Are we at the limits of quantitative forecasting? - Competitive Intelligence2024-03-28T16:12:10Zhttp://competitiveintelligence.ning.com/forum/topics/are-we-at-the-limits-of?commentId=2036441%3AComment%3A30269&feed=yes&xn_auth=noWARNING -- philosophical trea…tag:competitiveintelligence.ning.com,2010-08-10:2036441:Comment:356922010-08-10T18:27:16.596ZAnna F. Shallenbergerhttp://competitiveintelligence.ning.com/profile/AnnaFShallenberger
WARNING -- philosophical treatise follows... :-)<br />
<br />
Late to this party, but...What's the old line -- something to the effect of <i>"Figures Don't Lie, But Liars Do Figure"</i> ??? Love the AJ quote BTW. And humans are very visual -- many absorb that data faster/better -- witness the popularity of Tufte in the 90s... And it seems like having some sort of numbers became a sort of "pay to play" in building a business case for anything. From the planning/predictive front end to the…
WARNING -- philosophical treatise follows... :-)<br />
<br />
Late to this party, but...What's the old line -- something to the effect of <i>"Figures Don't Lie, But Liars Do Figure"</i> ??? Love the AJ quote BTW. And humans are very visual -- many absorb that data faster/better -- witness the popularity of Tufte in the 90s... And it seems like having some sort of numbers became a sort of "pay to play" in building a business case for anything. From the planning/predictive front end to the analytical/monitoring middle and a metrics back end.<br />
<br />
Like others, I see the need for balance between the qualitative and the quantitative. But in some ways, this actually brings <b>more</b> to mind a related issue. That is, the increasing "<b>subjectivity</b>" of underlying assumptions, <i>Qual/Quant aside -- in a world where often people can't even agree on the basics of what is "factual" -- it becomes increasingly challenging to evaluate quant data. Qual too for that matter...</i><br />
<br />
I have progressively found that those I am working with not only want the output, but <b>require</b> [more detail than historically requested] <i>around methodology / inputs etcetera</i>. Which is generally proprietary, beyond the basics -- e.g. sample size, time frame, collection method etc. I would be interested to hear others discuss if they have faced similar concerns. It seems like even most "raw" data often has a degree of [for lack of better term] "modeled contamination" these days...<br />
<br />
Sometimes we've tried to reverse engineer #s to understand the model, but generally speaking -- one rarely has enough confirmed details to accomplish that. Even though I majored in Econ -- I can't claim to be a stats guru -- even though, as my advisor [PhD Economist] quipped "Economists are people who aren't interesting enough to be accountants" -- Ouch!<br />
<br />
It also seems as if, while one may want to understand the wisdom of crowds -- there is a perception that stats / #s / quant --aid one in avoiding "group-think blind spots" -- which I don't believe provides as much of a shield as some believe... I sometimes struggle with balancing my common sense / BS detector with making sure I'm not too locked into my personal experiential box...<br />
<br />
Perhaps I'm being naive. However, and to me, yes, intel requires many subjective assessments/interpretations of a host of data inputs... I'm curious though if y'all feel we currently face more shades of gray, if you will...<br />
<br />
<i>Realize this is somewhat stream of consciousness here and veering off the original post -- but it has been on my mind.</i> That is fine, Eric, I am old…tag:competitiveintelligence.ning.com,2010-07-30:2036441:Comment:354212010-07-30T18:03:10.709Zklaus Söilenhttp://competitiveintelligence.ning.com/profile/klaussolbergsoilen
That is fine, Eric, I am old enough to understand a friendly hug!<br />
<br />
K
That is fine, Eric, I am old enough to understand a friendly hug!<br />
<br />
K Klaus, did you just place und…tag:competitiveintelligence.ning.com,2010-07-30:2036441:Comment:354202010-07-30T17:26:50.265ZEric Garlandhttp://competitiveintelligence.ning.com/profile/EricGarland
Klaus, did you just place understanding of strategic megatrends over a fetish for semi-fictional quantitative accounting statements? Only an accountant can get away with this - when I say the same thing, the quant jocks just assume I was too lazy to take nine years of calculus at university.<br />
<br />
I hope you won't be insulted, but I may hug you if I see you in America. ;-)
Klaus, did you just place understanding of strategic megatrends over a fetish for semi-fictional quantitative accounting statements? Only an accountant can get away with this - when I say the same thing, the quant jocks just assume I was too lazy to take nine years of calculus at university.<br />
<br />
I hope you won't be insulted, but I may hug you if I see you in America. ;-) Hi Tiauna,
I cannot but help…tag:competitiveintelligence.ning.com,2010-07-30:2036441:Comment:354152010-07-30T07:11:06.874Zklaus Söilenhttp://competitiveintelligence.ning.com/profile/klaussolbergsoilen
Hi Tiauna,<br />
<br />
I cannot but help comment on this. Before I became an academic, 10 years ago, I worked as an auditor by KPMG and before that as an accountant. I struck me then that managers often tell acccountants what kind of quarterly results they want, to fit a certain story, a story that often fits the managers' careeres and their incentive plans. This does not always give you a good idea of the company''s real performance. E.g. you take costs this year because your profit is high, or you wait…
Hi Tiauna,<br />
<br />
I cannot but help comment on this. Before I became an academic, 10 years ago, I worked as an auditor by KPMG and before that as an accountant. I struck me then that managers often tell acccountants what kind of quarterly results they want, to fit a certain story, a story that often fits the managers' careeres and their incentive plans. This does not always give you a good idea of the company''s real performance. E.g. you take costs this year because your profit is high, or you wait because it is low, etc. Mots of these manouvers are withing the legal limit, so engineering-the-books is more relevant than coocking-the-books. Still, an analyst who do not understand how accounting figures are made will fall for the story.<br />
<br />
That is why relying on income statements and balance sheets will not do by itself. You need to know the business, that is you need to know the macro factors. I believe it is one of the factors that has made Warren Buffet one of the world's most succesful investors. It is also an important lesson for the field of competitive Intelligence.<br />
<br />
Klaus I know that I am a little lat…tag:competitiveintelligence.ning.com,2010-07-30:2036441:Comment:354132010-07-30T03:26:35.752ZTiauna Rosshttp://competitiveintelligence.ning.com/profile/TiaunaRoss
I know that I am a little late on posting to this thread, but because I come from the accounting/finance function, I can't help but comment on this.<br />
<br />
Everyone in business wants to know the future. Financial analysts are charged with predicting future firm performance based on a variety of inputs that ideally would incorporate strategic direction derived from solid competitive analysis. It is the qualitative piece that doesn't get communicated or doesn't get interpreted correctly into the…
I know that I am a little late on posting to this thread, but because I come from the accounting/finance function, I can't help but comment on this.<br />
<br />
Everyone in business wants to know the future. Financial analysts are charged with predicting future firm performance based on a variety of inputs that ideally would incorporate strategic direction derived from solid competitive analysis. It is the qualitative piece that doesn't get communicated or doesn't get interpreted correctly into the financial picture. This is one thing that can cause an organization to be unable to hit projections because they didn't include scenario analysis into the numbers. The sales forecasts are off, which then drives the rest of the forecast. If you have accountants, who mostly focus on preserving the reliability of the past and present numbers, conducting financial projections, it is likely that the future forecasts become a mere extrapolation of the past. Projections are only as good as the inputs and the inputs should not originate in the accounting department because that is not where the numbers are made.<br />
<br />
Most forecasts published by companies are only good for a few things when it comes to competitive analysis. It tells you where they think they are going or at the very least, what they hope everyone else will believe they are going. Having said this, you would think that competitive intelligence would be a sought after partner when it comes to gathering good inputs. But over reliance on the quantitative side and the historical financials creates a false sense of comfort in numbers that are thinner than they appear.<br />
<br />
Competitive intelligence practitioners who can take the qualitative information and make it measurable and actionable will be better suited to communicate with people who are accustomed to seeing their information in the form of a dashboard. You need both but I will be the first to admit that the qualitative side is the most difficult to read and communicate, but most critical in creating value-added analysis. Thanks a ton Ellen. I will co…tag:competitiveintelligence.ning.com,2010-03-15:2036441:Comment:307222010-03-15T04:14:40.450ZNimalanhttp://competitiveintelligence.ning.com/profile/Nimalan
Thanks a ton Ellen. I will contact Mark Johnson. Sorry to have missed you too at SCIP but then there would be other opportunities..And SCIP was nice.. especially meeting all the people and the impromptu discussions in hallways, over drinks and during the work shops.<br />
<br />
Nimalan
Thanks a ton Ellen. I will contact Mark Johnson. Sorry to have missed you too at SCIP but then there would be other opportunities..And SCIP was nice.. especially meeting all the people and the impromptu discussions in hallways, over drinks and during the work shops.<br />
<br />
Nimalan Mark Johnson, who is a member…tag:competitiveintelligence.ning.com,2010-03-15:2036441:Comment:307192010-03-15T04:02:01.386ZEllen Naylorhttp://competitiveintelligence.ning.com/profile/EllenNaylor
Mark Johnson, who is a member of this CI Ning is a real whiz on the numbers, Nimlan. Sorry to miss you at SCIP! Sounds like you had a good time!<br />
<br />
All the best,<br />
<br />
Ellen
Mark Johnson, who is a member of this CI Ning is a real whiz on the numbers, Nimlan. Sorry to miss you at SCIP! Sounds like you had a good time!<br />
<br />
All the best,<br />
<br />
Ellen Interesting topic as this is…tag:competitiveintelligence.ning.com,2010-03-14:2036441:Comment:307052010-03-14T09:41:38.712ZNimalanhttp://competitiveintelligence.ning.com/profile/Nimalan
Interesting topic as this is something close to my heart!<br />
<br />
I am of the belief that quantitative analysis (especially of competitor's financial statements) should be an integral part of CI analysis. I have discovered in my life as a CI analyst, that looking at the balance sheets and cash flow statements can help quickly answer some of the client's questions about the competition. This also helps to corroborate intelligence from primary / secondary sources.<br />
<br />
Again, quantitative analysis of the…
Interesting topic as this is something close to my heart!<br />
<br />
I am of the belief that quantitative analysis (especially of competitor's financial statements) should be an integral part of CI analysis. I have discovered in my life as a CI analyst, that looking at the balance sheets and cash flow statements can help quickly answer some of the client's questions about the competition. This also helps to corroborate intelligence from primary / secondary sources.<br />
<br />
Again, quantitative analysis of the financial statements can help focus our collection efforts by pointing out that "something" is not right and that the competitor should be up to, well.. "something". So instead of searching in the air for anything and everything; we can now focus our efforts and be much more effective as we would now know what to look for. As Sherlock Holmes, in a story picks up a burnt match stick from the crime scene after the Yard has gone through it, famously remarks that he found it because he was specifically looking for it unlike the poor policemen.<br />
<br />
But sadly I do not find too many uses of financial analysis in CI. This could be partly due to the fact that financial analysis looks only at tangible numbers and does not take into consideration the so called "intangibles" which is often argued to be the reason for most of the financial analysis in itself going wrong. So if we could figure out a way that measures and considers these "intangibles" (which we as CI analysts are quite capable of) and incorporating that with financial analysis, not only will we have solid intelligence products but can also make a neat buck on Wall Street.<br />
<br />
I am currently looking for books / papers on this subject. I have found that Dr. David Rogers does workshops on these lines..if there are any books by him or any others that you know of, please do let me know. SCIP also did not have any work shop / session on this subject last week in DC, which was sad.<br />
<br />
Nimalan Spot on Max! You are not alon…tag:competitiveintelligence.ning.com,2010-03-09:2036441:Comment:306072010-03-09T19:04:24.604ZMiguel Duarte Ferreirahttp://competitiveintelligence.ning.com/profile/MiguelDuarteFerreira71
Spot on Max! You are not alone! So, it makes, at least two of us...<br />
<br />
Who knows, maybe there are...<br />
<br />
Question - How much is the decision maker willing to be fully aware of the 'full picture'? I believe you are assuming they are willing but then again "that's probably just me" :-)<br />
<br />
Miguel DF
Spot on Max! You are not alone! So, it makes, at least two of us...<br />
<br />
Who knows, maybe there are...<br />
<br />
Question - How much is the decision maker willing to be fully aware of the 'full picture'? I believe you are assuming they are willing but then again "that's probably just me" :-)<br />
<br />
Miguel DF Well put Max - thanks - hey,…tag:competitiveintelligence.ning.com,2010-03-09:2036441:Comment:305932010-03-09T16:39:24.058ZArik Johnsonhttp://competitiveintelligence.ning.com/profile/ArikJohnson
Well put Max - thanks - hey, you're in DC this week?
Well put Max - thanks - hey, you're in DC this week?