Quick Insight
In addition to forecasting a most-likely scenario, project a “best case” and a “worst case” scenario. This is sometimes referred to as “bookending” or “bracketing.”
Bracketing stretches your field of vision for potential outcomes. This may help you see actual changes that occur. As Chip and Dan Heath say in their book Decisive, “The future isn’t a point; it’s a range.”
People make more accurate estimates when they consider the high and low amounts at the same time. This means you may want to do some bracketing of assumptions while setting them before and during the forecasting process.
Bookending helps you anticipate potential outcomes and prepare for them. You may find an opportunity you want to prepare for or a risk you want to mitigate. You may decide to adjust your forecast for these opportunities or risks.
A small amount of preliminary anticipation can help you more quickly adjust and develop plans if the business environment starts to trend toward an alternate scenario.
- Rob Stephens
Founder of CFO Perspective and the Finance and Strategy Toolkit (FAST)