Points of Interest

0:00 – 1:00 – Introduction to Forecasting Challenges: Marcel and Kristen set the stage by identifying forecasting as a critical but often misunderstood aspect of agency operations, particularly in scaling businesses.
1:06 – 2:30 – Defining Forecasting’s Importance: They explain how forecasting provides the necessary visibility to manage capacity, revenue, and key metrics, forming the foundation for informed decision-making.
2:47 – 3:48 – Forecasting as a Management Function: Marcel discusses how balancing workload and staffing is a core leadership task, becoming more complex and high-stakes as agencies grow in size.
5:05 – 6:17 – Bottom-Up Forecasting Explained: Marcel describes the traditional method of forecasting via detailed task-level planning, often used by project managers to allocate resources with precision.
6:32 – 7:52 – Limitations of Bottom-Up Approaches: Kristen and Marcel highlight how bottom-up forecasting becomes difficult to scale due to its complexity and sensitivity to frequent changes in scope or staffing.
7:59 – 9:39 – Top-Down Forecasting Defined: The conversation shifts to top-down forecasting, which simplifies inputs by modeling at the role or department level, enabling faster, strategic scenario planning.
11:00 – 12:20 – Embracing Uncertainty in Leadership Planning: Marcel explains how top-down methods are better suited to leadership conversations, which often require evaluating multiple uncertain scenarios quickly.
13:04 – 14:27 – Statistical Logic Behind Simplicity: Marcel introduces the concept of reliability block diagrams, illustrating why less granular systems can actually offer more consistent accuracy over time.
17:00 – 17:45 – Precision vs. Accuracy in Uncertain Contexts: The hosts explore how broader, less precise estimates (e.g., ranges) are often more accurate and actionable when future outcomes are unknown.
20:31 – 23:01 – Keeping Systems Separate for Efficiency: Marcel warns against tightly coupling bottom-up and top-down systems, advocating for independent but aligned processes to avoid maintenance burdens.
26:15 – 27:02 – Material Discrepancies and Process Discipline: They stress that small mismatches between forecasting systems aren’t necessarily problems and underscore the importance of scope-driven planning.
30:57 – 34:20 – Getting Started with Top-Down Forecasting: The episode closes with advice on how agencies can start building simple top-down models using team capacity and project estimates to guide executive decisions.

Show Notes

Top-Down vs Bottom-Up Forecasting, With Kristen Kelly

The Agency Profit Podcast