Forecasting needs: what present circumstances can distort
Managers often commit resources for a period whose conditions differ from those in which they make the decision. The useful question is specific: how can they prevent needs felt today from becoming, without scrutiny, the benchmark for sizing future operations?
What the literature establishes
George Loewenstein, Ted O’Donoghue and Matthew Rabin (2003, The Quarterly Journal of Economics) formalise projection bias: the tendency to overestimate how closely future preferences will resemble present preferences. Their article combines an economic model with earlier empirical findings, rather than reporting a trial conducted in organisations. The mechanism does not require people to overlook an impending change: they can anticipate it while underestimating its effects on what they will want.
A temporary state influencing a future choice
Daniel Read and Barbara van Leeuwen (1998, Organizational Behavior and Human Decision Processes) examine food choices made in advance, varying appetite at the time of choice and expected appetite at the time of consumption. Their results show that a person’s current state influences a choice intended for a future state. The managerial relevance is a hypothesis to investigate: a period of overload, or conversely a quiet spell, might influence the needs people project.
The premature conclusion
One might conclude that decisions should only be made during quiet periods. These studies do not establish that: a quiet period is itself a particular situation and does not necessarily represent future conditions. The issue is instead to distinguish the conditions in which a decision is made from those in which its consequences will be experienced. (our executive and employee training programmes)
What the evidence does not allow us to transfer
An experiment on appetite does not measure the quality of a staffing, maintenance or tourism-capacity decision. Organisational needs also depend on technical constraints, service obligations and documented demand, not merely on individual preferences. A revised forecast is therefore not, on its own, evidence of bias: it may incorporate new and relevant information.
A practical check in Sion
As part of SHR’s “Decision-making” programme, an exercise in Sion could examine a resource allocation decision involving hydropower, healthcare, viticulture or Alpine tourism. Before the decision, record present conditions, expected conditions when the resources will be used, and the evidence supporting the stated need. When reviewing the decision under a different workload, retain the original file and separately record any new information and each proposed revision. The verifiable measure is the proportion of files whose recommendation changes without documented new evidence: a signal to investigate, not proof of bias or a sufficient indicator of quality. To go further: explore the Decision-making training in Sion in the canton of Valais, or browse our executive and employee training programmes in Switzerland.
In pictures: Decision-making in Sion
- decision-making
- Sion
- research
- training sion