How Accurate Modelling Can Help Inform Business Strategy
In the past few weeks, in the midst of the coronavirus pandemic, the benefits of modelling have come to the fore, with Imperial College’s predictions around future infections and likely deaths from the virus front and centre. Modelling has informed the government’s strategy and the measures that are currently being implemented.
Source: Imperial College London, 17th March 2020
Modelling is very much a part of how key decisions are made in numerous other situations – from how many policemen are required on the beat to how often train services should run. Robust modelling can be an essential tool in shaping successful business strategy. And it’s fair to say that some models work well and others less so – and by the time you discover that your model is flawed, it’s often too late to do anything about the decisions that have been taken.
Modelling is often driven by statistics and data around people’s behaviour, and Accent can either be involved in providing the research that feeds into the models, or we can provide an end to end service, as we have econometric modelling expertise in house.
We believe that there are a number of important elements that are key to any successful modelling:
- Accurate data is absolutely essential. Flawed or inaccurate data feeding into a model will result in unreliable predictions.
- A series of scenarios need to be included to cover all bases – we believe a minimum of three is crucial.
- Any model needs to be built with flexibility in mind – with the ability to adapt as underlying assumptions change – and should be designed with the end in mind, ensuring that the outputs are fully use-focussed.
- Successful modelling needs to choose appropriate statistical techniques for the type of data available, whether that’s econometric models, or machine learning algorithms.
- Any modelling should include sensitivity testing against modelling assumptions or other potential sources of error.
If you’d like to learn more about our modelling capabilities, or to explore how modelling can help you with any element of your business strategy, please contact Rob.Sheldon@accent-mr.com