0.0002  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '831' 
0.0002  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '831'
ORDER BY `sort` ASC 
0.0001  

SELECT `cat_id`
FROM (`product_categories__products`)
WHERE `prod_id` =  '831' 
0.0001  

SELECT *
FROM (`product_flags__products`)
WHERE `prod_id` =  '831' 
0.0001  

SELECT `sku`
FROM (`products__xsell`)
WHERE `prod_id` =  '831'
ORDER BY IF(position = 0, 1, 0) ASC , `position` 
0.0591  

SELECT `products`.`parent_id`
FROM (`transaction_lines`)
JOIN `products` ON `products`.`sku` = `transaction_lines`.`sku`
JOIN `product_categories__products` ON `products`.`parent_id` = `product_categories__products`.`prod_id`
WHERE `products`.`avail_id` =  'A'
AND TO_DAYS(transaction_lines.updated_at) < (TO_DAYS(NOW()) - 90)
AND `product_categories__products`.`cat_id` IN ('249') 
GROUP BY `products`.`parent_id`
ORDER BY COUNT(*) DESC
LIMIT 6 
0.0005  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  '361' 
0.0002  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '361' 
0.0004  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '361'
ORDER BY `sort` ASC 
0.0008  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  '3961' 
0.0002  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '3961' 
0.0002  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '3961'
ORDER BY `sort` ASC 
0.0001  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  '35' 
0.0002  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '35' 
0.0002  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '35'
ORDER BY `sort` ASC 
0.0001  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  '179' 
0.0004  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '179' 
0.0002  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '179'
ORDER BY `sort` ASC 
0.0001  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  '489' 
0.0002  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '489' 
0.0021  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '489'
ORDER BY `sort` ASC 
0.0001  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  '2465' 
0.0002  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '2465' 
0.0002  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '2465'
ORDER BY `sort` ASC 
0.0003  

SELECT SQL_CALC_FOUND_ROWS media_id, position
FROM (`media`)
WHERE `foreign_key_table` =  'products'
AND `foreign_key_column` =  'prod_id'
AND `foreign_key_value` =  '831'
AND `kind` =  'image_600x600'
ORDER BY IF(position = 0, 1, 0) ASC , `position` 
0.0001  

SELECT *
FROM (`media`)
WHERE `media`.`media_id` =  '404' 
0.0001  

SELECT *
FROM (`mime_types`)
WHERE `mime_types`.`extension` =  'jpg' 
0.0001  

SELECT *
FROM (`media_metadata`)
WHERE `media_id` =  '404' 
0.0002  

SELECT SQL_CALC_FOUND_ROWS media_id, position
FROM (`media`)
WHERE `foreign_key_table` =  'products'
AND `foreign_key_column` =  'prod_id'
AND `foreign_key_value` =  '831'
AND `kind` =  'gallery_image'
ORDER BY IF(position = 0, 1, 0) ASC , `position` 
0.0003  

SELECT *
FROM (`products`)
WHERE `avail_id` IN ('A', 'B', 'C', 'H') 
AND `parent_id` =  '831'
AND `type_id` =  'V'
ORDER BY IF(position = 0, 1, 0) ASC , `position`, `title` 
0.0001  

SELECT `c`.`format_id`, `c`.`price`, `c`.`sale_price`
FROM (`products` AS c)
WHERE `c`.`prod_id` =  '832'
LIMIT 1 
0.0002  

SELECT SQL_CALC_FOUND_ROWS media_id, position
FROM (`media`)
WHERE `foreign_key_table` =  'products'
AND `foreign_key_column` =  'prod_id'
AND `foreign_key_value` =  '832'
AND `kind` =  'thumbnail'
ORDER BY IF(position = 0, 1, 0) ASC , `position` 
0.0002  

SELECT `product_categories__products`.`cat_id`
FROM (`product_categories__products`)
JOIN `product_categories` ON `product_categories__products`.`cat_id` = `product_categories`.`cat_id`
WHERE `product_categories__products`.`prod_id` =  '831'
AND `product_categories`.`parent_id` =  1
AND `product_categories__products`.`cat_id` NOT IN (1, 261)  
0.0004  

SELECT `cat_id` AS id, `parent_id` AS parent, `status_id`, `name`, `description`, `url_friendly`, `page_title`, `meta_keywords`, `meta_description`, `position`, `updated_at`
FROM (`product_categories`)
WHERE `cat_id` != 1
ORDER BY `parent_id`, IF(position = 0, 1, 0) ASC , `position`, `name` 
0.0004  

SELECT *
FROM (`product_categories`)
WHERE `status_id` =  'A'
AND `parent_id` =  1
AND `cat_id` NOT IN (1, 261) 
ORDER BY `name` 
0.0003  

SELECT *
FROM (`site_settings`)
WHERE `option_key` =  'announcement' 
  HTTP HEADERS  (Show)
  SESSION DATA  (Show)
  CONFIG VARIABLES  (Show)