What 99% of Founders Get Wrong With Their Forecasts | by Pete Sena | Apr, 2023

Stop thinking forward — start thinking backward

When was the last time a business forecast that got presented to you or that you presented was completely accurate in reality?

If you’re like most business leaders, you’re likely thinking never. According to Gartner, only approximately 45% of sales leaders and sellers feel highly confident in their company’s forecasting accuracy. That feels pretty generous to me: Hubspot says salespeople spend over two hours on weekly sales forecasting, but they’re less than 75% accurate.

Keep in mind that’s for organizations that are doing business and have data they can analyze. Now, please tell me how you can accurately forecast anything for your startup’s pro forma plan. Go ahead; I’m waiting…

You can’t do it with any true accuracy, nor can I, even though I have more than 17 years of experience launching and building businesses.

Meanwhile, I’m not saying don’t forecast — you always should because there’s a lot to learn from it. At the core, you’re envisioning a future state. You’re using your existing knowledge and experience to predict what may be. Nothing wrong with that.

But then again, you’re working with only what you know, which is history the minute it happens. And it’s not just you; it’s all kinds of organizations. In fact, Gartner predicts that in the next couple of years, more than 90% of B2B enterprise sales organizations will still be relying on intuition vs. data analytics for forecasting — that’s their forecast, anyway 😉.

But if you want to build a product, service, or brand that doesn’t just attempt to predict a future state but actually designs it, you should add another forward-obsessed practice to your business planning toolkit: backcasting. It’s something that visionary entrepreneurs and CEOs from Henry Ford to Nikola Tesla, Steve Jobs, Richard Branson, and Elon Musk have successfully used. And it’s a technique that futurists like Faith Popcorn and Amy Webb, founder and CEO of the Future Today Institute, swear by.

Most founders focus on forecasting, but 1% of unicorn founders use backcasting. They don’t think linearly forward; they think expansively backward.

In other words, they can envision a future state — not utopias, but the people will face in tomorrow’s world and plan backward from there. Here’s the good news: you can easily do it, too. I back out future scenarios all the time.

So, let’s project about seven minutes in the future from right now — by the time you finish this article, you’ll have a reverse roadmap to drive future growth, including inspiration from legendary visionaries who have made the unimaginable real.

In my career, I’ve made it a point to study and talk to hundreds of successful entrepreneurs to get into their heads, hearts, and mental models. What every exceptional leader has in common is the ability to create a great vision, clearly articulate it to other people, and then inspire and bring those people together moving forward.

So, I started asking myself how game-changing visions are born — not just how they’re delivered, which would include clarity, alignment, and purpose — but literally how they were created. And in every case, it has to do with permitting yourself to dream of a future state that ignores current constraints and welcomes an unbridled vision of what can be.

Take, for example, Henry Ford. He didn’t invent the car (Karl Benz had a patent for a “horseless carriage” in 1886 and exhibited a vehicle in 1889 at the Paris World’s Fair), but he is credited with bringing automobiles to the masses. His vision didn’t just change transportation but reimagined capitalism.

“I will build a motor car for the great multitude. It will be large enough for the family but small enough for the individual to run and care for. It will be constructed of the best materials, by the best men to be hired, after the simplest designs that modern engineering can devise. But it will be so low in price that no man making a good salary will be unable to own one — and enjoy with his family the blessing of hours of pleasure in God’s great open spaces.”

Until that point, cars were incredibly expensive, only for monarchs and captains of industry. But Ford had a vision that someday everyone would drive cars — and he was right.

Where did he get that vision? For most of his life, Ford tinkered in his workshop. This is a meditative practice. If you look at other iconic entrepreneurs, like Steve Jobs (Buddhist meditator), Yves Chouinard (outdoorsman/surfer), Ray Dalio (Transcendental Meditation), and Arianna Huffington (meditation, sleep rituals), just to name a few, making time to reflect and clear their minds is an integral part of their daily routine.

It’s this sacred space where the future is born. Whether you get your best ideas in the shower on the top of a mountain while skiing or snowboarding, the point is you have to make space for free-flowing riffs.

I believe that ideas are the special entities that come to us. Your ability to visualize those ideas is what makes the difference between success and failure.

This is where backcasting comes in.

Rather than trying to predict the future based on past behavior, backcasting is all about creating a future state that’s unconstrained by anything we currently know. That may sound child-like, and in some ways, it is — the Zen concept of Shoshin, or Beginner’s Mind, dares you to drop preconceptions and, as Buddhist master Shunryu Suzuki put it, “be mischievous.”

This can be a terrifying challenge for business people who live and die by results. But if you’re a visionary leader, you must have the courage to go beyond what’s known to create something completely novel. Most people have no idea where to start, nor do they have the ingenuity, courage, or vision to imagine a world different from what they know.

As Henry Ford once said:

“If I had asked people what they wanted, they would have said faster horses.”

So, backcasting isn’t asking your customers what solutions to their current problems they can imagine — it’s about you visualizing their future challenges, coming up with inventive solutions, and engineering a pathway marked by innovative milestones to take your customers to that future place.

Let’s recap those three steps:

• Identify a problem that will be important to solve.
• Envision solving that problem in a novel way — remember, what will solve tomorrow’s problems doesn’t exist today, so don’t accidentally constrain yourself by trying to forecast.
• From that future state, work backward, creating a map that documents the innovations necessary to get there.

Notice that the critical difference between having a vision and being a visionary is action. Coincidentally, that’s what separates the founders of successful startups from the 90% that fail and make the 1% of unicorn founders college case studies and household names (i.e., Travis Kalanick/Uber, Brian Chesky/Airbnb, and so on).

A vision is something that doesn’t exist but that you see in your mind’s eye. What all the great innovators and inventors have in common is they can manifest an idea in their minds first.

And then, they back up and figure out the steps to make that imagined product, experience, or service.

You don’t have to be a time traveler to project yourself into the future. In fact, there’s a simple design thinking exercise my team and I use all the time called “Bridging the Gap” that will help jumpstart your backcasting.

All you need to get started is a whiteboard or paper and something to write with — you can do this activity solo or with a team. The activity has three parts, so you can divide the whiteboard/paper into three sections.

Part 1: Set a timer for five minutes to describe your business as it stands today. How do people feel about it? What life stage is it currently in? Describe your product, market, and revenue. This sets the foundation.

Part 2: Now, set a timer for another five minutes to imagine your business 20 years into the future. What will you sell? In what markets? What will people and the news headlines say about your brand?

Part 3: This is where the “gap” comes in. Set a time for a final five minutes, and compare where the business is today and where you’d like to be in the future. What strategies, tactics, or actions will you need to deploy to bridge that gap and make the future you see reality? Dare to dream — write things that don’t exist today but might tomorrow.

Once you’re done, you’ll plot your ideas, tactics, and strategies chronologically. This will help you develop or refine your planning documents, product roadmaps, or any other key documents that help define your business goals and aspirations.

It’s not an either-or deal when it comes to forecasting versus backcasting. In business, you’ll do both. But what I love about backcasting is the utter freedom it gives you to manifest success. As T.S. Eliot says in one of my all-time favorite quotes:

“We shall not cease from exploration, and the end of all our exploring will be to arrive where we started and know the place for the first time.”

With forecasting, you’re constrained by the past and what you know (or think you know). It’s like a headwind pushing on you, creating friction and resistance that slows you down energetically and emotionally. While you can still be optimistic, you’ll place more conservative bets.

For example, the Minimum Viable Product (MVP) from Eric Ries’ Lean Startup approach. It’s well worth aiming for as it keeps effort and investment minimal but maximizes opportunities to learn about your customers and evolve quickly. But then again, you only get one chance to make a first impression, so, IMHO, backcasting helps you aim higher with more creativity. (Aim for Minimum VALUABLE PRODUCT)

In other words, I’m a big advocate of having a bit of both in your forward-obsessed toolkit when you’re building your business.

When you project yourself into the future, you visualize the end goal and what it takes to achieve it. And while you’re likely to make plenty of missteps, if you hold that vision, you’ll get a lot of things right — and, critically, you’ll be innovating.

For inspiration, check out this video Microsoft made in 2015 about how productivity will look five or ten years in the future (ahem, so today), thanks to emerging technologies, including ubiquitous computing, new collaboration services, and data analytics.