How Examining Core Assumptions Can Save Your Company


Why do disruptions drive companies out of business? While it’s easy to blame “innovative technology” or “tough competitors”, most firms hurt themselves by not following early warning signs which challenge core assumptions. Jamaican firms are particularly vulnerable.

Why? As mentioned in prior articles, our companies are overly leader-centric. While this is sometimes a benefit, it’s more often a weakness, especially when the big boss is the sole strategic planner. In such firms there are no real, bottom-up planning retreats – just ad-hoc announcements of the leader’s intent.

While the downsides of this approach are easy to imagine, specific blind spots are hard to detect.

For example, when I lived abroad I used to be a customer of Kodak, Blockbuster, and Blackberry. These were all dominant players, but today, it’s hard to find a trace of these firms or their products. When their industries were disrupted, they just disappeared.

While some point fingers at their aggressive competitors, that’s only a part of the story. In retrospect, they could have anticipated the changes that eventually wiped them out. Their blind spots prevented them from noticing what was happening.

This may be taking place in your industry, to your company.

Fortunately, research shows that in each firm there are usually a few mavericks who see such disruptions coming quite clearly. However, their insights often make little difference. They aren’t invited to retreats, sit-downs with the CEO or board meetings. Without their input, companies fail to see their blind-spots, and don’t tackle underlying business assumptions which are slow-moving, but inexorable. If your company is vulnerable to this mistake, here is an approach which will reduce the risk.

  1. Uncover Core Assumptions

Conduct an exercise in your next retreat to make a list of assumptions that are tightly held, but are not being discussed. They should be pre-requisites for your current strategy to succeed.

Unfortunately, there is no static set of assumptions sitting in an MBA textbook waiting to be copied. You will get better results if you allow your team to flounder as it struggles to uncover them.

I often suggest that teams find companies in their industry worldwide which are using the latest disruptive technology or business model. Look for the ones showing some early success.

Then, conduct a quick poll of your middle managers. Ask “Until what year is our company safe from this particular disruption?” Use the responses to see whether or not there is a wide range of opinions.

Now, perform the same survey, but restrict it to attendees at the last strategic planning retreat. If you don’t find consensus, question the validity of all your firm’s current plans. Furthermore, if your company is leader-centric, and has never conducted a real, participatory retreat, you should be even more concerned. You may be facing a battle for the future.

Use the answers to these questions to come up with a timeline, carrying forward either the average or the median year for planning purposes.

  1. Agree Upon the Timing

Conduct an open discussion with the help of a neutral facilitator, asking: “How will the events leading up to this disruption, according to this timeline, play out?” Allow the sparks to fly as different assumptions arise.

It may be a contentious affair, but it’s better to have this conversation now, when the stakes are low. Even if you fail to achieve perfect agreement due to a lack of data, the disparity in viewpoints will point to the need for a further step.

  1. Name Someone to Monitor or Track Assumptions

If your firm faces a complex set of data, don’t rely on “buck up” methods. Appoint someone with the right background to scan the horizon for breaking information. Better yet, give him/her a budget to do proper research. Empower the individual to sound an alarm as soon as a shift is detected in the data they are collecting.

In other words, look for the early indicators that your intended strategy or business model is in danger of failing. And do whatever it takes to bring this data to the planning team so they can do a rethink. After all, they are the ones who developed the original hypotheses and are in the best position to determine the size of the correction that’s needed.

Following these steps should give you the kind of early warning signs that your strategy and/or business model are likely to fail. It’s not necessarily bad news – just an indication that swift action is required.

This is especially true in leader-centric firms which have relied on the instincts of a single, stubborn individual. Help these strong bosses recognize that their original brilliance needs a dramatic, team-based upgrade if the company is to survive a potentially disruptive future.