Assumptions and Consequences

Issue 74: Sept 22, 2022

Don’t make any assumptions! How many times have we heard this – at work and at home? Yet, we make assumptions all the time. And our assumptions are typically personal speculations that have broad implications. We assume that our workforce is achieving its potential. We assume that leadership is making decisions that benefit the entire organization, including its workers. We assume that our customers are pleased with our products and services and are loyal to our brand. And we assume that our market is renewable and sustainable.

But what if we’re wrong? Business Coach Stephanie Ward writes “We make assumptions when we don’t fully understand a situation. It is a natural reaction to immediately fill in any missing information by making up our own story. We do this because we like to try to make sense of people and situations. The problem with this is that most of the time our story is incorrect which causes all kinds of complications. The fact is, we don’t know what the truth is unless we ask.”

We are evolutionarily programmed to assess information and based on that information, faulty as it may be, determine what to think, how to respond, what to do and how to act. That programming comes from a basic necessity to ensure safety and security. We make assumptions because we feel compelled by the situation to do so (think: a team awaiting your direction); because it may be necessary to do so (approving a project or report); or because you’ve been asked a question (your CEO asks for your opinion of the market). In each and any instance we know some things — some things we don’t. And some things may not readily come to mind as we may not connect to the issue. In any case, when there are gaps in what we know, we make our best guess via assumptions. There’s another catch. We know our memories are not perfect — some of us remember words, some of us remember visually. It’s impossible to remember every element, rather only what our minds have deemed important. That assessment of what is important to remember is subjective and leads to gaps. And then we make assumptions.

Assuming Business as Usual

Let’s take a step sidewise. Entrepreneur reports “Assumptions are ideas that we presume to be true before making decisions. Assumptions are also made in organizations for developing a strategy, planning, and making decisions. These conjectures are generally standardized as disclosure of uncertainty and risk.” That’s an optimistic operational strategy. Budgets are based on assumptions. Customer acquisition is based on assumptions. Event attendance is based on assumptions. As is the performance of our workforce. But how do you know your assumptions are accurate?

Assumptions can grow to become beliefs that stem from faulty information, missing information, taking what someone shared as truth, or simply because we haven’t had time or the desire to research and seek out what would fill the gap. Australian advisory firm Advizia reports, “Over time, for a variety of reasons, an opinion or statement becomes fact without any empirical evidence or data to prove it. Anyone following U.S. political debate in recent years will see this concept in action. Someone in an organization, at any level in the business, will develop or state a position. This position, and the assumptions on which it is established, are naturally based on their understanding of the market, their interpretation of information or views or opinions. This position is then repeated and adopted throughout the business to become an assumption under which the business then operates.” And therein lies the rub. Accepting assumption as the truth has dire consequences.

Assuming What We Don’t Know We Don’t Know

We notice that often many of our clients make assumptions based on faulty information … or no information. Or institutional knowledge that is laced with individual or collective bias. Assumptions are often based on past experiences and a sense of trust that history will repeat itself. “We’ve always done it that way” is a perfect construct of assumption without rational validation. But we feel confident coming to conclusions based on assumptions built on what we feel we believe we know, even if what we know is out of context with the present time or conditions.

What we think worked in the past is not a guarantee for future success. In a business environment informed by data and analytics, making assumptions will become a thing of the past. Or put another way, making assumptions without measurements that matter is a lazy way to run an organization.

Here are a few examples of assumptions that can derail any organization.

Our customer base is stable. An organization can make two fatal errors: not growing and evolving with its current customers and neglecting to mine the next generation of customers that will be the leaders of tomorrow. In the first case it’s a question of being out of touch with the changing needs based on professional accomplishments and life stage changes that impact the needs of a group of key customers – those who have been loyal to you over time. In the second case it is a question of disconnect with a digitally savvy group of up-and-coming leaders who have distinctly different needs and desires, not to mention digital skills that demand how they want to be communicated with. Management assumptions about both of these groups without research and investigation are virtually meaningless.
Our market will remain the same for the foreseeable future. Without deeply understanding your market orientation, you will be left with making assumptions about its power and potential. Things change and when management assumes business as usual, it’s a red flag about the relevance of the organization. Any organization must evolve and fine-tune its strategy and operations to meet the changing demands of the market.
We know who our competition is. You can’t control your competitors and they may not be the usual suspects. It requires critical thinking and objective judgment to acknowledge that your competition is dynamic and may not stay the same in terms of how they compete with you.
Our workforce is reliable and secure. Well, guess what? Everyone woke up to The Great Resignation augmented by Quiet Quitting. Why were they so surprised? Assuming that traditional management skills can be transferred to a remote workforce has been another wake-up call. Not understanding how AI and ML can alleviate mind-numbing repetitive work to liberate workers to more productive, strategic work is a faulty assumption. And not nurturing the next generation with the empathy, respect and listening they demand is an assumption that will erode any organization.
Macro social, economic, and geo-cultural changes exist outside our niche business. Anyone in an international business needs to take heed of population shifts, cultural changes, and economic impacts. And in a domestic context, how are population and cultural shifts predictors of your future customer base?
Our business is … fill in the blank. If anything has changed most significantly in our digital marketplace it is the understanding and redefinition of what business we are in. To survive, you must evolve and innovate. Amazon changed the retail paradigm by making a diversified, yet connected, portfolio platform business into a behemoth. It’s hard to imagine that a traditional mall has a future, yet a branded entertainment center does. A professional association has become a hybrid services, education, consulting, and community hub. Airbnb redefined the hospitality business as Uber redefined transportation as Netflix pioneered at-home entertainment. If any of these examples assumed their core businesses traditionally, they would not be the game changers they are today. And then there is FedEx which assumed the mission of a logistics company also offering professional services to amplify its delivery service … that is now faltering.

Truth or Consequences

Advizia adds, “Ironically, the more widely a false assumption is adopted, the more resistant people within an organization can be when presented with facts or proof points that challenge that false assumption, often strengthening the business’ belief in it. Make no mistake, false assumptions can lead to the underperformance of a business, investment in the wrong areas and potentially even the demise of a business.”

A few simple examples of opinions or statements that could be false assumptions:

No competitor can ever replicate what we’ve built.
Our product is unique and highly valued by our customers.
We deliver the best customer service of anyone in our market.
Our brand and/or organization is the most trusted in the market.
Our business model and products are relevant.
We have X% market share and plenty of room to grow.
Customers hate our competitors and prefer to use us.
People will pay for this new product or service.

Keeping it Honest

Lastly, although all organizations operate based on assumptions at every level, here are some basic questions to ask, by way of Advizia.

What is the assumption?
Where did the assumption come from?
What decisions, investment or market positioning is the assumption driving in your business?
Why do you believe it to be true?
What proof points do you have that it is true?
If you don’t have proof, what actions can you undertake as a team to prove your assumption is either true or false?
If your assumption turns out not to be correct, what would you be doing differently as a business?

More on the Subject

Assumptions are covered in depth in our just-published book, The Truth About Transformation. We look deeply into the issues that influence building a dynamic and sustainable organization in today’s changing marketplace. Share it with your team and contact us to help you fulfill your mission and understand how the human factor impacts everything you do – especially assumptions.

Get “The Truth about Transformation”

The 2040 construct to change and transformation. What’s the biggest reason organizations fail? They don’t honor, respect, and acknowledge the human factor. We have compiled a playbook for organizations of all sizes to consider all the elements that comprise change and we have included some provocative case studies that illustrate how transformation can quickly derail.