Foresight is an important tool for making informed business decisions. Regardless of the size and characteristics of the company, forecasting helps the organization’s management to predict the trend of important business metrics, such as sales expectations or customer behavior. Forecasting capital is valuable, but it requires special skills and accurate data. This will help you better understand what forecasting is and how it can be an investment for your organization.
What is the forecast?
Forecasting is a way to make informed predictions using historical data as the main input to determine future trends.
Companies use forecasting for a variety of purposes, such as forecasting future expenses and determining how to budget.
What are the main sources for forecasting?
The data used for forecasting methods can be obtained from primary or secondary sources.
Primary sources: Primary sources provide primary information that the person or organization they anticipate collects directly. Data is usually collected from questionnaires, focus groups or various interviews, and although it is difficult to collect and focus on all the information, the direct method of obtaining the data makes the main sources the most reliable sources;
Secondary sources: Secondary sources provide information that has already been collected and processed by other organizations. Receiving data in an organized and collected manner speeds up the forecasting process.
What is the purpose of forecasting?
Forecasting determines the degree of accuracy required and helps identify the most appropriate forecasting techniques. An extensive decision, such as whether or not to enter a new market, can be made by estimating the approximate future size of that market. On the other hand, a more precise decision, such as determining the appropriate budget for each department, requires a more precise and detailed approach.
What is the importance of forecasting?
The ability to accurately predict future trends and events is useful in many areas, including business management. Prediction is important because it can be used for:
Estimating success in a new business
Proper anticipation when starting a new business can reveal important information that may determine a company’s future success. Anticipation reveals some of the risks and uncertainties that the new business faces and can provide the entrepreneur with the right tools to anticipate elements such as competitiveness, demand potential for a product or service, and future industry development.
Estimating financial needs
Estimating the future financial needs of the company is one of the most important applications of forecasting that can help the company determine the financial future by estimating sales, capital needed to develop the product, development costs and other potential costs that are used to estimate future costs.
Ensure the operational cohesion of the company
Proper forecasting can reveal important information about future income and expenses. Company management can set more efficient and accurate plans for the future by estimating the organization’s inflows and outflows in a given period of time.
Assisting managers in making the right decision
Now that you know what forecasting is and what it means, you should know that an interesting part of managerial decisions is based on accurate forecasting. Most jobs, regardless of size, face potential uncertainties, including seasonal increases and decreases in sales, changes in personnel, and changes in raw material prices depending on the exact nature and purpose of the organization. Anticipation plays a major role in providing information to managers to make informed decisions about the future of the company.
Increase the probability of successful commercial investment
The success of a business often depends on the right precautionary budget and the right budget allocation. Forecasting can predict important metrics such as the amount of raw materials needed, the appropriate budget for each part of the company, and the number of sales in the future. These figures help management allocate budgets and resources, and prioritize a product or service over another product based on the type of company and the data provided.
Develop effective plans for the future
All planning means using forecasts and making forecasting a very important element in setting realistic and useful plans. Any kind of planning, from short-term to long-term, is highly dependent on forecasting and establishes a direct link between accurate forecasting and adequate planning.
Promote collaboration in the workplace
Typically, collecting and analyzing the data needed for forecasting requires coordination and collaboration between all company managers as well as other employees. This increases cooperation, team morale and cohesion.
Help improve the organization
Foresight provides managers with information that can be used to identify weaknesses in organizational processes. By discovering possible shortcomings prematurely, they have the right tools to correct any weaknesses before affecting profits.
What are the forecasting methods?
There are 4 main forecasting methods that you can use to determine values, costs, expenses, trends and other similar indicators; Prediction methods are:
1. Straight-line method: This is the simplest predictive method for both learning and following. Typically, financial analysts use this method to determine future earnings based on past trends and figures;
2. Moving average: This method analyzes the basic pattern of the data set to estimate future values. The most common types of moving averages are quarterly and five-month moving averages;
3. Simple linear regression: This method is very useful for obtaining more accurate predictions, especially when analyzing the relationship between different variables;
4. Multiple linear regression: In situations where two or more independent variables are needed to predict, this method is mainly used to predict revenue.
What are the forecasting skills for investors?
Now that we have explained what forecasting is and how important it is, you need to know that forecasting is a major part of any investment, from stock markets and banking to real estate investing, venture capital, network marketing and business ownership. The most important skills investors need for accurate forecasting are:
Business skills
Understanding the business and market environment is a valuable asset for any type of investment. Whatever the type and purpose of the investment, the accuracy of the investor’s forecast depends on his understanding of the bigger picture and helps to determine the most useful forecasting methods and techniques for each situation.
Technical skills
Before an investor can make accurate and relevant predictions, he must have the necessary technical knowledge to identify relevant data, group them, and draw useful conclusions.
Data management skills
Data is the basis of all forecasts; Therefore, the investor must be able to identify, organize and manage all relevant data before receiving an insight into possible future developments. This means improving the quality of the data obtained by detecting and controlling any anomalies; It also includes the use of data to create real models for future events.

Communication skills
Good communication and interpersonal skills are valuable assets for investors. Communication is needed at every stage of the forecast, from data collection to explaining the results of the forecast to others. The investor will use his communication skills to interact with relevant business units, provide credit for investments, and pass on the forecast result to relevant individuals, such as partners and CEOs.
Technology forecasting
In recent years, technology planning has become one of the central components of corporate business planning. In such a way that technology planning is required both at the macro level (national) and at the company level as well as at the level of business strategies. Among these, technology forecasting as a starting point for technology planning has a special importance and position. In this section, while explaining the frameworks of technology planning and technology forecasting and their relationship with each other, the definitions and concepts of technology forecasting and the selection of appropriate methods of technology forecasting will be discussed.
Today, large and successful companies consider technology planning to be vital in order to gain more added value by using superior technologies.
In most European countries (especially the Organization for Economic Co-operation and Development), technology forecasting and technology planning officially began in the 1960s. Technology forecasting is currently used in most European countries.
In technology planning, the first step is to anticipate the technology. In the general approach to technology planning, technology forecasting is considered as a link between organizational strategy and research and development, which shows different ways to achieve long-term goals of organizational technology. Technology foresight can provide us with a vision of the future that will guide us today in shaping the future.
Technology forecasting helps managers identify how technology capability grows over time and how
Rival technology is emerging, growing and spreading, replacing older technology.
In technology planning, senior management support is very important to the organization, and long-term senior management plans should guide and support research and development activities to support the company’s goals, as well as determine in which technological areas to invest and without considering This will not be a clear path for the company, and what Frooman calls a “leap into darkness” should be avoided.
Technology planning framework
Various models have been proposed for technology planning, the most important of which is the model of Porter et al. Porter et al. (1991) developed a framework for technology planning based on research by Maddox, Anthony, and Whitley. This 7-step framework follows the overall strategic planning process and is as follows:
Step 1: Discovering Your Purpose This is the starting point for technology planning. This includes both the organization’s current technologies and the technologies that will be marketed during the planning period.
Step 2: Analyze and predict the environment. Identify environmental factors, potential environmental conditions, uncertainties, major threats (especially competition threats) and opportunities.
Step 3: Analyze and predict consumer and market behavior. In needs analysis, the current needs of key customers are identified and possible changes in these needs are determined and the effects and requirements of these needs on the products and services of the organization are identified. Market research and impact assessment of change are complementary. But analytical tools (however complex) alone are not enough. At this stage, direct contact with potential customers is essential. Real quality is about meeting the wants and needs of customers, and the best way to do that is to get closer to customers.
Step 4: Analyze the organization. Identify the main assets and problems. Make a list of the organization’s human and non-human resources and evaluate recent performance against previously identified goals. Knowing the strengths and weaknesses of the organization is crucial. It may be a good idea to use outside consultants to avoid mistakes that occur when evaluating an organization by its own members.
Step 5: Define the mission of the organization. Identify the underlying and vital principles. Set general goals for the organization, set specific goals for the planning period, and set criteria for measuring how well those goals have been achieved. This stage causes the organization to focus and avoid fragmentation, and the more people participate in this stage, the better. When each member understands the mission of the organization and feels a sense of belonging to it, the chances of the organization succeeding are higher.
Step 6: Design the organization’s actions. Suggest different options, analyze them and discuss. Develop an appropriate strategy that is agreed upon and leads to some key actions. This is another good time to re-use impact assessment tools.
Step 7: Run the program. Set small, timed goals and, if necessary, set steps, timing, and budget. Design a suitable mechanism for tracking tasks and functions below the standard. Monitoring can be very useful at this stage. Technology markets are very dynamic and every company should have a good understanding of changes and customer reactions.
As can be seen, the framework requires technology forecasting to identify the needs, opportunities and strengths and weaknesses of the organization and to develop and implement an action plan to achieve the goals of the organization.
As can be seen in this model, technology planning requires multilateral participation and it seems that in addition to the participation of company managers, the participation of production, marketing and research and development experts is also needed.
Definition of technology forecasting
Technology foresight is an attempt to visualize technological capabilities and to anticipate inventions and distribute technological innovations over time. Technology forecasting is a set of processes formulated to study the future of technology that results from advances in science and social change.
Technology forecasting is used as a tool in technology planning to identify the possible flow of future technological events to enable the appropriate selection of future technologies.
Elements of technology forecasting
For a prediction to be useful in the decision-making process, it must include four elements: qualitative, quantitative, time, and probability. The qualitative element means what should be predicted in technology forecasting. In other words, the events and phenomena that want to be predicted must be identified. Quantitative element means the quantitative development of the expected level of performance, which is expressed in numbers. The time element indicates when the phenomenon occurs and the probability element indicates the degree of certainty in the prediction.
Resources must be available to meet the expectations of a technology forecast. These sources include the four major sources of hypotheses, insight, data, and judgment.
Hypotheses are information that the predictor has sufficient confidence to validate over time, and it is recommended that important hypotheses be stated in the predictions, even if they need to be retested in future developments (they may be rejected in the future). Insight is one of the most important human characteristics in expressing the qualitative elements of prediction, and here we must emphasize that prediction should not be just a quantitative approach. In general, forecasting is finding its way to the future, and it can perhaps be said to be a tracking task.
A good forecaster uses his or her experience, technological know-how, and ability to relate to a wide range of developments. It requires an open mind to converge divergent thinking using creativity.
Once the right subject for the forecaster has been identified, there is a need for quantification and forecasting techniques that often track the future based on the past. There is a need for a lot of data and information here. In this way, obtaining the desired information with high accuracy is one of the predictive problems that it is suggested that an experienced team along with the forecasting team take on this task so as not to waste the time and focus of forecasting people in this path.
In many cases, such as predicting social and political trends, not much information is found or it is not possible to express them in a small amount of language, in which case there is no other way but to use the judgment of the forecaster or experts in that particular field. Managers’ mental judgments should be used as a complement to quantitative information in decision making.
Sources of error in technology forecasting
One thing to keep in mind is that technology prediction cannot be considered a completely accurate science and is always associated with error, and there are ways to reduce error. One of the effective factors in reducing the error in forecasting is knowing the sources of the error.
The most important sources of forecasting error are:
– Failure to consider parameters in the forecasting process
– Lack of available information when forecasting
– Inappropriate assumptions
– Choose the wrong forecasting method
– Improper interpretation (poor judgment) in the forecasting process.
Technology forecasting methods
Traditional methods of technology forecasting often rely on projecting past performance and generalizing it to the future. The fundamental weakness of this method is clearly evident in the evolving and complex conditions of the present world whose future conditions do not follow the past. Future conditions depend on the physical characteristics and constraints of the technology, social and environmental factors affecting its improvement, and market conditions compared to competitors. Environmental concerns, market conditions, the speed of technological change, and, in general, future conditions have made it difficult to predict technology, and this is such that other traditional methods may not be as desirable. For this reason, researchers and analysts have proposed new methods according to the circumstances. In a 1991 paper, Technology Prediction and Management, Porter et al. Described five technology forecasting methods as follows:
1. Experts’ opinions: This method is based on the assumption that an expert in his field of expertise can better predict progress. Necessary conditions for using expert opinions are the ability to identify and the presence of a group of experts in the field. If these conditions are not met, this method may not be appropriate. It should also be noted that consulting with experts does not always guarantee a successful forecast. Expert opinion methods are divided into two main groups:
 Methods of collecting information from experts, including Delphi methods, nominal group, structured interviews and questionnaires.
 Structural analysis methods that include structural and correlation tree analysis.
2. Monitoring: Monitoring means preparing an image of the environment using information that this information may be related to a specific technology. Monitoring is defined as the process of identifying possible signs in scientific, economic, managerial, political, or military fields that may also lead to possible advances in technology.
3. Development trend analysis: This method is based on the assumption that the future follows the past. In other words, this method assumes that the future is measured based on past events, trends and patterns. These factors and forces will not change significantly in the near future and the changes of the past will continue in the future.
4. Modeling: One of the methods that considers the relationships between events is the modeling method. This method is based on prediction, either computer-based (such as simulation) or judgment-based. The most important modeling methods in forecasting include interaction analysis and systems dynamics.
5. Scenarios: This method describes the future of developments over a period of several years to a century or more. Scenarios used in the field of technology forecasting describe different concepts of future technologies and show future technology options. Scenarios are useful when information is not available in the past, or experts in the field are weak or non-existent and there is no solid basis for modeling. In a classification, Tuiz divides technology forecasting methods into exploratory and prescriptive groups. In exploratory methods, the future is drawn using the knowledge provided from the past, while in prescriptive methods, a desirable technological future is first drawn and then the necessary planning is done for it.
Select the appropriate method for predicting technology
Studies show that one of the most effective methods of prediction is the combination of mathematical methods with judgmental methods. One of the main advantages of this method is that the number of factors that professionals have to use is reduced. The combination of mathematical methods and expert opinions will eliminate obvious errors. Thus, defining a forecasting strategy is an art that involves selecting, coordinating, applying, and changing quantitative and qualitative methods. To choose the right way to predict technology, one should not be limited to one method, but different methods should be used depending on the subject, purpose and available resources. Many criteria have been presented in this regard. Experts in the field have listed the following criteria for selecting the appropriate technology forecasting method or methods:

-The amount of access to information
-Degree of information validity
-Uncertainty surrounding the success of technology growth.
-The period when the forecast is made
-Cost and value of forecasting for decision makers
-The number of variables that affect the development of technology.
Moving technology forecasting to technology planning
Any prediction is an attempt to understand the course of future events. But this prediction can be pursued at different levels of knowledge and lead to the deepening of these predictions. These levels include extrapolation, general patterns of structural factors, and the planning agenda.
If the predictor confines himself only to past information and historical trends, he can only extrapolate past events to the future. If the predictor knows about the practical patterns of a series of events but does not know about a particular case among them, he can only apply the practical pattern to the extrapolation results of that particular case. S-shaped curves are an example of such general patterns in innovation.
If the forecaster does not have information about the type of factors influencing the direction and trend of events, by changing the structural factors, the performed extrapolation will be invalidated and will cause the most errors in forecasting. Therefore, in addition to general patterns of events, it is necessary to know the type of factors affecting the direction and trend of events. Therefore, in this strategy, after recognizing the patterns and structure of events, in the form of planning, the impact on the course of events is examined to make them as desirable as possible.
Conclusion
As observed, technology forecasting is very important in the process of technology strategy and planning. Technology forecasting is used as the first step in technology planning as a tool to better understand the opportunities and threats and to be aware of future technological developments and the current state of the organization’s technological assets. Thus, technology forecasting allows organizations (especially technology-based organizations) to step forward in a purposeful way and not be caught in future events. Because in today’s world technology plays a key role in development, it is very important to predict the trend of technology developments and future developments and to study its effects, especially at the national level. The tremendous impact of technology forecasting, especially when combined with technology planning, can provide major benefits in a variety of areas. This shows the importance of utilizing technology management knowledge in determining technology strategies both at the micro and macro levels.