Social Forecasting Introduction Process

Transcription

1 CrowdWorx Berlin Munich Boston Poznan White Paper Series Social Forecasting Introduction Process Abstract Social Forecasting is an Enterprise2.0 tool used for the aggregation of distributed knowledge gathered from employees and experts. This collective knowledge is then converted to quantitative business KPIs for use by management. This document gives an overview of the preconditions for corporations that want to use Social Forecasting in supply chain management, S & OP, sales forecasting, new product development, and strategic management. The structure of Social Forecasting introduction process is explained and typical activities are described as well as the effort involved on the side of the company.

2 2 1 Introduction to Social Forecasting CrowdWorx TM is a Social Decision Support TM (SDS) focused on Social Forecasting. Social Forecasting is used by companies for sales forecasting, new product introduction, and strategic forecasting. It is deployed within the enterprise as a webbased system. Employees regularly contribute their insights via the web browser and the Social Forecasting turns them into quantitative forecasts. Social Forecasting has been deployed at global companies as well as SMBs with impressive results: 10% to 50% higher forecasting accuracy than traditional forecasting methods Costs are up to 5 times lower than costs of traditional forecasting methods Forecasts are updated automatically at no extra cost These remarkable characteristics stem from a combination of new Web2.0 methods, now often referred to as Enterprise2.0, Crowdsourcing, or Social Business. Social Forecasting utilizes the knowledge of a company s employees to overcome the limitations of traditional forecasting methods. Typical areas of application include sales and demand forecasting, new product development, strategy and Risk management. 2 Many firms are not ready for Social Forecasting The nature of Social Forecasting is such that it allows all participants to see the forecasts they are participating in. This might include some people who have not had access to forecasts before. Of course, access to every specific forecast can be limited to a selected group of people but still a certain degree of trust in employees is required for making effective use of Social Forecasting. Moreover, a certain minimum amount of activity is needed to engage participants, at least in the first couple of months until the platform has become part of everybody s work day. Like any other Crowdsourcing tool, you need to provide sufficient feedback to your crowd to let them know what you actually want them to do for you. Number of employees: If you do not have at least employees there is no point in starting as it is likely that only a small part of the people will have relevant knowledge of the questions you plan to ask. Of course, exceptions of successful small business deployments exist, too. Cost of poor forecasts: If the cost of poor forecasts is low, i.e. your production is flexible so you can always respond and incur only minimal costs and almost no foregone revenues, then any forecasting method, including Social Forecasting, will not be able create additional business value for you. Volatility of demand: If the demand in your market is volatile then traditional backward-looking methods, like statistical modeling and Econometrics, are not suitable for forecasting. Social Forecasting will perform better in such environments because it utilizes the Collective Intelligence of your employees and sales staff. Frequency of new product introductions: If you plan to use Social Forecasting to assess the sales potential of new products or their relevance for different customer groups you should check whether you have at least new products to assess. Ideally, you have new products multiple times per year to justify the initial effort of introducing Social Forecasting. Openness: If you are not ready to share with your participants at least some basic information to empower them to make a better forecast for you, Social Forecasting might not be the right tool for you. When most of these criteria are met in your company you can be confident that Collective Intelligence forecasting will be able to create value for your company. 3 Introduction process overview As with most conventional systems a 3-stage introduction process has been proven to work well when introducing an Enterprise 2.0 tool like Social Forecasting to an organization. Stage 1 is important for establishing trust in the new crowdbased approach. Table 1 shows the complete process, its duration, goals, and the number of participants, which may be involved during each stage. These are not trivial challenges as seen in the failures of many Enterprise 2.0 projects, e.g. deserted wikis and nonsense blogs within companies. A company planning to use Social Forecasting should ask itself some questions before embarking on the journey. The following paragraphs are meant to describe the types of questions you have to address.

3 3 Stage 1 Stage 2: Roll-out preparations Stage 3: Regular usage Duration 2-4 months 2 months Regular usage Goal Collect PM forecast results and compare with actual outcome Benchmark SF accuracy with accuracy of established methods Full customization according to client requirements, e.g. integration into Intranet, reporting systems etc. Roll-out Social Forecasting to all departments and countries which have a need for it Participants Typically participants Inviting additional participants depending on topics and company size As needed Table 1: Overview of Social Forecasting introduction process. Source: CrowdWorx. 4 Stage 1 Preparation steps during stage 1 Determine the precise forecasting topics Forecast how long in advance and with what time resolution (weekly, mothly, quarterly etc.)? When will the actual outcome be known? Name the source and when it will be available! Are these one-time topics or regular forecasting questions? Identify suitable participants in your company You need to gather a crowd which has relevant knowledge about the forecasting topics chosen in the previous step. Connect to other departments early in the process to ensure their cooperation. Draw up a crisp communication strategy on how to introduce the system to your crowd. An internal champion or a core team within the organization should conduct internal marketing, e.g. word-of-mouth. Support from top management is required, as is the case with most projects. Discuss suitable incentives for your participants. How many participants are needed? This question cannot be answered conclusively. Some good rules of thumb are: 50 participants for 30 forecasts per week or month (e.g. 10 products in 3 regions per week or month), 100 participants for 60 forecasts, 200 participants for 100 forecasts per week or month. Experience shows, when you invite 100 people, only half of them will be active. Do my participants have to be a representative sample as in traditional surveys? The answer is: No! The Social Forecasting approach is not based on representativity but on knowledge. Hence, you need to invite the people who might have relevant knowledge about the forecasting topics. You don t need a representative crowd, you need a wise crowd. Roles during the project Sponsor / management support: This role is essential as with most other projects. Internal champion: A person from the client side who will also be the contact person for the Social Forecasting vendor. Vendor: Provides all specialized Social Forecasting services and usually the software platform, too. User support: In stage one you need a person who helps the users during the first months in the system. This person should plan to invest 1-2 hours on average per day in this task. In later stages, when the crowd becomes self-sustaining, the involvement the community can be managed with less involvement. Customization Social Forecasting can run as Software as a Service (SaaS) or in the cloud thus not costing any IT effort on the side of the company. If a deeper integration into exiting IT systems is needed, e.g. single-sign-on with your Enterprise 2.0 landscape, this should be part of the project plan. System launch Create the initial content in the system, e.g. the forecasting topics, FAQ etc. Send out invitations to users. Most of the time users will self-register with their company which they have to confirm. For a more secure approach limit access to the system to computers which are in the company network.

4 4 Project execution during stage one When you go social with your company it is imperative to be professional about the process. Building a community is not easy. You have to support your users, monitor activity, and analyse behavior. With these learnings you can improve the system s organizational fit. In general, a good vendor should provide the following services during a stage one project: User support Help execute the internal communication strategy Close topics for which the actual outcome is available Analysis and monitoring Give feedback to the client, e.g. reports on activity Offer a management cockpit for its client to view results in real-time and results as Excel downloads At the end of stage 1: Present all results, lessons learned, next steps Typical effort during stage one A typical stage one pilot project lasts about 2-4 months, including the preparation work. This enables the collection of enough forecasts and real-world outcomes in order to assess the forecasting accuracy of the Crowdsourcing tool. Depending on the Social Forecasting system you are using the effort for deploying it will vary. When using CrowdWorx, which is equipped with all necessary Enterprise2.0 features and a out-of-the-box deployment proceedure, the typical effort for a stage one project is small: Pre-launch preparation work requires only a one-time effort of 5-10 man-days on the client side. The operation during stage one requires 1 manday per week, usually provided by the vendor as an outsourced service. 5 Stage 2 After stage one has been completed and the final report warrants a permanent roll-out, the project will move to stage two. Here the task is to incorporate all learnings from stage one into the preparations for the full roll-out happening in stage two. Devise an internal communication strategy Customize the platform as needed Assign internal resources, e.g. a community manager This package should be the basis of the work in stages two and three which are usually done shoulder-to-shoulder with stage three. Particular focus should be put on designing the Social Forecasting business process. There are well-establshed approaches: In approach one, somebody takes responsibility for posting regular operational forecasting questions and collecting the results. This approach is used for regular operational forecasts, e.g. in a regular supply chain planning process (S & OP). Approach two, is an Enterprise 2.0 approach which empowers both managers and employees to post questions and to respond, espectively. This approach is not suited for regular operation forecasts (see approach one). Figure 1 provides an overview of how this Enterprise 2.0 approach typically looks like. Which approach is the best one or whether both approaches need to be implemented in different departments of a company is governed by the mission statement and forecasting tasks to be accomplished by the Social Forecasting platform. Another important work package in stage two is the preparation of an internal communication strategy towards all future stakeholders in the regular operations of the platform. This inculdes communication to be directed towards managers who are supposed to make use of the results of the platform, as well as the participants of the platform who are supposed to provide their insights. Once these peprataions have been completed, the Social Forecasting vendor should customize and configure the platform to meet all requirements of the roll-out. Once these technical preparations have been completed, stage three regular usage can commence. A couple of decisions have to be made in stage two: Draft a brief mission statement for the system, including measurable goals Pick the forecasting topics that should now be routinely done by the Social Forecasting system Business process: Agree on responsibilities and reporting cycles Write a roadmap for migration of duties to the new platform

5 5 Figure 1: Typical business process for Corporate Social Forecasting after roll-out in Stage 3. Source: CrowdWorx. 6 Stage 3 Stage three will not start from scratch because there will be an active user base from stage one as well as project team members with some experience in successfully operating an Enterprise2.0 tool in their own organization. Building on this momentum stage three will focus on executing the business process and communicating with all stakeholders. This is a very dynamic stage and the project team should be prepared to respond to questions from various stakeholders. Some success stories based on the final report from stage one, will help to convince everybody to use the new system. A good Social Forecasting vendor will support this porcess with both best practices as well as operational support.

6 6 Contact You can find the CrowdWorx white papers series in the CrowdWorx resources section on CrowdWorx Social is a global Forecasting provider, headquartered in Poznan, West Poland. We serve clients in Europe and North America with the full range of Social Decision Support services based on Collective Intelligence and State-of-the-Art Enterprise 2.0 methods. For more information on CrowdWorx please write to team@crowdworx.com or call an office near you. Berlin, Germany Rotherstr Berlin Germany Tel: Fax: Munich, Germany Isartalstraße Munich (Unterhaching) Germany Tel: Fax: Boston, USA 17 Stonecleve Rd. Wellesley (Boston), MA Tel: Fax: Poznan, Poland ul. Fredry Poznan Poland Tel: Fax: