Future Forecasting Tools: The Delphi Method

By Emil Bjerg, journalist and editor

Developed during the Cold War for military applications, the Delphi Method is a popular forecasting tool across various sectors, from public policy to healthcare. This article delves into the Delphi Method, exploring its methodology and pros and cons while guiding you on how to apply it in your organization.

This is the third article in our series about tools and methods to help business leaders navigate an unknown future. Previously, we’ve covered megatrends and scenario planning.

The Delphi Method is a tool to achieve ‘wisdom of the crowds’ – a theory that evaluations made by groups are of higher quality than those made by individuals. Since the fifties, the Delphi method, named after the Ancient Greek oracle, has been helping leaders circle closer to a relative truth. In recent decades, in a refined form, it has returned as a way to establish consensus – or to highlight differences – among experts.

How Does the Delphi Method Work?

The Delphi Method is a structured communication technique that relies on a panel of experts in a given field. The experts and a facilitator are working through a series of rounds, where they are asked to provide their opinions or predictions on a specific issue anonymously. After the first round of questions, the facilitator provides an anonymous summary of each expert’s forecasts and the reasons they’ve given for their judgment. This summary is then used as a basis for further rounds of questioning.

A key feature of the Delphi Method is its iterative nature. In subsequent rounds, experts are encouraged to revise their earlier answers in light of the replies of other panel members. This process is designed to reduce the range of responses and arrive closer to a consensus. The number of rounds in a Delphi study varies. Typically, the process is stopped after a pre-defined stop criterion is reached, such as achieving a certain level of consensus.

The anonymity of the responses is supposed to prevent the authority or personality of some participants from dominating others in the process. This encourages free expression of opinions and prevents a ‘bandwagon effect’ or under-representation of alternating views.

Present and Historic Use Cases of the Delphi Method

The method was invented in the 1950s, amidst the looming uncertainties of the Cold War, when the United States Air Corps faced a challenge: predicting potential Soviet attacks. The traditional forecasting methods were perceived as inadequate to deal with the unprecedented situation. This led to the conception of the Delphi Method, spearheaded by the two researchers Norman Dalkey and Olaf Helmer.

Since then, the method has been refined in different fields: from public policy to healthcare. In the business world, the Delphi Method has been adapted for strategic planning and decision-making. It’s been applied to forecast market trends, assess new product development, and strategize organizational changes.

Before diving into how your organization can apply the method, let’s look at its advantages and challenges.

Advantages and Challenges of the Delphi Method

According to researchers in the field, an advantage of the method is that it maps expert knowledge and identifies areas of agreement and disagreement without direct confrontation. That can reduce conformity to dominant views: Anonymity within the method enhances creativity and honesty while minimizing the negative impact of group dynamics. Its process doesn’t demand proximity, allowing for independent thought.

Another clear advantage is that over multiple iterations, it’s possible to map a consensus or at least identify clear disagreements between experts in the field.

The Delphi Method, like any method, also comes with its challenges. The iterative nature of the method can be time-consuming and may result in participant dropout or high costs. Anonymity, while a strength, can also lead to less ownership of ideas. Furthermore, generalizing results can be challenging due to sample size limitations and varying expertise levels among participants.

To effectively navigate the challenges of the Delphi Method, the following two strategies can be impactful. First, the careful selection of the expert panel is crucial. The panel should comprise professionals with diverse but relevant expertise, ensuring a well-rounded and informed discussion. The panel’s diversity is vital to cover all facets of the question topic, enriching the process with varied perspectives and insights.

Second, it is important for all participants and stakeholders to acknowledge and accept from the beginning that the Delphi Method is inherently time-consuming. This understanding helps set realistic expectations regarding the duration and depth of the process.

How Can Your Organization Get Started with the Delphi Method?

To implement the method in a business setting, company owners and leaders can follow these practical steps:

Define the Objective: Clearly outline the decision or forecast the Delphi process will address. This could be anything from market trend analysis to product development strategies.

Select a Facilitator: Choose an individual who can impartially facilitate the process. This person will design questionnaires, summarize feedback, and ensure the process runs smoothly.

Assemble the Expert Panel: Identify and invite a diverse group of experts. These could include internal stakeholders like senior managers and external experts like industry analysts or academic researchers hired to participate.

First Round of Questionnaires: Distribute the initial set of questions to the panel – this can be done in person, over Zoom, or by email, depending on the nature of the research. The questions should be open-ended to prompt detailed responses.

Analyze Responses and Provide Feedback: Next, the facilitator should summarize the responses, highlighting areas of agreement and disagreement, and share this summary with the panel. Here, a factual and objective summarization is essential.

Subsequent Rounds: Conduct additional rounds of questions, refining questions based on previous responses. Continue this until a consensus or a stable range of opinions emerges.

Implement Insights: Use the insights gained from the Delphi process to inform business decisions and strategies, potentially in connection with other tools.

The Delphi Method In Combination With Other Tools

Harvard Business Review writes that results coming from the Delphi Method don’t “necessarily lead to great decisions any more than good market research does. The predictions are most useful if they are shaped into several possible scenarios that allow decision makers to understand the implications more fully.”

From that perspective, combining the Delphi Method with scenario planning can be an ideal approach. Scenario Planning allows organizations to create detailed narratives about different potential futures, which the consensus can enrich or diverse viewpoints gathered through the Delphi Method.

It also integrates well with SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats), combining expert foresight with an assessment of organizational capabilities and market conditions. Lastly, the Delphi Method can be applied in combination with PESTLE Analysis (Political, Economic, Social, Technological, Legal, and Environmental factors).

The Delphi Method allows organizations to tap into a diverse pool of knowledge while mitigating the influence of dominant personalities. The key to the Delphi Method’s success is its iterative nature and anonymity to participants, encouraging honest and unbiased feedback. While it’s time-consuming, done right, possibly in combination with other forecasting methods, it can provide clarity and guide a successful strategy.