Tag Archives: forecast

Manage to Lead

Introducing Manage to Lead: Seven Truths to Help You Change the World as an interactive digital workbook.

Leave a comment

Many intelliven.com blog posts are based on the slides and lecture notes from a masters class in Organization Development called Organization Analysis and Strategy offered at American University and taught by Peter DiGiammarino.  These posts and other material from class, including:

  • Work problems,
  • Templates,
  • Graphics,
  • Slide shows, and
  • Assessments

are available  from Amazon as a softcover workbook or from iTunes as an iBook titled Manage to Lead: Seven Truths to Help You Change the World.

Selected intelliven.com blog content is now available as a workbook from Amazon or as an iBook from iTunes.

Whether one wants to change personal habits, implement a new information system, improve a business process, get team members to work together, increase a community’s appreciation for diversity, or even to topple a monarchy, taking seven actions driven by seven disarmingly simple truths will individually and collectively help achieve the goal.

Manage to Lead presents a framework to describe and assess any organization. It also provides a structured approach to plan and implement next steps for an organization as it strives for long-term growth and performance.

Readers are invited to select a familiar organization on which to apply the tools and templates introduced throughout the workbook. Exercises in each chapter produce essential elements for the organization’s annual strategic plan and lay the groundwork for implementing that plan.

Readers can package the key elements from Organization Exercises to form a strategic plan that communicates how the organization sees itself and where it is headed. At the end of the year leaders can compare actual results with what was described in the strategic plan to study what happened, why what happened was different than plan, what is to be learned from that, and what to do differently going forward as a result.

Repeat the process over several years and compare actual to planned results year-to-year to see the organization mature, perform, and grow to its full potential.

Do & Review, Finance Matters, Manage to Lead

Four questions an organization needs to ask every performance period in order to perform, learn, and grow to its full potential.

1 Comment

It is impossible to control what you cannot, and what you do not, measure. For every important thing that the organization does, decide what is most important to monitor and then watch carefully to know how things are going.

If what to monitor is not known then:

  • Watch everything and whittle away what turns out to not be useful and keep watching what turns out to be useful.
  • Study similar organizations to learn what they track.
  • Look up industry analysts and market researchers to find out what they watch.

Continue reading Four questions an organization needs to ask every performance period in order to perform, learn, and grow to its full potential. →

Finance Matters, Grow, Manage to Lead

How to increase the accuracy of revenue forecasts.

Revenue Forecasts asserts that a certain amount of revenue will be earned in a certain period of time with a certain probability that the actual revenue earned in the period will be within a certain tolerance of the forecast.  For example, management may forecast that there is a 90% chance of actual revenue being not more than 10% less than a forecasted amount.

Generally speaking, the percent probability of revenue from a source is assigned by management based on their judgement in light of their collective past experience with similar revenue generating opportunities in similar circumstances.

Some managers set forecasts equal Expected Value; that is, their revenue forecast equals the sum of potential revenue generating opportunities each multiplied by an assigned probability of occurring.  There are several potential problems with this approach that should be considered carefully before proceeding:

  • Summing expected values allows fractional results when there may actually be little to no chance of fractional results.  For example, an opportunity to generate revenue of $100,000 with a 50% probability of occuring would contribute $50,000 to a forecast computed as a weighted sum even though the actual result is more likely to either be $0 or $100,000.
  • Actual Results are more likely to binary; that is the the result either happens or it does not happen, so fractional results do not occur.
  • The percent probability assigned to a given opportunity may reflect the probability of the revenue ever occuring but not be specific to the period in which the revenue will occur.  A good approach to forecasting needs to set the probability of revenue in a specific period
  • Probabilities assigned often reflect stage of progression through a sales process but do not represent a real assessment of probability of the event occurring.  For example, one might assign a 75% probability to all prospective sales for which a proposal has been submitted because it is, at the point of submission, about 75% of the way through the sales process but it may be, in reality, that only 50% of all proposals are successful.

Failure to account for any or all of the three cautions can lead to actual revenue results that are consistently outside the forecast tolerance range.

Finance Matters, Get Clear, Manage to Lead

How to get, and stay, in control of operations.

Leaders who are in control of operations compare their organization’s actual performance results to:

  • Past results to know whether their organization is trending up, down or sideways.
  • The results other organizations that are doing things similar to theirs achieve in order to know how well they are doing relative to industry benchmarks, especially relative to those who do best what they are doing.
  • Plan, budget, projection, or forecast in order to hold themselves accountable to what they said would happen.
  • Target or goal to know if it is time to be done with what they are doing!
The exhibit below provides precise definitions of terms leaders can use to talk about their organization’s performance with their leadership team and organization stakeholders.