J+D were approached by a global pharmaceutical company with a broad pipeline across rare diseases, who needed an improved forecasting
Choosing the right modeling methodology is the first key to better long-range planning. At J+D Forecasting we advocate event-based forecasting. This enables you to model the impact of factors that fall outside of the scope of historical data. For example, this might be the impact of a competitor’s product launch at an unknown point in the future. With this approach, you can easily modify key data points to understand the impact of a variety of possible future scenarios.
Rather than focusing on accuracy above anything else, forecasters should aim to present a range of possible future scenarios. A solid model which has the sophistication to capture the full range of factors impacting the forecast enables forecasters to adapt their output response to stakeholder requests. For example, this type of model might be used to demonstrate the steps a company would need to take to reach a particular financial goal with a new drug launch.
2. Identify variability.
Focusing on variability can help forecasters better identify risks and opportunities. To enhance long-term forecasting, the key is to begin with robust data and identify the main sources of variability. Investing in accurate data-gathering for these areas of variability helps to drive better assumptions and understand the risks and opportunities of a particular scenario.
The next step is to run multiple scenarios which capture the inherent uncertainties of the future competitive landscape, defining the most likely, worst and best-case outcomes.
3. Clear communication.
Last but not least, forecasters should also consider how they communicate long-range forecasts to stakeholders and decision-makers. Forecasts should empower an organization to execute strategic long-range business plans with confidence and clarity. Long-range forecasts should be designed to be as user-friendly as possible. This can be achieved by filtering and presenting only the key information that stakeholders need and quoting ranges rather than precise numbers for greater accuracy.
This type of presentation requires a mindset shift for forecasters away from the laser focus on accuracy toward a broader top-level approach. Stakeholders should be able to come away with a clear understanding of a particular project's upside and downside potential, which can directly enhance their executive decision-making processes.