Of humans and algorithms: an introduction to the nature of prophecy

… including strategies for better sales forecasting

The article explains why predictions and forecasts are a key element in business. It describes the current situation in most organizations, especially in sales departments, presenting an effective method for improving the medium to long-term quality of sales forecasts.

We all do it, all the time: we make predictions concerning future developments or incidents. We assess probabilities, make forecasts, offer prognoses. Yet hardly anyone would claim to be clairvoyant or a prophet. On the contrary: we take our daily predictions as nothing out of the ordinary. Yet for computers to do exactly what we do on a daily basis involves complex mathematical methodologies.

Predictions are not only part of our daily lives. To a large part, they also determine the world of business. Take the ifo Business Climate Index, which forecasts economic growth. Predictions also impact the actions and decisions of every organization. This article focuses on their significance in planning processes as illustrated by the example of sales forecasting.

Real-life sales planning is still mostly based on a far-from-ideal methodology that combines pure assessments with data from the previous month and year.

How can the quality of forecasts be improved under these conditions, leading to better planning? The combination of pattern recognition, human experience, and entrepreneurial consistence has proven to be an effective method. This article outlines my five-step plan for better planning predictions.


This is a management summary of an article first published in the magazine of Digital Tempus Germany. You can read the full article here in German, or contact me if you wish to have more information about the topic.