The share market, government ministers … pretty much any stakeholder doesn’t like surprises, except of course if they are a nice surprise. Consequently, your Board is the same and this is why there is value in well thought through good quality predictions.

When reporting to the Board on progress against your strategic plan, there is an obvious need to focus on what has happened so that the members understand how the current situation has been arrived at: to give them an opportunity to sense check that the outcomes match the dialogue provided.

Next is forecasting. When forecasting, most often I see forecasts that are single estimates rather than a range. That is, “Revenue target will be $X”, not “Revenue will be >$X with a 90% probability and more than $Y with a 50% probability, and more than $Z with a 10% probability”. Providing a range with probabilities, calculated appropriately using statistical models, along with explanations of the breadth of the range, will make it much easier to unpack results at the next update.

If your organisation is not in a position to utilise statistical models to improve your forecasts, what else can be done? The answer: One simple thing, which is to put a risk level on each of your strategic objectives. In fact, even if you use statistical models, you should do this as well, as some of your objectives will be much less measurable than pure financial ones.

By putting on a risk level, based on an estimate of how much we may miss our targets by, and how likely that we will miss them, you’re reporting to your board:

“This is the performance over the last quarter, and this is the risk to future performance.”

What board wouldn’t be happy to receive a performance update in this way?