16. Evangelical Forecasting
Evangelical Forecasting: When Faith Meets Ruin
Ever been in a Demand Review or Management Business Review meeting where tensions are high because the sales numbers aren't where you want them to be and the Sales Team are saying -- "if we only had the stock, it wouldn't be a problem"?
Maybe you have also then witnessed your CEO step in, eyeball everyone, and deliver a sermon: "Right, we're going to fill up that warehouse and fix this problem once and for all. Fill ‘er up with stock and cut the sales teams loose on the markets!"
Welcome to what I call evangelical forecasting - where the CEO’s unshakeable faith in inflated sales volumes, along with his or her ego, overrides common sense, data, and the voices of experienced planners.
An Evangelical Mindset
Evangelical forecasting isn't just optimistic planning - it's planning with religious-like fervour. Like a preacher delivering salvation, these senior leaders preach growth numbers with low tolerance for dissenting voices or inconvenient data.
There are several parallels:
Unquestioning faith required from the planning congregation
Charismatic preaching that overrides evidence
Believers’ vs non-believers when someone tries to inject reality
The inevitable reckoning when prophecy meets reality
But unlike Sunday service, the consequences here get measured in cash flow crises and inventory write-offs.
The Cycle:
Here's how the evangelical forecasting cycle typically unfolds:
Stage 1: Frustration Many factors contribute to poor sales – poor strategies, pricing, market intimacy, competitor activity etc mount up and the Sales teams also rightly, sometimes wrongly, complain about stockouts and poor DIFOT affecting their ability to serve customers.
Stage 2: Revelation The evangelical CEO forecaster swoops in with the "solution" – fill the system with inventory. "If we just fill up the warehouse and pipeline, we'll solve this DIFOT problem!"
Stage 3: Faith-Based Numbers Sales forecasts then get inflated based on wishful thinking rather than market analysis. Leaders rely on ego, gut feeling, or fear of crossing the CEO, overstating demand.
Stage 4: The Blob A "blob" of stock gets pushed into an already struggling system. What was meant to solve a service problem becomes a bigger financial problem.
The financial damage from evangelical forecasting is threefold:
Cash Flow Strangulation: Inventory and cash flow are like a see-saw, too much focus on one alters the balance. Investing too much in inventory tips the business to burn cash faster than it makes it.
Carrying Cost Explosion: The cost to store surplus stock is another downside of overstocking. Rough rule of thumb – 10% of the value of stock-on-hand (SOH) is its carrying costs ie: $10M of extra inventory adds $1M pa in cost to the P&L.
Obsolescence Risk: When the evangelical forecast doesn't materialise, companies run the risk of markdowns or write-offs as products become outdated/expires.
Why Evangelical Forecasting Feels Right (But Is Wrong)
The appeal of evangelical forecasting lies in its apparent decisiveness, at least in the CEO’s mind. When facing genuine problems, dramatic action feels like leadership. The evangelical forecaster appears to be "taking charge" and "solving problems."
The truth however: evangelical forecasting is the opposite of good leadership. It's management by whim, not by design.
Real leadership means trusting your planning processes, your people, your data, and your tool, when the pressure is on. The solution isn't more evangelical fervour; it's better discipline.
Back to Sanity
Avoiding evangelical forecasting is straightforward:
Build Genuine Forecasts: Numbers should be based on market analysis, historical trends, and realistic growth assumptions. Machine learning and AI helps clean and apply market data quickly, unlocking greater levels of accuracy.
Trust Your Systems: If you've invested in planning processes and people, trust them. Don't override months of careful analysis with table-thumping emotions. Seek to understand the real reason why performance is poor and address that.
Remove Scapegoats: In my opinion, DIFOT problems stem mainly from supply issues, not demand forecasting problems. Fix any underlying operational issues rather than throwing inventory at symptoms and take that scapegoat off-the-table.
Plan for Reality, Not Fantasy: It's better to have a plan built on reality, however ugly, than to mask the real problems and create future-plans based on flawed assumptions. Build realistic scenarios with conservative assumptions rather than evangelical visions. At least that way you are facing the truth and at least give yourselves a chance to do something about it.
‘An ugly truth is better than a pretty lie’
Grow by Design, Not by Whim
Many companies that consistently outperform the competition aren't the ones with the most charismatic leaders or the boldest forecasts. They're the ones that grow by design, not by whim.
They understand that sustainable growth comes from:
Disciplined planning processes
Realistic demand forecasting
Balanced supply and demand planning
Trust in data over drama
When you follow good practice - building genuine forecasts, following sales plans with intelligent adjustments, and trusting the people and systems you've employed - the problem of running out of cash has a much better chance of staying away.
The Bottom Line
Evangelical forecasting might feel decisive in the moment, but it's a fast track to financial trouble. The next time someone starts preaching inflated sales volumes and table-thumping solutions, remember that churches are for faith, businesses are for facts.
Your planning team isn't there to be converted to your vision - they're there to help you see reality clearly enough to navigate it successfully.
What's your experience with evangelical forecasting? Have you seen a CEO override months of careful planning with a single “fill the warehouse” directive? Share your war stories.
Want to learn more? Visit me at www.planninglab.co.nz
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