Prediction vs. Hindsight: What Matters More?

November 23, 2011

Today I read an interesting—albeit not entirely surprising—perspective on the “Top 10 Financial Failures of 2011.”   As I reviewed the notable events, and as the year draws to a close, the age-old saying “hindsight is 20/20” was all I could hear.  I couldn’t help but think there’s a very valid reason that there are few fans of the so-called Monday-morning quarterback. 

Looking toward the future, then, surely is better than looking in the rearview mirror.  Right? 

Not so fast.  I quickly found this blog post, with its 6 top financial trends for 2011. As I read it (also interesting and also not totally surprising) it triggered another line of thought, and not what I was expecting—what good is foresight if it’s not what actually ends up happening?  (What I expected was that I would start cross checking the predictions against the reality to see how accurate they were.  But then it hit me—what’s the point?  Who really cares whether the trends predicted reflected the ultimate reality?) 

As I was contemplating the obvious question of whether relying on predictions or hindsight matter more in the day-to-day dealings of business, the answer virtually screamed at me:  Neither!  Reality matters most.

The reality of each day is what impacts business most.  Yes, we can and should pay attention to predictors and best practices.  We can learn lessons from history.  But what actually happens inevitably weighs more than what is expected to happen, and big gaps between the two can be catastrophic to a business.

So how do you strategically plan for an ever-changing reality?  You need to make certain that you have nimble and adaptable systems, programs, processes and employees.  That way, when a new demand or requirement arises, you are ready to respond.  This can cover any number of functional areas, from data and system consolidation to workflow efficiencies to customer service.  Through careful planning and deliberate choice of what systems you use and how you do things, you’re able to change quickly and with minimal impact.  Having a robust infrastructure that enables sophisticated analysis and reporting means you’re ready for virtually any regulatory change.    Continually evaluating systems and workflows to ensure  resources are allocated optimally can more than compensate for market volatility and skittish investors resulting in increased demands on money managers.

And because a lot of change creates a classic “hurry up and wait” scenario, having the right systems and processes can result in a lot less hurrying and a lot less waiting—freeing you up to keep a laser-like focus on your key business strategies and allowing you to benefit from change, as opposed to being burdened by it.

Nicole Comeau – Product Manager

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