Are You Ready When They Predict Snow?

The snowstorm gripping the country reminds me of a visit to Minnesota earlier in my career. We were scheduled to make an early morning presentation in Marshall, which is about a 3-hour drive west of Minneapolis.

As our team gathered, I noticed that my good friend and colleague Scott Wallace had brought a small bag and an extremely large bag that was stuffed full. I thought he was bringing his hockey gear for a good workout and began to joke with him about how much he had packed for a simple overnight trip. He then explained to me about his snow bag and how things worked in the north.

Scott had been designated to bring his snow gear. This consisted of several layers of clothes topped by an insulated suit, boots, snow goggles, a hat, and gloves. He explained the real winter threat was white out blizzard conditions and what would happen if which were trapped in such conditions. He was the guy designated to get help.

The next day, I left Minnesota with two things. One was a great appreciation and respect for the awesome power of nature and what a prudent man needs to do to for it. And secondly, a great desire to make sure that the pilot for this project be performed at a facility much farther south, where snowstorms are rare. (In large portions of Texas, the term blizzard refers to an ice cream concoction made by blending a candy bar into soft-serve ice cream rather than anything to do with severe snowstorms.)

As individuals, we often have to scramble to recover when our plans are blown off-course. That is because most of our planning assumptions are about as accurate as weather forecasting. At Business Finance magazine, we often run a first-quarter survey of budgeting and planning practices. My favorite question asks:

At what point do your current-year planning assumptions become obsolete?

The multiple-choice answers are:

a. Before the year even begins
b. 1 to 3 months into the year
c. 4 to 6 months into the year
d. 7 to 9 months into the year
e. 10 to 12 months into the year
f. Never; they are valid the entire year

The past 2 years, two-thirds of our respondents answered less than 6 months (a, b, or c). How would you reply? If your budget has a shelf life of less than half a year, why do you spend so much time preparing and negotiating it? That is why so many companies are replacing budgets with continuous rolling forecasts.