Backcasting
- A planning and analysis technique that works backwards from a known final outcome to identify required steps or factors.
- Applied to set targets, diagnose past results, or assess whether a proposed plan is realistic.
- Focuses on identifying key drivers (e.g., market growth, product development, resources) that must be in place to reach the outcome.
Definition
Section titled “Definition”Backcasting is a method used in time series analysis to generate a hypothetical sequence of events or values that would result in a given final outcome or ending point. It involves working backwards from the known final outcome to identify the steps or factors that would need to be in place in order to achieve that outcome.
Explanation
Section titled “Explanation”Backcasting begins with a specified final outcome and traces backward to determine the intermediate conditions, drivers, or actions required to produce that outcome. By identifying those key drivers, an organization can develop plans to achieve the desired result, analyze causes of past outcomes, or evaluate whether a proposed strategy is realistic and achievable.
Examples
Section titled “Examples”Forecasting a target revenue
Section titled “Forecasting a target revenue”One common use of backcasting is in forecasting future trends or events. For example, if a company wants to achieve a certain level of revenue in five years, it can use backcasting to identify the key drivers or factors that would need to be in place in order to achieve that level of revenue. This could include factors such as market growth, product development, and sales strategies. By identifying these key drivers, the company can then develop a plan to achieve its desired outcome.
Analyzing a past sales decline
Section titled “Analyzing a past sales decline”Another use of backcasting is in analyzing past events or trends. For example, if a company wants to understand why its sales have declined over a certain period, it can use backcasting to identify the key drivers or factors that may have contributed to the decline. This could include factors such as changes in consumer behavior, market competition, or changes in the company’s own business strategies. By identifying these factors, the company can then take steps to address the underlying causes of the decline and prevent similar declines in the future.
Evaluating feasibility of a new product launch
Section titled “Evaluating feasibility of a new product launch”Backcasting can also be used to evaluate the feasibility of a proposed plan or strategy. For example, if a company wants to launch a new product, it can use backcasting to identify the key drivers or factors that would need to be in place in order to make the product a success. This could include factors such as market demand, production capacity, and financial resources. By identifying these key drivers, the company can then determine whether the proposed plan is realistic and achievable.
Use cases
Section titled “Use cases”- Forecasting future trends or setting long-term targets.
- Analyzing drivers behind past events or performance declines.
- Evaluating feasibility and realism of proposed plans or strategies.
Related terms
Section titled “Related terms”- Time series analysis
- Forecasting