“Every forecast takes a number from today and multiplies it by a story about tomorrow.” – Morgan Housel

He describes all forecasts as the same: “Something we know multiplied by a story we like” and adds, “The trick when forecasting is realizing that’s what you’re doing.”

How often do we make what we believe to be sound business decisions based on the data, but get surprised by results far different from what we expected?

When we look at charts and figures, it’s natural to feel confident or reassured that the data backs up our point of view. As someone who’s created dozens of graphs and tables for quarterly business reviews, I’ve usually asked myself, “Okay, how does the data support my message?” Not a bad place to start, right?

The problem is, that assumption is colored by the story I’m telling myself about the data. If I’m not careful, that story can blind me to some even more important questions: “Does the data support my message?” “Am I looking at the right data?” “Does this data really mean what I think it means?”

So instead I’ve learned to start by asking:

1. What’s the story we’re telling ourselves?
2. How will I know if our story is wrong?
3. And if our story is wrong, what’s our Plan B?

If you’re involved with QBRs, forecasting meetings, or other meetings that rely heavily on data – these questions will help you uncover the real story.

Originally published on LinkedIn.

To connect with Ching Valdezco or learn more about our Storytelling with Data programs, contact us.