We make decisions based on assumptions, but how often do we make decisions about the validity of our assumptions?

We wake up with assumptions

• Life is full of assumptions. Every morning we wake up assuming that the world will still be the same. We assume there will be water for our shower, food for our breakfast, and transportation to our work. Most of the time, all those elements will be there, but what if they aren't? Do we have a Plan B?

• Companies live on assumptions. Each year they put together an annual budget that assumes many things: that they will still be in business, that the market will behave as they hope, that employees will perform as expected, that customers will continue to buy, that the company will not lose any customers, that products will continue to attract new customers, that competition will not change, and so on.

• Unfortunately, rarely do any of these elements meet expectations. For example, the average company loses about 10 percent of its customers every year due to such causes as attrition, competition, dissatisfaction, changing preferences, new products in the market, innovations, etc. Yet, each year they plan additional growth without factoring in the likely loss of a percentage of existing customers.

• Further, strategic decisions in large companies are often made by senior executives who haven't seen a customer in years, yet assume they know their markets.

• This is a very common flawed assumption. It is found mostly often among managers, experts, consultants, politicians, journalists, and psychologists. They tend to become solutions in search of problems. Like the man who invented a remedy for a non-existent disease, they are so enchanted by the cleverness of their invention that they lose sight of its practicality. In the business world, this trend typifies product-driven companies bent on pushing their product or service as is into the market - whether or not the market wants it.

• The urge to show expertise, a rush to get past defining the problem as quickly as possible so as to move on to offering - not finding - a solution, is quicker and easier than the former. A clear example of this is found among generals who, as Winston Churchill said, "are always fighting the last war." In the end, reality always prevails because there is no right solution to the wrong problem. In the business world, the ultimate responsibility for making sure that the organization addresses the right problems lies principally with the CEO and the board of directors.

• A frequent assumption is that the problem is solvable within the existing parameters, or without changing anything. There are people who believe that all disagreements can be solved peaceably. But, if a raging maniac attacks you with a knife, do you really think you could talk him out of it? If an American competitor offers a better product at a better price than yours, do you think you can still retain the business?

• The height of arrogance is to assume that one can solve all problems. In order for a problem to be solvable, one must be able to control, or at least influence, some or all of its causes. On the other hand, that a problem is not solvable doesn't mean that it can't be mitigated in some degree. That's why it is equally foolish to assume that nothing can be done about unsolvable problems.

• Go back and check the previous four flawed assumptions and you will see why, if they still exist, you can't solve the problem.

• There is no Enduring Solution; despite global vaccination campaigns, even smallpox is still around. If the causes of a problem are still around, you can expect it to reappear. That's why problems having to do with human nature keep recurring, generation after generation. They say History repeats itself. To some extent that is true, because human nature hasn't changed in two million years.

• Feeling good, "at least we did something about it," is not a solution. That you feel comfortable with the solution you have devised does not mean that it will be effective. In 1939, British Prime Minister Neville Chamberlain returned from his meeting with Adolph Hitler with a big smile on his face saying, "Peace in our time." World War II followed.

• There is no Universal Solution. Why? Because there are no universal problems. Every problem is individual in some manner. We see this flaw surfacing, time and again, when customers order a piece of equipment, a spare part, or a component, or a medication, that "solved" the problem the last time around. Then, they are angry because the equipment, spare part, component, or medication didn't work. The repetition of the same symptoms does not guarantee that you are suffering the same illness. What was indigestion the last time could be a heart attack today.

• Defining the nature of the problem does not guarantee that it will remain unchanged while you come up with a solution. This is an especially dangerous assumption for sales people and other professionals who must develop proposals that they submit to prospective clients for approval. Generally, they have interviewed the prospect beforehand to define his or her need. If some time lapses between that interview and the submission of the proposal, the need or problem could change - and often does.

• By their very nature, assumptions are based on incomplete information. Therefore, there is always a possibility that the missing information is essential to finding the right solution. Such was the case of the doctor who received a call at two a.m. in the morning from a patient who said, "Doctor, I'm afraid my wife is having an acute appendicitis problem, and needs an operation." To which the doctor replied, "That's ridiculous! I took your wife's appendix out six years ago." "Doc.," the man said, "I got divorced two years ago. I remarried; new wife, new appendix."

Assumptions are a part of the fabric of life; it would be impossible to operate without them. The problem, however, is that we fail to realize that they may not support the decisions we need to make. A typical assumption may be when you are preparing dinner based on a recipe that you have memorized, and you are sure that you have all the ingredients. Then, surprise, you discover that one key ingredient is missing. It's an easy mistake to make, and we all have at one time or another. But - no big deal - we can make a quick run to the supermarket and pick it up.

It is quite another thing if you are the head of the Federal Reserve, and you assume that subprime mortgages won't hurt the financial system. But, even that assumption might have been easy to make, unfortunately.

When making important decisions, we need to ask ourselves what assumptions are we making, and how valid are they? Flawed assumptions are easy to make, but the damage they cause can be catastrophic.

P.S. I forgot to mention that there is an Eleventh Flawed Assumption; it is that these 10 assumptions about flawed assumptions are flawless, which, of course, may not be the case.

P.P. S. Just in case you hadn't already thought of it, remember - everything about the future is an assumption with high potential for being flawed. So, what do you do to check the quality of your assumptions? Run them by someone who is knowledgeable, experienced, and - most importantly - objective! An ounce of this prevention can save you tons of headaches and expensive mistakes. Would you like to talk about it? Call me at (630) 420 2605, or contact me at mykwyn@aol.com ; you might also save a ton of money, in addition to your career and your business.