Achieving Stakeholder BuyIn

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Achieving Stakeholder Buy-In
PBIRG Forecasting Workshop January 25, 2005

• Nancy H Wilkerson
• Mgr. BDMA
• Eli Lilly Company

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4 Rules to SuccessfulForecast Communication

• All forecasts are wrong
• Know your audience
• Facts are friendly
• Keep a track record

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All Forecasts are wrong!
Even post-launch, a 3 to 5 error margin is
common.
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All Forecasts are wrong!Just dont strive for
Precisely Wrong

• In forecasting, precision lacks credibility
• Strive for Directionally Correct
• Round off to millions or larger
• Use ranges rather than specific points

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Know your audienceWhats their experience with
forecasts?How might your forecast impact whats
important to them?
While pre-launch teams may prefer higher
forecasts
post-launch teams may prefer forecasts that
are less aggressive
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Know your audienceFollow the money
For early stage product teams, higher forecasts
sometimes mean more people, resources, and
prestige within the company.
For managers at the country level, lower
forecasts can increase the opportunity to exceed
forecast and earn larger bonuses
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Know your audienceLipitor Case Study

• Approaching launch
• Forecasts for Lipitor were all low
• Avoid repeat of the Cognex forecast disaster
  (corporate)
• Sandbagging for bigger bonus (affiliate)
• Manufacturing was based on affiliate forecasts
• Co-promotion contract called for 6 months of
  inventory on the shelves
• First 12 months
• Demand far exceeded forecasts (and manufacturing
  plans)
• Manufacturing had to work 24 / 7 to keep product
  in the pharmacies
• Many Rx partially filled / Risk of substitution /
  Loss of switch opportunity
• Cost of Goods significantly increased (labor,
  shipping, etc.)
• Affiliate GM bonuses were very big
• Aftermath
• GM bonus structure changed
• Forecasting system revamped

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Facts are FriendlyBe prepared

• Know the market
• Past
• Present
• Potential futures
• Know the relevant analogues
• Not just the numbers (curves)
• Same market and / or similar situations
• Know your company analogues
• What has happened with other products
• Know what you dont know

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Facts are FriendlyDocument! Document! Document!

• Triangulate your sources the more independent
  sources with similar information the better
• Know which assumptions are solid and which are
  shaky
• List all assumptions and their sources
• Note those assumptions which, if they change,
  will significantly impact the outcome

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Facts are FriendlyCommunicate Openly and Often

• Network your forecast before you present it
• Review forecasts with individual stakeholders
  BEFORE presenting to the team
• Be Transparent
• Share assumptions and methodologies openly
• Focus on Inputs (assumptions) vs Outputs
  (numbers)
• Ask What assumptions would you change?
• Ask What would you have done differently?
• Be open to accepting better information
• Ask for the source, and check it out
• Play what if games to demonstrate impact of
  assumption changes (even if you know theyll be
  minor)
• Be flexible
• Admit to what you dont know
• Give in / compromise when appropriate

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Keep a Track RecordSuccess Breeds Success

• Someone is sure to ask you for it at some point
  in time
• Dont offer until asked
• Track your forecasts vs. adopted forecasts
• Variance from actual
• Assumptions related to the variance