MONEY

Have You Checked Your Assumptions Lately?

The worst decisions leaders make are the ones based on assumptions they never even acknowledge, let alone challenge.
One of the great unchallenged assumptions of our time: "Home prices only go up."
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How many legs does a cow have if everyone agrees its tail is a leg?

Most decisions are based on an underlying assumption. Positions articulated in a debate are based on an assumption. The problem is that, too often, in business the assumption is never made explicit, or if it is, its accuracy is never questioned.

Some of the worst decisions I've made or been a party to were ultimately based on a flawed assumption that was never challenged. Here's a few examples of wrong-headed assumptions that you may recognize:

  • Home prices just don't go down. They never have. So, maybe it's okay to leverage up if that debt is supported by home values? We know how that one turned out.
  • People are primarily motivated by money. Really? What about the superb businesses that pay less than their peers but seem to attract and retain great people because of they create a strong culture and sense of community?
  • If I give my subordinates constructive criticism, they may get demoralized and not want to work for me. This one is contradicted by numerous surveys and other evidence that shows that a primary reason people quit jobs is because they're NOT being coached and challenged to improve their performance.
  • Tax cuts don't increase the deficit, because tax cuts pay for themselves. I won't touch that one.
  • We have the best health care system in the world, and therefore we shouldn't change it. Hmmm. Are we sure about that? Evidence suggests that we rank far behind numerous countries in terms of health care outcomes despite being number one in spending by a huge margin.

Anyhow, you get the idea. My point is not to gore anyone's ox. It is to suggest that we all need to challenge the assumptions we make that drive critical decision making. In my experience, most business leaders could do a much better job of this.

How do you do on this front? Push yourself and those around you to make assumptions explicit. Tease the assumptions out of arguments if you need to. Challenge whether you agree with the assumption or not. Step back and see if it is in fact accurate. This approach will create better debates, better analysis and certainly better decision making.

After all, a cow only has four legs. Assuming a tail is a leg doesn't change that.

Last updated: Feb 14, 2012

ROBERT S. KAPLAN | Harvard Business School

Rob Kaplan is a Professor of Management Practice at Harvard and author of What to Ask the Person in the Mirror: Critical Questions for Becoming a More Effective Leader and Reaching Your Potential.




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