Assumptions build up and harden over time. They often get passed on to new employees as “facts” or “the way we do things.” Even if assumptions are founded in some initial data or facts, as they harden, we don’t often change our assumptions even if the underlying facts change. In turn, these unchanging and unchallenged assumptions determine what we are willing to consider when it comes to things like product development, pricing, and experimentation.
Organizational culture and assumptions
Social psychologist Edgar Schein defines organizational culture as “a pattern of shared basic assumptions that a group working together for a common goal has created in learning to cope with the problems of external adaptation and internal integration.”
Organizational culture is both a thing that people try to build (intentionally) and a thing that manifests based on how people conduct themselves (sometimes unintentionally). It’s made up of formal elements, such as company values and vision, an employee code of conduct, governance, or communication channels, and informal elements, such as meeting etiquette, leadership style, risk tolerance, back channels, shared stories, expected working hours, or assumptions.
For something as complicated as “innovation,” all these cultural elements will affect attitudes, appetites, and capabilities. Which, in turn, impacts what actually gets done.
Talent management expert Deepa Premkumar builds on Schein’s definition to reveal how assumptions get culturally entrenched:
Assumptions influence how we think and therefore how we act. How we act further strengthens the wiring in our brains about how things work! Thinking and actions most repeated by the team members becomes the norm/culture of the team.
In terms of innovation and experimentation, it’s the “wiring in our brains about how things work” that can be dangerous, along with assumptions about customers – who they are, how they think, what they are willing to try, and what they need (vs. what they ask for).
Author Phil McKinney describes it as a danger of the obvious. If a company has a lot of people who “know best,” it can get complacent. They feel secure in their knowledge and certain about the “facts.” But the facts often hide a set of assumptions that become barriers to asking questions and challenging the obvious, even if doing so will result in positive change and opportunities.
Here are some ways you might uncover organizational assumptions:
- Don’t always accept “this is how things are done.” Make it OK to ask about why that’s the case, and for how long it’s been that way. Think about experiments that might give you insights on it. Have the underlying assumptions changed, or should they change? Do customers actually need a whole different way given their current needs and changing technology? Now, I caution that always questioning how things are done, especially as a new manager, can be quite off-putting. But especially in conversations about innovation opportunities, I think all types of assumptions should be fair game.
- Observe what gets attention, what doesn’t, and how language is used. What do people talk about on internal channels? Which customer personas are invoked most often in product discussions? What are the favored business models and buzzwords, especially related to business strategy and how that’s communicated?
- Ask questions about automatic no-go ideas or changes. These will likely be related to those hardened assumptions. If there was a failed attempt before, what happened? Does everyone go with it because it’s just assumed the answer is no? Is it presumed to be risky to try something different?
- Analyze which stories get retold often and which stories are considered part of the “legend” of the company. These are the stories that make up the dominant cultural narrative, and they shape assumptions that will directly impact what people think and do. Stories have a powerful influence on our mental models, so they need some close attention.
- Seek an understanding of “who benefits” and “who says so.” It doesn’t have to be the case that people have some self-serving agenda for them to push certain viewpoints as fact-based conclusions. You can get into some interesting conversations where two teams with different perspectives, when given the same data, arrive at very different assumptions based on that data.
- Ask “What else might be true?” Questions like this one will help you to stay curious and stop holding onto assumptions too tightly. By asking “what else,” you have to identify the assumptions already in place. It’s also a great leading question for experimentation.
- Map goals and outcomes against current state to test each assumption to get from here to there. In financial models, we do this already with scenarios and bridging, but it’s a practice that scales up and down. Innovation consulting firm Innosight created a video to explain how you might uncover assumptions to assess your growth gap, for example. There’s no reason the same approach can’t be used for team goals, product gaps, and so on.
- Ask questions like an outsider (or ask an outsider). Outsiders don’t have the same experience or context as insiders and sometimes their simple questions reveal a lot about the assumptions that are built into your company culture. That’s why bringing in a third party can sometimes jumpstart change that internal people struggled to get going. Even if you don’t go outside of your company for help, thinking like an outsider can help you see your assumptions in a different way.
Questioning assumptions is a gateway to experimentation. It would be really hard to make experimentation a part of organizational culture in a company where hardened assumptions are off limits.
- Examine the hurdles or proof points that any new idea must get through to be considered. What are the assumptions built into these particular gates? How can you test those assumptions?
- Do a SWOT analysis of your company or team, then take an extra step and explicitly write out the underlying assumptions for each element. Are there any experiments you might undertake to prove or disprove assumptions about strengths, weaknesses, opportunities, and threats?
- Review your customer persona documents. This exercise is especially useful if the documents haven’t been fully reviewed in a while. Which assumptions are built into the personas? What assumptions do you hold about their likely future behavior? How can you be confident about these assumptions? Business professors Rita McGrath and Ian MacMillan wrote a great case study about how Euro Disney missed the mark on several key assumptions about customer behavior and how that oversight impacted revenues.
- Do some “what if” thinking about industry assumptions. Every industry will have formal and informal “rules” for how vendors interact with customers, how customers interact with clients, about what industry “standards” are. What if any of these rules changed? What assumptions are built in to accepting the rules as they are? Disruptors will be challenging assumptions, and you should too.
- Explore and discuss your “what must be true” checkpoints on your strategic plans. Basically, reverse engineer your desired outcomes back to the elements at each stage that must be true for you to succeed. Now ask questions about the assumptions that are built into each of these steps. You probably have assumptions about expected revenues and costs, customer needs, available technology, pricing, markets, and so on. What experiments can you do to test these assumptions and reduce your up-front investment? What assumptions have you extrapolated from previous experience that might need more insights for you to be confident about them?
- Hard data isn’t a guarantee. Companies of all types and sizes can “fail” due to planning errors that are based on assumptions:
- Even though there is no hard data, once key decisions are made, people proceed as though their assumptions are facts.
- The hard data needed to check assumptions is available, but people don’t actually do it.
- People look at the data and determine an opportunity exists, but they make false assumptions about their ability to carry out the strategy, or about what it will take to succeed.
- People start with the right data, but assume that the environment or market is static, so they don’t notice that a key variable has changed until it’s too late.
- Challenge built-in assumptions in conversations and decision-making. Some of the conversational flags to look for, according to Premkumar are:
- Generalizations (“Everyone I spoke to agreed with X” or “All clients are like this”). Who is everyone? How many people? What was asked? What is the context?
- Comparisons (“This situation is similar to what happened several years ago so we should do X”). Using a past experience as a guide could be the right call, but how do you know? What assumptions are you making that might have changed? Or that make this situation different?
- Leaps to solutions or conclusions. This one is harder to spot because the conversation leading up to the conclusion probably has some robust arguments, but the conclusion “skips a few steps” or isn’t directly linked to the arguments that came before.
McGrath and McMillan suggest discovery-driven planning as a way to incorporate attention on challenging assumptions into strategic planning. Experimentation should be a key part of the model, as it will help with determining direction and scope, and with challenging assumptions. This model has four elements with related documents: a reverse income statement, an operations spec, a key assumptions checklist, and a milestone planning chart that includes “gates” for checking assumptions. These elements could easily translate into something on a smaller scope as well.
“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.