The Politics of Forecasting: Managing the Truth

by Craig Galbraith, Gregory Merrill



Executives think a lot about the future; it drives much of what modern management is all about. The techniques of forecasting and modeling, by their very nature, are designed to reduce the inherent uncertainty of predicting the future. Unfortunately, motives other than "predicting" often politicize the forecasting and modeling process to the detriment of managerial decision quality and investor confidence. Many firms routinely manipulate elements of the forecasting process. Requests by senior management to purposely alter forecasts, backcast from previously established cost and revenue positions, or mis-specify models occur all too frequently. Better training, formalized forecasting procedures, codes of conduct, clearly defined consultants' roles, and punitive actions can improve the quality of forecasting.

California Management Review

Berkeley-Haas's Premier Management Journal

Published at Berkeley Haas for more than sixty years, California Management Review seeks to share knowledge that challenges convention and shows a better way of doing business.

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