#220: Better Forecasting & Present Sense with Steve Morlidge (Part 1)

with Steve Morlidge


Our Guest Mentor:

Steve Morlidge has 30 years of practical experience in designing and running performance management systems in Unilever, including three years leading a Beyond Budgeting initiative for the company. He has been associated with our network since its inception and is a former chairman of the European Beyond Budgeting Round Table. He now works as a management thinker, writer and speaker, drawing on his years of experience at the leading edge of performance management thought and practice and is a member of the non-executive Core Team of the Beyond Budgeting Institute. Steve Morlidge published Future Ready: How to Master Business Forecasting, John Wiley, 2010, and through Matador, ‘The Little Book of Beyond Budgeting’ (2017) , ‘The Little Book of Operational Forecasting’ (2018) and, within the last few months, ‘Present Sense’ (2019). He is on the editorial board of Foresight, a forecasting practitioner’s journal published by the International Institute of Forecasting to which he regularly contributes. He is also a cofounder of CatchBull, a supplier of forecasting performance management software for the Supply Chain. Steve Morlidge is a visiting fellow at Cranfield University, Bedfordshire, UK and has a PhD from Hull Business School in Yorkshire, UK on the application of systems concepts to the design of complex organizations. He completed his BA with honours, and is a qualified management accountant (CIMA). 

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Key Quotes From the Episode: 

Everybody makes the same mistakes and those mistakes are those things we were taught to do.[06:32] 

People will never let go of the brass ring until they have another brass ring to hold on to.[10:57] 

“Any forecast may still be wrong but as long as it’s not so wrong that it causes you to make a wrong decision in steering the business, that is OK.”[14:49] 

The finance professional can influence the way people in the organization think without actually telling them to change the way they think.[23:13] 

A budget is just a guess and usually politically motivated.[28:36] 

(Other resources and how to connect with Steve below). 

Key Points From the Episode: 

Your experiences may provide practical solutions if; 

-Recognizing your mistakes 

-Curiosity on the science of beyond doing things 

-Have a solution to be better than yourself  

Pitfall of traditional budgeting practices; 

– We can’t predict the future and also have fixed plans to be responsive to emerging needs 

-We are sending a wrong signal that our colleagues cannot be trusted 

-Need to develop a better toolkit 

Forecast with zero bias is a good forecast although it could still be wrong but as long as it’s not so wrong that it causes you to make a wrong decision in steering the business 

Practical steps to filter data and make sense to it by providing a clearer picture to the business 

Time Stamped Show Notes 

[03:33] Steve shares his career journey which started at Unilever handling several financial positions lasting for 25 years.   Was introduced to Robin Fraser and Jeremy Hope during the late 1990’s when they were in the process of setting-up the Beyond the Budgeting Roundtable.  

[06:16] Your experiences may provide practical solutions if; 

  • Recognizing your mistakes 
  • Curiosity on the science of beyond doing things 
  • Have a solution to be better than yourself  

[07:33Pitfall of traditional budgeting practices; 

  • We can’t predict the future and having a fixed plans may not be responsive to the emerging needs 
  • We are sending a (wrong) signal that our colleagues cannot be trusted 
  • Need to develop a toolkit that isn’t based on the same assumptions as traditional budgets (predictablity, fixed targets/cadence/horizons)     

[08:43] Forecasting in the mid term horizon helps us navigate the business during times of uncertainties.  

[13:08] A forecast with zero bias is a good forecast it could still be wrong but as long as it’s not so wrong that it causes you to make a wrong decision in steering the business. 

[17:27Tips on making a good forecast; 

  • Be aware of the distinction between target and forecast 
  • Recognizing the gaps 
  • Discuss the changes needed to address the gaps 

[21:06] – Finance professional can help change the mindset of the organization in defining target and forecast. 

[23:95] – Influencing the way people in the organization think by providing them clear pictures of the gaps and the targets. 

[27:34] – Budget is just a guess and it does not make sense to use it to measure performance. 

[30:50] – Filter data and make sense to it by providing a clearer picture to the business by; 

  • Determine what is relevant from those what we can safely ignore 
  • Attribute meaning to the information 
  • Communicate that meaning to better assimilate its true meaning  

Resources Mentioned: 

Books:   

Paperback  

The Halo Effect: …and the Eight Other Business Delusions That Deceive Managers by Philip M. Rosenzweig 

https://www.amazon.com/Halo-Effect-Business-Delusions-Managers/dp/1471137163 

Hardcover 

The Black Swan: The Impact of the Highly Improbable (Incerto) by Nassim Nicholas Taleb  

https://www.amazon.com/Black-Swan-Impact-Improbable-Incerto/dp/1400063515/ref=tmm_hrd_swatch_0?_encoding=UTF8&qid=&sr= 

Paperback  

Future Ready: How to Master Business Forecasting – 27 Nov 2009 by Steve Morlidge  (Author), Steve Player (Author) https://www.amazon.co.uk/Future-Ready-Master-Business-Forecasting/dp/0470747056 

Paperback  

The Little Book of Beyond Budgeting: A New Operating System for Organisations: What it is and Why it Works  – 28 Feb 2017 by Steve Morlidge  (Author) https://www.amazon.co.uk/Little-Book-Beyond-Budgeting-Organisations/dp/1785899287 

Paperback  

The Little (illustrated) Book of Operational Forecasting: A short introduction to the practice and pitfalls of short term forecasting – and how to increase its value to the business Paperback – 15 May 2018 by Steve Morlidge  (Author) https://www.amazon.co.uk/Little-illustrated-Book-Operational-Forecasting/dp/1789013429 

Paperback  

Present Sense: A Practical Guide to the Science of Measuring Performance and the Art of Communicating it, with the Brain in Mind Paperback – 17 Sep 2019 by Dr Steve Morlidge (Author) https://www.amazon.co.uk/Present-Sense-Practical-Performance-Communicating/dp/1838591095 

Connect with today’s guest: 

Email: steve.morlidge@satoripartners.co.uk﷟HYPERLINK “https://www.linkedin.com/in/karlhkern/” 

LinkedIn Profile: ﷟HYPERLINK “https://www.linkedin.com/in/karlhkern/” https://www.linkedin.com/in/steve-morlidge-0987a0/ 

Company Website: https://www.satoripartners.co.uk/ 

Beyond Budgeting:  https://bbrt.org/founders/ 


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