Challenge Business Assumption– Strategy, Market, Customer… Based on False Assumptions, Fail: Hope-Wish Not an Option…

Assumptions are foundations of business and they are characterized by things that are accepted as true or as certain to happen without proof. They are statement, methodology, ideas, concepts… that are presumed to be true without concrete evidence to support it, and they are used in wide variety of situations that enable companies to plan, make decisions… in face of uncertainty… they impact the very survivability, sustainability, and success of business…

Making accurate, valid… assumptions is the difference between success and failure of business… The more accurate the assumptions the lower the risk of failure, and the higher the odds of success. However, many companies wait until they hit rough times to question basic business assumptions; when sales are growing and profit is good, most businesses don’t want to mess with success…

According to Don Miguel Ruiz; the problem with making assumptions is that we believe they are the truth. We could swear they are real… We make assumptions that everyone sees life as we do. We assume others think the way we think, feel the way we feel, judge the way we judge… We base business decisions on assumptions all the time, and it’s time we own up to this, because assumptions are not always correct.

Assumptions are based on past experiences; they are reactive-unconscious, so we often don’t question them… According to Geoff; question everything you do that touches the customer; your business name, web site, brochure, posters, letters, phone messages, ads…  question every detail. Stakeholders often approve a strategic plan without scrutinizing the assumptions, the very foundation on which the plan was built (sound familiar)?

According to Mark Hollingworth; the reality is strategic assumptions form the underlying foundation for a strategic plan. They underpin everything contained therein – and hence reflect the vision, strategic map, performance, targets… which subsequently follow… According to Maurilio Amorim; eventually all assumptions need to be either validated or disproved, and the sooner we have clarity on foundational beliefs the better decisions we make with increasingly better results.

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In the article Importance of Assumptions by Steve McKinney writes: Every business leader, no matter business size or industry, makes assumptions about the organization’s business, industry, products, customers, competitors, effectiveness… Assumptions are the very foundations of the business… the reason the business was started and the reason the products were created, and perhaps the biggest assumption of all takes the form of: If I build it, they will come. That little sentence, at the heart of so many companies, services, products, is actually hiding potentially thousands of untested assumptions…

Assumptions that are derived from the leader’s experience, vision, knowledge… They may come from perceiving shortcomings of other businesses, products… They may be a copy of another company’s perceived strengths. They may be a derivation by analogy of something seen in a partner, competitor, or even a completely different industry. They may even have been created through our experiences as customers of some other business…

Wherever they come from, assumptions must be tested and tested well, before they can be relied on. They are only the raw material inputs for the feedback loop, not the answers they masquerade as. Leaders, in particular, should keep this in mind when they embrace ideas for business.

In the article Avoiding Bad Assumptions by Seth Elliott writes: Decisions based on invalid assumptions can have disastrous results, but we are usually blind to bad assumptions until after the terrible results have surfaced… By formalizing procedures to protect against incorrect assumptions, you can minimize the danger. The most effective mechanism for this is to institutionalize a procedure of inquiry. Seek out second (and third and fourth) opinions about key assumptions for critical decisions: Create a questioning environment and foster an environment in which stakeholders, employees… are encouraged to question assumptions.

Asking; ‘why’ should be rewarded not discouraged… Once you’ve determined a course of action, step back, and question it… You want the decision to be stripped down and questioned– particularly the assumptions. Encourage a ‘devils advocate’ approach to the process. If you can’t readily answer questions raised, perhaps you’ve made too many unwarranted assumptions or rushed too quickly to judgment…

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In the article Assumption Management by Quentin Sarafinchan writes: How much time do you spend looking and thinking about assumptions? People blindly copy assumptions from a boiler plate documents just because they are good catch-all assumptions, but never actually think about them… What we rarely do is think about why we made assumptions in the first place… Assumptions are not there to cover your ass; they are there to provide a meaningful framework for making critical decisions…

Another way to look at assumptions is that they provide the highest probability of not being mired in quicksand-indecision… Assumptions may only be valid for a specific period of time… and in some cases they may be factors we’ve declared, unknowingly, true even if they are not.  Once an assumption is determined to be invalid, it must be refuted, removed, or turned into risks.

So what makes a good assumption? There is no hard and fast rule but a few guidelines can be applied, for example it must be; very specific, unambiguous, concise… and, if there is no risk involved then it’s not an assumption…

In the article No Room for Assumptions in Business by Joe Evans writes: Assumptions often lead us astray and problems frequently stem from unproven assumptions. Therefore, one regularly ask: How do you know that is true? A common reply is: Well, I just assume that it’s true. As defined in Webster Dictionary; assumptions are anything taken for granted; supposition… Sisson’s Synonym Book uses words like; arrogance, audacity, imagination, judgment, presupposition, suspicion, usurpation… as substitutes for the word ‘assumption’.

Many of these synonyms are negative and presumptuous, implying that we have overlooked, perhaps unintentionally, pertinent facts. We rely on our own interpretation rather than search for support of the truth… When we assume, we have not fully tested our thoughts against the evidence, for example; we make business decisions by making guesses about customers’ preferences… We rely on such limited thinking on a daily basis…

What if we are wrong? The consequences can be catastrophic… Some assumptions help us function, but many are dangerous– they destroy businesses. So begin by being aware of the assumptions: Then work on keeping them in check. Verify them. Put them to the test... According to Lemony Snicket; making assumptions simply means believing things are a certain way with little or no evidence that shows you are correct, and you can see at once how this can lead to terrible trouble...

We must make the effort to check-verify assumptions, for example: Recognize the difference between assumptions and reality.  Know the biases. Ask questions. Listen to perceptions of others. Investigate…

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In the article Managing Assumptions by Joe Evans writes: Assumptions form the basis of strategies and those underlying assumptions must all be fully vetted. Testing strategic assumptions requires allowing the people involved with planning to back away from the ‘givens’ and challenge them to ensure the team is not assuming the rosiest of scenarios on which to base strategy… Considering that the synonyms for the word ‘assumption’ includes words; hypothesis, conjecture, guess, postulate, theory… assumptions are beliefs we take for granted, but they can be no better than guesses in many cases.

Assumptions are not always justifiable, and defending them may be difficult… That doesn’t mean they are incorrect, but it does underscore the challenge assumptions present in planning. In fact, assumptions are particularly difficult to even identify because they are usually unconscious beliefs… Here is an ‘assumption’ about assumptions: One can safely assume– if an assumption is sound, the inference and conclusion associated with that assumption will also be sound, but the reverse is also safe to assume… Questions you might ask: Is there anything being taken for granted? What beliefs are being ignored that shouldn’t? What beliefs are leading to the conclusion? What are we assuming? Why are we assuming?

In the article Business Plan–Underlying Assumptions by Ed Howat writes: It’s interesting to note that many business plans have performance increases built-in from year to year. Perhaps these increases are based on ‘fact’ or just assumption… For example; perhaps some of the assumed improvement will come from growing account values thereby increasing revenue… Perhaps the ‘experience’ assumption is invoked– you naturally get smarter and more skilled each year; subsequently performance should improve… Now as an exercise; can you articulate five assumptions that you used to build the last business plan? 

Did you test whether or not last year’s assumptions were valid?  If you use the same assumptions again and didn’t test validity, perhaps the new plan is built on sand instead of a solid foundation… Wishful thinking and operating on false assumptions are inherently problematic. Company executives-managers make assumptions, but only a few actually examine, challenge, validate, disprove assumptions.  It all starts with a plan, and valid assumptions…

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Carefully examine your business plan and make a list of all the ideas you believe are true. List the decisions you make based on those beliefs. Highlight the decisions that cannot be supported by reliable data, no matter how strongly you believe in them, and demand that independent evidence be found to support them… According to Joe Murtagh; managers must demand factual data to verify all assumptions. If assumptions cannot be proven… no matter how much or how long you have believed them, they must be abandoned in order to avoid pending disaster…

According to  Dave Brock; sales strategy based on assumptions is pure wishful thinking. Assumptions are particularly dangerous as we become more experienced, seasoned… Sales people are eternally optimistic, so that may make assumptions that even more dangerous… As you develop-execute sales strategies, make sure you are acting based on what the customer said; what you have validated directly with the customer, otherwise you are just guessing.

History is rich with business failures due to false assumptions, which were supposedly ‘known for sure’. However, there are also many examples of successes for those who were able to effectively challenge those false assumptions. Challenging assumptions allow organizations to seize competitive advantage opportunities…

Circumstances are constantly changing in business, even more so in today’s environment. Unpredictable, sudden, and violent shifts are increasing in this turbulent setting. Therefore, understanding strategic risk requires systematical-regular challenge of fundamental assumptions that underlie basic business practices… According to Deborah Mills-Scofield; we’ve heard the phrase; Hope is not a strategy… and it isn’t, especially when based on illusion, delusion, fiction or false assumptions…