ation

Quintessential Thought

We’re in a series about how to improve forecasting for agility. We’ve explored three of the four core practices: re-forecasting, reducing precision to increase accuracy, and bracketing forecasts.

Our final practice is to use the time horizon to adjust your approach. You don’t need to be Dr. Who or Marty McFly to do this - no unusual time travel is necessary. 🙂

Put simply, you’ll adjust your use of precision and bracketing based on how close the event you’re predicting is.

• If the event is far away, an agile forecast is less precise and the brackets are farther apart.

• As the event draws nearer, you can refine your forecasts by increasing the precision and narrowing the bracketed range of possible outcomes.

We’re talking about the cone of uncertainty, which acknowledges that the things that are closest to this moment have less variability and the things that are furthest from this moment have the most variability. When drawn in a diagram, it looks like a cone with the variability depicted as lines diverging from the current moment. You’ve seen it used in weather forecasting of storms as the forecasters address the inherent and increasing uncertainty.

Public Domain image by NHC

Here are a couple of examples:

• For a forecast 12 months away, the precision would be low and the bracketing wide. So, the scope goal would be at a high level and outcome-oriented, the budget could be bracketed at 25 to 50% on each side of the median, and the schedule might be expressed in months or quarters.

• For a forecast of the next two weeks (like a Sprint-length in Scrum), the precision would be higher and the bracketing narrower. The scope goal would be more detailed, expressing the outputs that are likely to be created to achieve a specific outcome, the budget could be bracketed at 5 to 10% on each side of the median, and the schedule might be locked in at two weeks.

Adapting your forecasting approaches based on the time horizon will help you increase agility while communicating clearly.

Quotes

“We must become more comfortable with probability and uncertainty.” — Nate Silver

"The future is always uncertain, but the seeds of the future are always in the present." — Stephen R. Covey

"Forecasts may tell you a great deal about the forecaster; they tell you little about the future." — Paul Samuelson

Quick Step

When might a time horizon have helped a forecast you’ve given or seen?

Question

For your next forecast, adjust the precision and brackets based on the time horizon.

Advanced Product Owner, Mar 3-6

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