To overcome the limitations of individual forecasting the obvious step is to involve a group of individuals in the forecast. These individuals will develop a forecast by reaching some sort of consensus. There are different methods available to reaching this consensus: a straight forward jury system or the Delphi technique.
According to Dalrymple (1989) and Mentzer and Cox(1984), a jury of executive opinion is one of the most popular forms offorecasting used by organizations. Effectively a group of company executives(or it could be a panel of experts external to the company) are brought togetherto discuss their respective views of events that may occur in the future. A Group forecast emerges that is the consensus view of the group. Any forecast will depend on the quality of the individuals within the group. There are several problems with a jury method. Decisions about the composition of the jury will have a major impact on the judgments the group will derive. The consensus reached by a jury, as it attempts to reach an accommodation all members can live with, may diminish the input of the more talented forecasters.
An even greater threat is that persuasive individuals, or those with greater status, rather than those with the most knowledge dominate the group. The greater the cohesiveness of the group the more likely it is that they will be unwilling to listen to a dissenting individual within the group. This tendency is called ‘group think’ and can have major implications for management groups in general and jury forecasting in particular. Group think tends to occur with groups of individuals that know each other well, enjoy being together and belong to the same ‘in group’ (Janis, 1972; Janis and Mann, 1982). These in groups are widespread in organizations.
Four key factors affect the way in groups work and the level of group think that develops:
Janis regarded decisions such as the Bay of Pigs crisis, escalation of the Vietnam War and the lack of preparation for an air attack on Pearl Harbor as illustrations of the effect of group think. A more contemporary example would be the disaster of the Challenger space shuttle There are obvious commercial examples as well, including perhaps the Sinclair C5.
In groups cause obvious problems for organizations as they curtail critical evaluation, limit the serious reflection of alternative courses of action and foster acquiescent behavior in individuals. However, they are virtually impossible to eradicate. In groups exist precisely because they offer security to individuals and a sense of belonging. There are ways to minimize group think behavior during forecasting and planning activities.The aim of these curtailing actions is to enforce a critical evaluation of the decision-making process without destroying the group. Fostering a critical evaluation can be facilitated by instituting several procedural measures(Makridakis and Wheelwright, 1989):
One technique that has been developed to overcome the problem with group forecasts is the Delphi forecast. A Delphi forecast purposely keeps the panel of experts involved physically apart. In many studies they will remain unknown to each other. Communication is undertaken by letter or e-mail directly to each individual from the Delphi study coordinator. This approach is taken in order to remove the social pressures and other undesirable aspects of group interaction. If a study examining what technological break throughs are desirable and achievable in the next twenty years was commissioned the following procedures would be executed. Once a panel of experts has been formed by the coordinator the Delphi study will have at least four phases:
Delphi forecasts aim to arrive at a consensus position and can go beyond a fourth phase in order to do so. Once a consensus has been achieved an organization can then begin to weigh up the impact the forecasted events will have on their operations.
There are several problems with this forecasting technique:
The advantages of the Delphi method should not be dismissed, however – the technique does attempt to remove some of the problems related to group decision making. The Delphi method is also a move away from striving to form a single view of the future. Although the aim is to narrow down the responses to as much of a consensus as possible this may not be achieved. When the process does not reach a clear consensus it can still be useful as it has identified the spread of opinion among experts in the field. A planning team can therefore consider a series of potential outcomes.
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