Broken Forecasting

The other day, I had occasion to prepare an adoption forecast for a service, and, like any good innovator who knows anything, I formulated my answer using a nice s-curve shaped curve.

S-curves are such a useful tool for forecasting the adoption of anything – particularly anything that involves communication and collaboration – because they describe how the phycology of an adoption decision works.

People don’t, as it happens, just randomly decide to try something new, unless they’re super risk unsensitive. For most people, its necessary to see someone you know and trust doing something new before you’ll be confident enough to do it too.

There’s much additional material available on this here.

Anyway, so I prepare my adoption forecast, which was predicated on quite slow take-up at the beginning, followed by rapid growth later on. I felt I was on pretty safe ground here, since every other new introduction I’ve ever been associated with has had just this pattern.

As usual, however, those who saw the forecast were struck by how “conservative” my numbers were. This is a very common response, actually, because people always hate it when you suggest a new shiny object is not going to be an instant hit the moment it comes onto the market.

Hits – or actually the great myth that they exist in the first place – is the core topic of my book Sidestep and Twist.

Anyway, this got me to wondering: why is it people are so wedded to this idea that success comes instantly, and if it doesn’t your product is a failure?

Looking back on all the business cases I’ve seen over the years, I have come to a theory: most demand forecasts are done on the basis that demand is a linearly increasing function of time, or that there will be a big spike in sales at launch (coupled with a marketing push, I suppose), followed by steady growth.

The former seems to be what people put forward if they have a marketing budget, the latter if they don’t.

Then, of course, everyone is disappointed when their grand projections don’t come to pass.

On the other hand, if you create a realistic projection based on the actual innovation science which exists, everyone goes, “boring!”. I mean, who wants to invest in an s-curve when there are plenty of other business cases floating around which have flashy peaks or nice linear growth?

Anyway, me ranting on about this really doesn’t do anything to help anyone.

However, this is just one of many areas of the innovation management space where there’s lots of opportunity for vendors to make a real difference in the outcomes businesses achieve from their investments.

Problems like these are things the team and I are focusing on right now, and I think you’ll be interested to see what Spigit has coming in 2012.

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