Outfoxing Murphy by Managing Strategic Assumptions

By Terry Schmidt, Founder, ManagementPro.com

When NASA’s $150 million Mars Orbiter crashed during the landing phase, analysis showed that the spacecraft builders worked in the metric system. NASA assumed (but for some reason failed to verify) that the builders were using the English measurement system of feet and inches. Thus, the Orbiter’s computer program was based on bogus data and the mission didn’t have a chance.

When “Company X’s” strategic plan crashed during the execution phase, analysis showed that the core strategic planning team worked with the senior managers but didn’t consult the operational front-line. They assumed, but failed to verify, that there would be strong support all among the stakeholders. Thus, their plan was based on bogus assumptions and didn’t have a chance.

Whether aiming for Mars or closer to home, many missions that matter crash on the hard rocks of reality when a taken-for-granted assumption went awry.

Murphy and his infamous law dwell in the land of invalid assumptions–those conditions which must exist for the strategy to be valid. The graveyard of failed strategic plans is littered with undefined, unexamined, and untested assumptions such as:

  • Management support is etched in stone on this one.
  • Everyone is in the loop and on-board for the entire ride.
  • We have a good balanced scorecard and that should be sufficient.
  • No use wasting too much ink because we all know our plan.

Assumptions Matter

When bad things happen to good strategies, erroneous assumptions are often to blame.

Valid assumptions are often the most critical factor in developing and executing plans. Every strategy rests on assumptions—whether or not they are acknowledged or spotlighted for analysis. The very best strategic thinkers, planners, and agents of action take the time to identify, examine, and validate their underlying assumptions because faulty ones act as invisible beds of quicksand, eager to suck good strategies under. So, how do you surface the most relevant ones?

There are two levels at which assumptions analysis can help strategic planners to reality-base their work. One level concerns assumptions made about the implications of trends and factors identified during an environmental scan.

There’s an old story about two European shoe salesmen sent to different parts of a remote part of Africa to study sales potential. The first reported back that since no one wore shoes, there was zero sales potential. The second reported that since no one wore shoes, the potential was infinite. Same underlying facts, but diametrically opposite interpretations. These contrasting conclusions reveal very different mental models and assumption at play. This phenomenon can also occur during strategic planning, and among strategic planners as well, because we seldom bother to make explicit our implicit assumptions.

Equally important are the assumptions in your more immediate planning environment. Ask yourself, “Whatshould we assume?” or “What are we assuming?” in such categories as:

  • Planning Team Members
  • Stakeholders Interests
  • Management Support
  • Technical Issues
  • Resource Availability
  • Related Projects
  • Willingness to Change
  • Customer Expectations
  • Political Climate
  • Competing Concerns

Three Steps for Managing Assumptions

As your own experience may confirm, many strategic initiatives fall flat due to faulty, ill-formed, undefined or unexamined assumptions. Assumptions always exist, whether or not we acknowledge or verify them. Get them out of your head and onto paper.

Try this simple three-step process to surface easily-overlooked issues and potential deal-breakers which deserve your attention.

Step 1. Identify Key Assumptions

Get your core team together, or fly solo, and use these kick-off questions to surface underlying assumptions:

  • What conditions must exist, and what factors must be true, for effort to work?
  • How must the world cooperate with us?
  • What else must happen for this to succeed?
  • What else should we assume?

Step 2. Analyze and Test Them

Now you can analyze and test each with questions like these:

  • How important is this assumption to strategy success or failure?
  • How valid or probable is this assumption? What are the odds? How do we know?
  • If the assumptions fail, what is the impact? Does it diminish the level of accomplishment? Delay it? Destroy it?
  • What could cause this assumption to not be valid? (Note: This one triggers specific risk factors.)

This first-cut analysis offers a jumping-off point for more rigorous risk assessments using conventional risk management techniques.

Step 3. Act On Them

Now subject each assumption to the following:

  • Is this a reasonable risk to take?
  • To what extent is this amenable to control? Can we manage it? Influence and nudge it? Or only monitor it?
  • How can we design our initiatives to minimize the impact of, or work around, risky assumptions?
  • What contingency plans might have handy just in case?

Acting on assumptions requires making contingency plans and putting preventive solutions in place. For example, if it absolutely, positively must get there overnight, send identical packages by DHL, UPS and FedEx. If storms are brewing, do the organizational equivalent of nailing on plywood and getting a gasoline-powered pump before the hurricane hits. You get the idea.

Steering Assumptions in Your Direction

By vetting key assumptions as part of the plan, your organization can better navigate towards its “future of choice” no matter which way the wind blows.

There are many proven approaches for pulling assumptions from the murky waters where Murphy dwells. One such tool, the Logical Framework approach, teases them out and helps articulate the underlying issues and conditions, so you can either deal with them before they surface and crush your strategy, or monitor them and have a “Plan B” waiting in the wings.

As you and your team becomes more adept at managing assumptions, you’ll be better prepared to navigate skillfully and courageously across the sea of change washing over us, rather than getting drowned by a strategic tsunami you didn’t see on the horizon.

About the Author

TERRY SCHMIDT holds a Harvard MBA and is an internationally known management consultant who helps organizations become more strategic, productive, and profitable. He has over thirty years of experience as an executive, educator, and strategy coach. He is the founder of ManagementPro.com, and teaches strategic thinking and project management in corporate universities and executive programs worldwide, including the UCLA Technical Management Program and the MIT Professional Institute.

Schmidt is spearheading the formation of the Seattle ASP Chapter. He is the author of Strategic Project Management Made Simple (John Wiley & Sons, January 2009). You’ll find other great articles on our totally re-tooled website www.ManagementPro.com, and lively topics at my blog Terry’s Toolbox™.

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Contact Terry or call 206.433.0700 today for a confidential discussion of your issues and objectives.