Why forecasts should drive strategy



Stefano Malvolti, director of strategic vaccine supply for PATH, on forecastings role in strategic execution and implementation

Despite all the planning and strategy that goes into generating forecasts, finished forecasts often have little bearing on the strategies pharmaceutical companies pursue.

The perceived value is in the forecasts numberthe target, the proposed budgetnot in the insights that went into devising that number.

This, according to Stefano Malvolti, director of strategic vaccine supply for PATH, is a huge waste.

Planning is the process, Malvolti said at eyeforpharmas Pharma Forecasting Excellence summit, held in Zurich.

Forget about the result. Whats valuable is the discussion you have about what can help.

PATH is an international nonprofit organization that facilitates access to vaccines in developing countries.

In his work for the organization, Malvolti is responsible for forecasting the unknowns of introducing a new vaccine into places like Burkina Faso or Niger.

He says the numbers he comes up withhow long, how many, how quicklyare irrelevant.

Its the lessons learned in coming up with those numbers that count.

While the plan remains in a closet or on a piece of paper or an excel spreadsheet, there is not much use and value in that, he said.

The value is when these translate into some operationalization of the strategy and some execution.

Keep it simple

Malvolti says the first key to turning forecasts into drivers of strategy is to keep those forecasts straightforward.

Dont get bogged down in unnecessary complexity.

For PATH, Malvolti is tasked with projecting the cost of introducing a new vaccine to a developing country as well as a likely launch date.

While there are myriad variables he could throw into the mix, he prefers to limit those variables to the bare essentialswhen, how, how quickly, and for how many people.

His reasoning is twofold.

First, the data available in most developing countries is inherently unreliable, which makes it hard to forecast complex variables effectively.

Second, considering more variables will only serve to distract from the key discussion points that should drive strategy.

We have to take away focus from forecasting a specific concept and instead [focus on] the one or two general concepts that are critical for execution and implementation, he said.

Dig below the data

A second key step is to delve into the driving forces and determinants of each of your variables.

The insights behind the numbers and the data are what will help your organization determine its future course of action.

In Malvoltis case, he likes to examine each step of a countrys application processfrom expressing initial interest in a vaccine to applying, getting reviewed, gaining approval, and receiving the first shipments.

Figuring out how long a country has taken to go through this process in the past obviously will shed some light on an expected launch date in the future.

More importantly, though, it will help develop an understanding of a countrys historical strengths and weaknesses, and that can be discussed with partners and then parlayed into a work plan.

How should you approach this country? Where does it need help? How should funding be distributed?

This is not rocket science, Malvolti said.

Whatever model we build, forget the theoretical blue sky scenario. Focus on the type of information you do have and the logical process you want to influence. Then we make this work of planning something that is useful and executable.

Put someone in charge

So youve kept your forecast simple, youve grappled with your data to develop a strategic understanding of potential roadblocks, and youve discussed that with partners to ensure its integrated into strategy.

Now what about execution?

Malvolti believes its critical to set up a body that will govern the transition from planning to practice.

He relates it to the challenge of delegating responsibility for sales and operations planning in the private sector.

Who should own itMarketing? Commercial operations? The finance department?

It turns out, it often doesnt matter which department steps in.

What counts is that one department is made fully responsible. (For more on sales and operations planning, see Forecasting: Aligning marketing and operations.)

Malvolti says its the same story with translating forecasts and strategy into measurable objectives.

It can be a sales and ops team, a brand team, a business unit team; it doesnt matter, as long as a group is in charge of making it happen.

Thats the only way the forecasting and planning work does add value, Malvolti said.

If you dont do that, forget your planning.

Hes created a management team that parses every line of work plans to make sure they correspond with objectives that can be implemented in the field.

The team also is in charge of communicating the strategy and, once its been executed, of making sure the results feed back into strategy formulation of the next cycle.

In the public health space, thats what we shoot for, Malvolti said.

We want to vaccinate more people to have less people dying of diseases that can be prevented with vaccines.


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