Instructions (SCMG Week 3) Week 3: Judgmental Forecasting Course Objectives: CO3: Evaluate Forecasting methods, predictability factors, and causes of error in Forecasting Prompt: This week you will

The D elp h i m eth od w as i n ven te d b y O la f H elm er a n d N orm an D alk ey o f t h e R an d

Corp ora tio n i n t h e 1 9 50 s f o r t h e p u rp ose o f a d dre ssin g a s p ecif ic m ilit a ry p ro ble m . T he

m eth od r e lie s o n t h e k ey a ssu m ptio n t h at f o re ca sts f r o m a g ro u p a re g en era lly m ore

a ccu ra te t h an t h ose f r o m i n div id u als . T he a im o f t h e D elp h i m eth od i s t o c o n str u ct

co n se n su s f o re ca sts f r o m a g ro u p o f e x p erts i n a s tr u ctu re d i t e ra tiv e m an ner. A

f a cilit a to r i s a p poin te d i n o rd er t o i m ple m en t a n d m an ag e t h e p ro ce ss. T he D elp h i

m eth od g en era ll y i n vo lv es t h e f o llo w in g s ta g es:

1. A p an el o f e x p erts i s a sse m ble d .

2. F ore ca stin g t a sk s/c h alle n ges a re s e t a n d d is tr ib u te d t o t h e e x p erts .

3 . E xp erts r e tu rn i n it ia l f o re ca sts a n d j u stif ic a tio n s. T hese a re c o m pile d a n d

su m m aris e d i n o rd er t o p ro vid e f e ed back .

4 . F eed back i s p ro vid ed t o t h e e x p erts , w ho n ow r e v ie w t h eir f o re ca sts i n l ig h t o f t h e

fe ed back . T his s te p m ay b e i t e ra te d u n til a s a tis fa cto ry l e v el o f c o n se n su s i s

r e a ch ed .

5. F in al f o re ca sts a re c o n str u cte d b y a g gre g atin g t h e e x p erts ’ f o re ca sts .

E ach s ta g e o f t h e D elp h i m eth od c o m es w it h i t s o w n c h alle n ges. I n w hat f o llo w s, w e

pro vid e s o m e s u ggestio n s a n d d is c u ssio n s a b o u t e a ch o n e o f t h ese .

E xp erts a n d a n onym it y

T he f ir s t c h alle n ge o f t h e f a cilit a to r i s t o i d en tif y a g ro u p o f e x p erts w ho c a n c o n tr ib u te

t o t h e f o re ca stin g t a sk . T he u su al s u ggestio n i s s o m ew here b etw een 5 a n d 2 0 e x p erts

w it h d iv ers e e x p ertis e . E xp erts s u bm it f o re ca sts a n d a ls o p ro vid e d eta ile d q u alit a tiv e

ju stif ic a tio n s f o r t h ese .

A k ey f e a tu re o f t h e D elp h i m eth od i s t h at t h e p artic ip atin g e x p erts r e m ain a n on ym ou s

at a ll t im es. T his m ea n s t h at t h e e x p erts c a n not b e i n flu en ce d b y p olit ic a l a n d s o cia l

p re ssu re s i n t h eir f o re ca sts . F u rth erm ore , a ll e x p erts a re g iv en a n e q u al s a y a n d a ll a re

h eld a cco u n ta b le f o r t h eir f o re ca sts . T his a v o id s t h e s it u atio n w here a g ro u p m eetin g i s

h eld a n d s o m e m em bers d o n ot c o n tr ib u te , w hile o th ers d om in ate . I t a ls o p re v en ts

7 mem bers e x ertin g u n du e i n flu en ce b ase d o n s e n io rit y o r p ers o n alit y . T here h av e b een

su gg estio n s t h at e v en s o m eth in g a s s im ple a s t h e s e a tin g a rra n gem en ts i n a g ro u p

se tt in g c a n i n flu en ce t h e g ro u p d yn am ic s. F u rth erm ore , t h ere i s a m ple e v id en ce t h at a

g ro u p m eetin g s e ttin g p ro m ote s e n th usia sm a n d i n flu en ce s i n div id u al j u dgem en t,

le a d in g t o o p tim is m a n d o verc o n fid en ce .

A b y- pro d u ct o f a n on ym it y i s t h at t h e e x p erts d o n ot n eed t o m eet a s a g ro u p i n a

p h ysic a l l o ca tio n . A n i m porta n t a d van ta g e o f t h is i s t h at i t i n cre a se s t h e l ik elih ood o f

gath erin g e x p erts w it h d iv ers e s k ills a n d e x p ertis e f r o m v ary in g l o ca tio n s.

F u rth erm ore , i t m ak es t h e p ro ce ss c o st- effe ctiv e b y e lim in atin g t h e e x p en se a n d

in co n ven ie n ce o f t r a v el, a n d i t m ak es i t f le x ib le , a s t h e e x p erts o n ly h av e t o m eet a

c o m m on d ea d lin e f o r s u bm it tin g f o re ca sts , r a th er t h an h av in g t o s e t a c o m mon

m eetin g t im e.

S ett in g t h e f o re ca stin g t a sk i n a D elp hi

In a D elp h i s e ttin g, i t m ay b e u se fu l t o c o n du ct a p re lim in ary r o u n d o f i n fo rm atio n

gath erin g f r o m t h e e x p erts b efo re s e ttin g t h e f o re ca stin g t a sk s. A lt e rn ativ ely , a s

ex p erts s u bm it t h eir i n it ia l f o re ca sts a n d j u stif ic a tio n s, v alu ab le i n fo rm atio n w hic h i s

n ot s h are d b etw een a ll e x p erts c a n b e i d en tif ie d b y t h e f a cilit a to r w hen c o m pilin g t h e

fe ed back .

F e ed back

Feed back t o t h e e x p erts s h ou ld i n clu de s u m mary s ta tis tic s o f t h e f o re ca sts a n d o u tlin es

o f q u alit a tiv e j u stif ic a tio n s. N um eric a l d ata s u m marie s a n d g ra p h ic a l r e p re se n ta tio n s

ca n b e u se d t o s u m maris e t h e e x p erts ’ f o re ca sts .

A s t h e f e ed back i s c o n tr o lle d b y t h e f a cilit a to r, t h ere m ay b e s c o p e t o d ir e ct a tte n tio n

an d i n fo rm atio n f r o m t h e e x p erts t o a re a s w here i t i s m ost r e q u ir e d . F or e x am ple , t h e

fa cilit a to r m ay d ir e ct t h e e x p erts ’ a tte n tio n t o r e sp on se s t h at f a ll o u ts id e t h e

in te rq u artile r a n ge, a n d t h e q u alit a tiv e j u stif ic a tio n f o r s u ch f o re ca sts .

8 It e ra tio n

The p ro ce ss o f t h e e x p erts s u bm it tin g f o re ca sts , r e ce iv in g f e ed back , a n d r e v ie w in g

th eir f o re ca sts i n l ig h t o f t h e f e ed back , i s r e p ea te d u n til a s a tis fa cto ry l e v el o f

co n se n su s b etw een t h e e x p erts i s r e a ch ed . S atis fa cto ry c o n se n su s d oes n ot m ea n

co m ple te c o n verg en ce i n t h e f o re ca st v alu e; i t s im ply m ea n s t h at t h e v aria b ilit y o f t h e

re sp on se s h as d ecre a se d t o a s a tis fa cto ry l e v el. U su ally t w o o r t h re e r o u n ds a re

s u ff ic ie n t. E xp erts a re m ore l ik ely t o d ro p o u t a s t h e n um ber o f i t e ra tio n s i n cre a se s, s o

to o m an y r o u n ds s h ou ld b e a v o id ed .

F in al f o re ca sts

T he f in al f o re ca sts a re u su ally c o n str u cte d b y g iv in g e q u al w eig h t t o a ll o f t h e e x p erts ’

fo re ca sts . H ow ev er, t h e f a cilit a to r s h ou ld k eep i n m in d t h e p ossib ilit y o f e x tr e m e v alu es

w hic h c a n d is to rt t h e f in al f o re ca st.

L im it a tio n s a n d v a ria tio n s

Apply in g t h e D elp h i m eth od c a n b e t im e c o n su m in g. I n a g ro u p m eetin g, f in al f o re ca sts

c a n p ossib ly b e r e a ch ed i n h ou rs o r e v en m in ute s — s o m eth in g w hic h i s a lm ost

im possib le t o d o i n a D elp h i s e tt in g. I f i t i s t a k in g a l o n g t im e t o r e a ch a c o n se n su s i n a

D elp h i s e ttin g, t h e p an el m ay l o se i n te re st a n d c o h esiv en ess.

In a g ro u p s e ttin g, p ers o n al i n te ra ctio n s c a n l e a d t o q u ic k er a n d b ette r c la rif ic a tio n s o f

q u alit a tiv e j u stif ic a tio n s. A v aria tio n o f t h e D elp h i m eth od w hic h i s o ft e n a p plie d i s t h e

“estim ate - ta lk - estim ate ” m eth od , w here t h e e x p erts c a n i n te ra ct b etw een i t e ra tio n s,

a lt h ou gh t h e f o re ca st s u bm is sio n s c a n s till r e m ain a n on ym ou s. A d is a d van ta g e o f t h is

v aria tio n i s t h e p ossib ilit y o f t h e l o u dest p ers o n e x ertin g u n du e i n flu en ce .

T h e f a cil it a to r

The r o le o f t h e f a cilit a to r i s o f t h e u tm ost i m porta n ce . T he f a cilit a to r i s l a rg ely

r e sp on sib le f o r t h e d esig n a n d a d m in is tr a tio n o f t h e D elp h i p ro ce ss. T he f a cilit a to r i s

a ls o r e sp on sib le f o r p ro vid in g f e ed back t o t h e e x p erts a n d g en era tin g t h e f in al

fo re ca sts . I n t h is r o le , t h e f a cilit a to r n eed s t o b e e x p erie n ce d e n ou gh t o r e co gn is e a re a s th at m ay n eed m ore a tte n tio n , a n d t o d ir e ct t h e e x p erts ’ a tte n tio n t o t h ese . A ls o , a s

th ere i s n o f a ce - to - fa ce i n te ra ctio n b etw een t h e e x p erts , t h e f a cilit a to r i s r e sp on sib le

f o r d is se m in atin g i m porta n t i n fo rm atio n . T he e ffic ie n cy a n d e ffe ctiv en ess o f t h e

fa cilit a to r c a n d ra m atic a lly i n cre a se t h e p ro bab ilit y o f a s u cce ssfu l D elp h i m eth od i n a

j u dgm en ta l f o re ca stin g s e ttin g.

B ib lio gra p hy

Bueh le r, R ., M esse rv ey , D ., & G rif fin , D . ( 2 0 05). C olla b o ra tiv e p la n nin g a n d p re d ic tio n :

D oes g ro u p d is c u ssio n a ffe ct o p tim is tic b ia se s i n t im e e stim atio n ? O rg an iz a tio n al

B eh av io r a n d H um an D ecis io n P ro ce sse s , 9 7 (1 ), 4 7– 63. [ D OI]

R ow e, G . ( 2 0 07). A g u id e t o D elp h i . F ore sig h t: T he I n te rn atio n al J o u rn al o f A pplie d

F ore ca stin g , ( 8 ), 1 1– 16 .

R ow e, G ., & W rig h t, G . ( 1 9 99). T he D elp h i t e ch n iq u e a s a f o re ca stin g t o ol: I s su es a n d

an aly sis . I n te rn atio n al J o u rn al o f F ore ca stin g , 1 5 (4 ), 3 5 3– 37 5 . [ D OI]

7 . F or f u rth er r e a d in g, r e fe r t o : R ow e ( 2 0 07 ); R ow e & W rig h t ( 1 9 99 )

8. B ueh le r, M esse rv ey , & G rif fin ( 2 0 05 )