So, What did you assume?

For this blog let me use the following terminology:

Prediction - It is a statement of what will happen.

Forecast - It is a statement of what you think will happen, based on certain assumptions about the world - assumptions about the  external environment and about your own future actions and those of others.

I have seen many people severely underestimate the importance of study of probable futures.

Forecasting is a very important tool for making any sort of important decisions. Actually, it is impossible to take any decision without employing at least some very rudimentary forecasting technique. The decision making skill would improve greatly if one learns more about it. 

For now, let me tell you some of the points, which I think are important and feel that most people are unaware of it.

• A forecast, if it is to be an effective tool, does not have to be a good prediction of the  future. The very fact that the forecasted future might not come about - because the assumptions might be wrong or have been changed - as a result of decisions you make based on forecasts - that makes forecasting useful. A perfect prediction is perfectly useless. 

• Bad forecasts are worse than no forecasts. If you have no forecast, you will be at least be alert; you will always have a lookout posted. A poor forecast, on the other hand, can foster dangerous complacency or misinform decision making. Forecasts help us to work out what to look for - they distort our perception. If we have not contemplated that something might happen we may fail to even notice it until it is too late.

• Unlike historic information which we only need to collect, forecasting information must be created; and the process of creation is very complicated. Simply forecasting better is not enough; you have to know what you can do with the information if the picture the forecast paints is not what you want, so we need to understand the link with decision-making as well.