Three ways to battle assumptions and implement fact-based strategies in your business

We’re all living out the consequences of our assumptions, and we’re all operating on a mixture of valid and invalid assumptions.

 

Valid assumptions are those that are well-reasoned and well-supported, i.e. we can explain why we rely on them. Invalid assumptions are those that we don’t realize we rely on, or can’t explain how we got to.

 

Invalid assumptions might be justified with statements like “that’s how we’ve always done it” or “everybody knows this is the way it’s done”.

 

Valid assumptions, on the other hand, might be explained with statements like, “we looked at a large sample of data, and that led us to a conclusion we’d never have arrived at otherwise” or “we decided to ask our customers, instead of just assuming that we already know everything we need to know about them.”

Two common reasons for operating a business on assumptions include:

 

  1. Overconfidence – you believe you know your business, market, industry, customer, simply because you’re experienced. But experience doesn’t necessarily root out assumptions that have defined your strategies and decisions the whole way.

 

  1. Time constraints – assumptions are a shortcut. When we get busy, it’s easy to forget that we need to actively work on identifying assumptions.

 

The real question to ask yourself is not whether you are being limited by your own assumptions, but how much you are being limited – and how much you stand to gain by fixing it.

Three actionable strategies to identify and attack assumptions

1. Use data.

 

The value of data goes beyond confirmation that we’re doing things right (in that scenario, all you get is peace of mind). Data allows us to expose the weaknesses of bad strategies – if we use it to test ideas, instead of just seeking to validate them.

 

Data can also provide insight. It can reveal correlations and patterns that make us stop and ask why is this happening? What does it mean? This line of thinking leads us to brand new conclusions that are beyond the reach of unassisted imagination.

 

To put it another way, you gain a lot more from data when you find out you’ve been doing it wrong than you gain when you find out you’ve been doing it right.

2. Open up dialogues with all your stakeholders

Customers, suppliers, employees and investors all have a different interest in your business. Stakeholders are sources of insights/opinions that are easy and affordable to access. By building a culture that encourages everybody to share their ideas, you create a tool that can cast scrutiny on internal assumptions, and broaden the pool of new ideas.

3. Bring in an expert/outsider

Often, we fail to identify our assumptions because we’re too close to them. A third party, like a lawyer or consultant, can bring fresh perspective.

 

A decade spent helping dozens of business will lead to different insights than a decade spent inside one single business. It’s not so much that they know more than you, necessarily – it’s more that they know different things than you. Together, you have more insight at your disposal.

 

An outsider also might be willing to speak more frankly.

Busting your own assumptions goes beyond implementing protocols in your business; if you practice it as a personal habit, and encourage your team to do so also, you’ll find that the accumulation of small insights eventually leads to huge steps forward.

 

Business leaders in the areas of Seattle, Pittsburgh, and Bozeman can contact FVA for legal and business consultation. We work with businesses of all types and sizes, and can offer flexible payment agreements.

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