Being able to consistently predict and deliver accurate future outcomes is a skill that separates a good CEO from a great one. And no, I am not referring to the god-like ability of Steve Jobs to predict how products like the personal computer, iPod, iPad and of course the iPhone would completely revolutionize the computing world, because you only come across those type of CEOs once in a lifetime. To expect that kind of ability from every CEO is simply setting yourself (and the CEO) up for disappointment.
Then, there are CEOs that can gauge their company’s strengths & weaknesses, read market conditions and deduce estimates provided by their sales or operations team to provide a range of performance metrics that the company’s employees can work toward delivering. These predictions can be the sales numbers, margins, profits and/or any other metric that can be used to measure the company’s performance. The CEO could then drive the team to meet these deliverables within the mid-point of that range. This ability to predict an outcome makes a great CEO.
However, an obvious question that can pop up is ‘why would a CEO want to be at the mid-point of their predictions and not over-deliver?’
The reason is a CEO that consistently projects numbers that the company will beat gains the reputation of sand-bagging and their seniors discount their prediction ability.
A great CEO is skilled enough to provide an unbiased and precise reasoning as to why the numbers his/her team were on the lower or higher end of his/her estimate.
Just reading this note from a CEO can tell you whether that CEO is at the top of affairs in his company or not.
I called this ability a “skill” because it is something one develops over time with proper practice. Therefore, if you are a CEO and want to learn this skill, start by predicting the sales numbers your company will achieve in a month. Jot down 3 numbers i.e. the low estimate (if everything goes to hell), the mid-estimate (if everything goes according to plan) and the high estimate (if you happen to catch a lucky break!). Share these numbers with your board or mentor along with the list of assumptions you made to generate them.
As the month progresses you will start to see that some of your assumptions are playing out and some are not. On the 7th, 15th and 22nd day of the month predict whether you will be at the higher or lower point of the range and clearly state the assumptions that have led you to believe that. At the end of the month i.e. on 30th or 31st, you will have the initial prediction and 3 follow-on predictions to compare with your final number. You will now be able to analyze which of your predicted scenarios played out and which ones didn’t. Take that learning and predict an outcome for the next month i.e. just practice, practice and practice.
When the range between the high and low estimates are shrinking, it is a sign that you are getting better at this skill. You will begin to see which manager overpromises and underdelivers and which one does vice versa. After some trial and error, once you have a good handle on predicting one metric, add one and so on.