MEPX
Chapter 9 of 10All chapters
  1. 1What is one row
  2. 2Rates and denominators
  3. 3Beyond the average
  4. 4Compared with what
  5. 5Aggregation traps
  6. 6Noise and significance
  7. 7Metrics and proxies
  8. 8Missing data
  9. 9Reading forecasts
  10. 10A reading routine

Chapter 9 of 10

Reading forecasts

Projections are assumptions.

What drives them

A forecast is a model plus assumptions about growth, retention and seasonality. Changing one assumption often changes the answer more than any amount of historical data does.

  • Ask which assumption the result is most sensitive to.
  • Straight-line extrapolation of a recent trend is the least reliable method in common use.

Ranges

A single projected number implies precision nobody has. Best, likely and worst cases communicate the real state of knowledge and are harder to misuse.