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Applied Forecasting

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by Robert C. Brenner, President, Brenner Information Group

Based on what he had learned about how to forecast future trends, John took action to apply his new skill. He collected subjective and empirical data on the nation, the state, and his local area. He wanted to identify business opportunities.

As part of the process, John analyzed social, political, economic, and technical changes that were occurring. The continued corporate downsizing, growth of new high-skill jobs, and significant political and social events were listed. He included the new Congress, NAFTA, GATT, global trade, the Information Superhighway, just-in-time hiring, reduced average pay, increased overtime, and the trend toward hiring temporary workers.

He collected forecasts and future projections from industry experts. No one has a crystal ball on the future, but John considered every expert opinion. He entered the published projections into a spreadsheet. To identify a consensus of opinion from various perspectives, he analyzed the matrix and discovered some fascinating insights.

Annual inflation should remain low for the next two years. Pay raises will also be low. Most new hires will be temporary or part time at low pay. Skilled technicians will be in high demand with correspondingly higher pay. Since most new jobs are service-oriented and low pay, the standard of living of the typical American has declined with the average wage.

John is watching to see if the local, state, and federal governments will soon approve business tax credits for R&D investments and reduce excessive regulations and reporting requirements. He chooses to believe in the power of government to heal self-inflicted wounds.

The Information Superhighway with its Internet and convergence aspects is changing the way Americans interact. Technology and business reorganization are promising a productive and profitable future.

His area has a huge population of information specialists and graphic artists. This unparalleled nucleus of entrepreneurial talent should return his hometown to the forefront of economic opportunity. It will also reverse the out-migration as highly skilled workers are attracted back.

Armed with a mass of information factoids and forecasts, John collected his staff for a brainstorming session to conduct strategic planning. After sharing his perception of where the company is and showing them its financials, he shared insights that he had gained during his research. Then John established the ground rules for the opportunity brainstorming they were about to begin: No idea would be too wild, no idea would be ridiculed, and everyone would be expected to express their thoughts. He wanted to create a synergistic result in a short time.

John rented an electronic meeting room at the local university. He had each person sit at a computer and enter ideas using their keyboard. All of the ideas were displayed to every other participant. This prevented a dominant individual from monopolizing the session and stifling comment. He acted as the facilitator or moderator for the session.

John also quickly suppressed rumors or negative thoughts. He needed the team to be open and expressive. He asked everyone what they expected the economy to look like in January with continued no-growth, a reduction in US exports, dumping by Japanese banks of US real estate and US Treasury bonds, and poor economic news in Europe and the Far East. In this global economy, what happens in elsewhere in the world affects what will happen here.

John is determined to be successful. He emphasized that the company is in the information business, not publishing. The team developed a plan to position the shop for near term survival and long term success by finding more business. But how could they find the profitable clients?

This led to another brainstorming session. A number of new business options surfaced-cold calls, direct mail, trade shows, directory listings, door hangers, windshield flyers, local shopper inserts, magazine and newspaper ads, networking professional associations and user groups, and word of mouth by customers, vendors and colleagues. Each of these lead-generating sources has an accompanying cost. Each method also focuses on finding new customers. John feels that a treasure of repeat business already exists in their own customer base. If he could convince current and past customers to buy more products, they could increase sales without the high cost of finding new customers. The strategy would be to learn all they can about their customers, reward them for repeat business, offer them what they need and want at a price that they can’t refuse, and give them a reason to tell a friend.

To get new customers, John decided to form partnership alliances with his competitors. He noticed that the big companies were forming large webs of joint-ventures to provide the critical mass required for new products and services. Why not do the same on a smaller scale?

John contacted competitors that he respected and who produced work with the quality that John demanded of his own staff. Each competitor possessed skills or capability that John’s shop did not. He met with each owner individually. None of the competitors knew that he was also talking with another competitor. John wanted to find the best relationship and business formula that he could.

In a no-holds-barred meeting, he described to each owner his near term scenario. Then John proposed several solutions. He explained that an opportunity exists to work together for mutual gain. The relationship could be in the form of trade support for each other or an actual partnering agreement. In the first solution, each could refer customers who needed a particular product that the other offered, or they could use each other as a subcontractor. Each would charge the other a trade rate for services. The priority of services would be negotiated up front. This formula allows each company to produce a larger pallet of products faster and without the additional investment in hardware and software. The second formula is to pair two companies to jointly offer a wider variety of product options. Additional savings occur by conducting joint marketing and advertising programs.

The wise competitors saw value in John’s proposal. To make the relationship work, they must identify mutual interests that will be met, recognize and work to overcome possible obstacles, and mutually measure the results of the alliance. It’s vital that all participants win. Otherwise they can mutually lose to an unrelated competitor. A suitable partner was found and gradually a relationship formed. They developed a joint strategic business plan and allocated funds to cooperatively market the partnership. Each day a dialogue assessed progress in implementing their business plan and the success of the venture. John had taken the first giant step into his business future. And it was working.

Robert Brenner is the president of Brenner Information Group. He is the author of 18 books including PRICING GUIDE FOR DESKTOP SERVICES and over 300 articles. He can be reached at PO Box 721000, San Diego, CA 92172-1000, 619/538-0093.

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