Incentives matter more than forecasts

A detailed forecast can still sit on top of a weak relationship between owners and managers.

Before studying the decimal points, it is worth asking simpler questions. How is management rewarded? What happens when growth destroys value? Who bears the consequence of a bad acquisition? Does the person allocating capital think like an owner?

Incentives do not determine every action. They shape the direction in which rationalisation becomes easiest.

A business with aligned incentives can recover from an imperfect forecast. Misalignment can corrupt even an accurate one.