Imagine if you could sit down and talk with a fortune teller to predict the future of your industry. With the Delphi method of forecasting, you basically can. The Delphi method draws on industry experts to make a best-guess prediction about what’s to come, helping businesses make decisions amid uncertainty.
Learn about what the Delphi method is, how it came to be, why and when your business should use it, and how to implement it for yourself.
What is the Delphi method?
The Delphi method of forecasting, also called the Delphi technique, is a systematic and qualitative method of gathering and distilling insights from a group of experts to reach a decision.
The process involves multiple rounds of surveys in which industry leaders individually offer their opinions on a topic or problem. After each round, the facilitator provides each participant with an anonymized summary of the other experts’ answers. The experts then have a chance to modify their opinion based on the responses of the other experts before moving on to the next round of surveys. The experts’ identities remain anonymous throughout this process. The end goal is to eventually reach a consensus.
The origin of the Delphi method of forecasting dates back to the early 1950s, when researchers at the RAND Corporation aimed to create a qualitative system for making predictions about the impact of developments within technology and the military. Researchers Norman Dalkey and Olaf Helmer developed a system of iterative rounds of surveys in which experts could revise their responses after each round of anonymous feedback. With its success, the Delphi method eventually spread to other industries, such as health care and economics.
Advantages of the Delphi method
The Delphi method can be an effective option for business owners or project managers who want to conduct research into a specific problem they are facing through a qualitative method. Here are a few reasons you might want to use the Delphi method when business forecasting:
Flexibility
The Delphi method of forecasting is particularly useful for business owners needing to navigate the emergence of new technologies or incorporate new trends that have little historical data. While quantitative forecasting and market research are useful when you have data and statistics on hand, the Delphi method can be an invaluable tool when there is little existing data with which to make informed decisions. Additionally, you can adjust the process as new information arises.
Balance
The Delphi method involves surveying panels of experts who have a wide range of insights into a given field of research or industry. Whether they’re ecommerce experts or medical professionals, they should bring a diverse range of experiences and opinions to the table. This allows businesses to tap into a vast set of knowledge and look at an issue from multiple angles, helping make better predictions about potential outcomes and reach a balanced consensus.
Qualitative information
While quantitative surveys based on extensive market research and data collection can be useful in some scenarios, these models can overlook the insights revealed by subjective data. The Delphi method works even if a business has no previous information to work with on a given trend or development because experts can provide nuanced insights using their experiential knowledge. Combining quantitative and qualitative data can get you closer to having all the answers.
Anonymity
Because the Delphi method is completely anonymous, the participating experts can be more candid than they might be in a group discussion. This allows them to share their opinions freely, and it prevents their forecasts in the first round from being distorted by groupthink.
Convenience
The surveys are distributed and filled out remotely, so participants can fill them out at their own convenience.
How to use the Delphi method
- Identify the problem
- Gather your panel of experts
- Prepare a questionnaire
- Begin the first round of surveys
- Analyze the responses
- Revisit expert opinions
- Continue surveys to reach a consensus
- Prepare a final report
Business owners can use the Delphi method process to help answer questions that they have about new or emerging trends in their industry. The Delphi method consists primarily of identifying a problem and collecting opinions from a panel of experts to find a consensus on what the predicted outcome will be. Here’s the basic process:
1. Identify the problem
Clearly define the problem your business is facing or the new development that might impact your industry. As part of this process, create a list of questions that you wish to have answers to or unknowns that you want to better understand. The more specific your questions and problems are, the better your experts will be able to make predictions.
2. Gather your panel of experts
Choose a panel of experts with close ties to your industry. They should have a diverse array of experience to help broaden the scope of the survey. Consider the specific problem you wish to gain clarity on and find experts who you feel can provide the best insights on that specific issue.
3. Prepare a questionnaire
Create a list of open-ended questions based on the problem you identified in step one. These questions should be specific to the issue you wish to gain insight on but also open-ended so you don’t receive simple yes or no answers. Give the experts plenty of space to share their own opinions and a field to offer their own questions for the group.
4. Begin the first round of surveys
Distribute your written questionnaires to each of your chosen experts individually. Do not reveal the identities of the experts or allow them to share their responses with one another. Encourage each of them to provide their unbridled thoughts, opinions, and predictions based on their past experiences and acquired knowledge.
5. Analyze the responses
Once each expert has submitted their responses, take time to collect and analyze their feedback. Try to find common threads between each of the survey responses as well as areas in which they disagreed with one another. Compile your findings into a summarized report.
6. Revisit expert opinions
Return to each expert individually and provide your summary report on the previous survey. At this point, give them an opportunity to revise or reconsider their provided opinions based on the other expert’s answers. Record any amendments to their previous responses and prepare a second summary report.
7. Continue surveys to reach a consensus
As new questions arise, modify your questionnaire and revisit the survey process by repeating steps four through six. This can take several rounds of anonymous responses before you are able to land on a consensus. As you analyze each subsequent round of feedback, look for trends within the responses—especially areas in which the opinions of the experts begin to converge. Ideally, with multiple rounds of surveys, the experts will have reached a consensus in their individual responses.
8. Prepare a final report
With your surveys completed, gather the responses and your insights and create a final summary report of findings. Your findings will be the basis for the final forecast of potential outcomes that your business can use to make decisions.
Example of how to use the Delphi method
Let’s say that a fashion retailer wants to gain insight into how advancements in artificial intelligence will affect the fashion industry. The retailer could gather a panel of experts with backgrounds in fashion, AI, and ecommerce. The company can tap fashion executives, AI researchers, and ecommerce professionals.
The retailer would then create a survey of questions regarding the impact of AI on fashion. Some questions might include:
- How might AI affect the fashion industry?
- How might AI affect textile manufacturing and production?
- What ethical or societal challenges might arise if we increase our reliance on AI in the fashion industry?
After putting together a comprehensive list, they would distribute that survey to each of the experts individually. Once completed, they would summarize the anonymous feedback and distribute the report to the panel before asking for more feedback. After several rounds of surveys, the retailer would land on a consensus that can help direct their business decisions.
Delphi method of forecasting FAQ
When is the Delphi method useful for ecommerce businesses?
The Delphi method is most useful when an ecommerce business faces emerging consumer trends or new technologies that have no historical precedent in the industry. In these cases, the Delphi method becomes an invaluable tool for predicting how the trend or technology will affect the industry and how to make decisions to best succeed in the face of these uncertainties.
How is “consensus” defined when using the Delphi method?
When the opinions of the panel of experts converge or align toward a single opinion. It doesn’t have to be a perfect convergence of opinion to be a consensus, so long as the majority of expert opinions trend toward a mutual agreement, indicating a shared perspective.
Is the Delphi method a one-time forecasting approach, or can you use it continuously?
You can use the Delphi method once or continuously depending on your needs and the nature of the uncertainties your business is facing. A specific development could call for just one instance of the Delphi method to help a business make decisions, while a more long-term or constantly evolving question in an industry may require a more drawn-out and continuous use of the Delphi method.
What are the potential challenges of using the Delphi method?
The Delphi method can present some challenges such as having difficulty finding a group consensus among your panel of experts. It may also be difficult to keep your experts engaged over the course of multiple rounds of surveys, since the Delphi method relies on many rounds of analyzing answers from subject matter experts.
