Unit Three Discussion Board One

Jack Lilly

Colorado Technical University

CS875: Futuring and Innovation

Dr. Calongne

January 18, 2022

Unit Three Discussion Board One

Scenario Planning

    When attempting to predict what may happen in the future, individuals, groups, and businesses have a few tools that can be utilized. Some are more effective than others, depending on the context of the situation. These different focuses set each device apart from others and allow them their specialty. Regardless, predicting the future holds several key advantages – especially in the business world. 

    Scenario planning is something that most people have direct experience with. It is a practice through which an entity can understand an uncertain future by exploring multiple possibilities of that future (Lincoln Institute, 2021). It allows that entity to ‘step’ through variables and understand how a change in one place can propagate and affect other areas. While this is a more complete form of prediction than simply traditional forecasting, it can be much more resource intense. 

    Building this potential future requires the entity to examine various aspects, and each element will incur a cost in the form of funding, time, and workforce. For the scenario to be fully comprehensive, it must be constructed to show all related variables and their interactions. This structure can then be queried in different ways to answer ‘what-if’ questions. Because of the results of this model, the entity should have premium information that shows where their business currently stands and where it will be in the forecast future.

Traditional Forecasting

    Traditional forecasting is the beginning of business predictions, and it has grown much since. It uses historical observations to estimate future metrics like inventory, budgets, and revenue (DSPanel, 2020). The company will forecast daily sales based on the previous year’s sales in the fast-food business. While this can be pretty beneficial in general, it can also be a weakness regarding a specific intent. 

    As the yearly seasons change, so can the number and consistency of customers visiting that store. Conversely, if a specific number of product units were sold on a specific date the previous year, there is no guarantee that it will again happen in the current year. This is because traditional forecasting relies on historical data, but it has a gap between the prediction and what occurs. Furthermore, traditional forecasting has a prime advantage when concerned with consistent occurrences on a large but straightforward scale. It tends to fail when applied to complex or inconsistent scenarios. 

    The most significant similarity between both types of forecasting is the critical necessity of accurate information. A predictive model will use the inputted data to create projections based on that data. If the information is too old, corrupted, or simply incorrect, the forecast predicted will be inaccurate. As such, the primary requirement of any forecasting is collecting relevant information that allows this model to operate successfully. 

References

DSPanel. (2020). Live forecasting vs traditional forecasting vs rolling forecasting. Performance Canvas.         Retrieved January 11, 2022, from https://www.performancecanvas.com/live-vs-rolling-vs-traditional-        forecasting/ 

Lincoln Institute. (2021). Introduction to scenario planning. LILP. Retrieved January 11, 2022, from             https://www.lincolninst.edu/research-data/data-toolkits/consortium-scenario-planning/introduction-            scenario-planning