Originally Posted by bisonrav

The way modelling for business plans works in practice is that its a form of chicken entrail examination. There is the idea in some forms of management that you can completely derisk any activity by "forecasting", and that "forecasting" is a precise art. It's particularly true in businesses that have left their explosive growth phase and entered an established format which is largely accountancy led. Explosively growing companies tend to be customer experience led.

In essence, you are asked to produce a model that supports a business plan that has largely been predetermined by the C-Suite. Unless there is something wildly wrong with the underlying plan - it happens quite frequently - and you're prepared to fight your corner, you just adjust assumptions until the required outcome is indicated. Then usually something will happen - late product introduction due to develpment delays is the classic - that provides covering fire if the outcomes don't happen. The bigger the suggested outcome the more pressure from the C-Suite to get it done, and I saw in my working career senior managers inching up amounts in various columns to get to a target without the first thought about the mechanism that makes the assumption true. Remember when everything was going to be subscription based services?

Sadly the easiest things to forecast are things which reduce the customer experience by nickel and diming costs. Brunchgate is a great example. So they tend to get waved through. The potentially paradigm shifting innovations are much more difficult to plausibly plan, so they tend to not get done except via disruptive start ups (difficult in aviation as Global are finding).

This is endemic to BA and IAG really. They're decently run businesses but they're very constrained by capacity. Hence the pressure to find something different, but rather than innovating they've adapted a cookie cut model provided by consultants who are also advising every other airline and every other airline is chasing the same money. So at some level it's very likely to fail to meet expectations, in which case it's quite dangerous to have knocked a hole in your previous business model. Maybe I'm too cautious. But we're already seeing late release of, for example, the Amex deal so someone somewhere is saying "we we needed credit card support, no wonder the model isn't working well". Or cover from Trump and antipathy towards US travel from Europe.

Incidentally what very successfully growing companies do - see Amazon - is to try things and reverse ferret when they don't work. IAG isn't like that. There's a technique I used a lot called Schrello screening which basically does a sanity check on an idea in an afternoon and you can move the same week.