Business projections: beware the crystal ball

The chances are that your company has a graph of projected profits over the coming years.

It is dangerous. It is dangerous because profit cannot be predicted. Profit can be wiped out by an nimble competitor or shift in consumer trends. Profit can skyrocket due to unforeseen success.

Past performance is not a good indicator of the future.

The world is becoming more interconnected and more complex. “Winner takes all” and power laws are more common than linear growth.

Be wary of anyone with a crystal ball.

The best defence is innovation. The bible is The Black Swan.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s