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Friday, December 30, 2011

Why making 2012 forecasts is a waste of time

As we approach the New Year we all try and forecast what will happen in the coming 12 months to both our social and professional lives.

Most of the time this activity is no more than daydreaming about our hopes and desires rather than formulating rationale predictions. Some may attempt to predict how the events that were shaping the world on the 31st December 2011 will play out by 31st December 2012. However rigorous the process the outcome is unlikely to worth the effort.

With the exception of cataclysmic convulsions
 of nature the events that are shaping the future are obvious. What is impossible to know is the timing of when a nuisance grows to an annoyance that becomes a problem that morphs into danger that ends becoming a catastrophe. Add to this an inability to know (or a willingness to recognise) if we are reacting to the manifestation of an event or its fundamental causes. 

Let me give you a couple of examples. Today’s newspapers reveal that in 1981 the Government debated/discussed the “managed decline” of the North of England. The argument was that instead of spending public funds ‘invigorating’ Merseyside it would have been best to accept the fact that the city was in terminal decline and make that process as painless as possible. For Liverpool read the other large Northern towns. Even to Mrs. Thatcher this latter option was not palatable.

The policy then, as is now, has been to reshape the North of England. For periods the figures suggested this was happening. A bucket load of money was spent on Liverpool. There were a few good years in the sun but the population has halved and it bounces along the bottom in a downward direction. The policies to ‘invigorate’ have failed and still nobody can even mention the option of “managed decline”.

Another example is the Euro. In today’s Lex Column of the FT he argues that we have spent the last few years mucking about trying to cure the symptoms but ignoring the underlying problem. The Euro will fail, or certainly not look anything like it does at the moment, of this I am certain. What I have no idea about is when the demise will occur. By continuing to focus policy on the symptoms the currency might go on for years or days. Like the North of England, the European politicians cannot face the solution of “managed decline” and keep looking for the magic bullet to cure the symptoms.

So what does all of this mean to us marketers?

I suggest you make a list that has two columns. In column one you list the things you know will happen – be really, really, honest about what you write. In the other column detail your ability to predict the timing and the magnitude – be really, really, honest about what you write.

Let me start you off with a suggestion.

Young people (18-24) will suffer an accelerating decline in their disposable expenditure for at least the next 24 months. So do you face this fact and propose policies equivalent to the “managed decline” or do you try and ‘invigorate’ the market? You might be able to delay the event (at a cost) but you will not be able to change the eventual outcome.

So your choice. Do you make 2012 the year you are really honest about what is really happening and your lack of ability to predict the outcomes or will it be “service as normal” and you surf along the top of the waves without any idea where they are taking you? Happy New Year. Dick Stroud

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