The power of counterfactual thinking in business

'What if'. This powerful question forms the base of counterfactual thinking, where you try to imagine what might have happened under a different scenario/circumstance. It is not intellectual heroism to do so, but rather those who want to illustrate improvements, compare things under changed circumstances etc would find this sort of thinking very useful. The below business situations illustrate the importance of

1. Stress analysis/scenario analysis:-'What if' analysis tries to model the effect of stress testing and analysis. That is counterfactual analysis
2. Proforma financial statements in prospectus for past data:- As IFAC puts it,  Pro forma financial information included in an issuer’s prospectus illustrates the impact of a proposed acquisition, equity or debt issuance, or other transactions on the issuer’s historical financial information as if such event or transaction had occurred at an earlier selected date.  This is nothing but counterfactual thinking.
3. 'Improvements' after consulting assignments:-When consultants claim to have implemented projects resulting in savings of XXX, these amounts are often counter factual.
4. Opportunity Costs/Benefits:- For example, Delhi International Airport(DIAL) had taken interest free Refundable Security Deposit (RSD) from the lessees/shop owners. For purpose of setting tariffs under cost-plus rate of return regulation by AERA, they stated that the RDSs have an opportunity cost and hence the Authority should provide a reasonable return on the same because if  DIAL  had  not used these deposits for the project, then  additional  funds would have been raised through equity or debt, on which the Authority would have provided a return. This is nothing but counterfactual thinking. 
5. Avoidable costs:- Suppose an activity had not have been carried out(if deemed wasteful/unnecessary/imprudent), then what would have been the costs saved? Regulators do not generally permit such inefficient/non regulated activity related costs. For example, the  primary  activity  of the  airport  is to  provide  aeronautical  services and the users  should bear  the  cost of these.  Where,  however,  the  presence  of  non-aeronautical  activities  has  generated  an additional  requirement   for  space  or  facilities,  which  would  otherwise  not have been  needed,  the  resulting  otherwise avoidable  costs  should  be regarded in full as non-aeronautical.