Tyranny of False Assumptions

I recently met with a company with a high profit margin for their industry. They hired me to help with a growth strategy. During my meetings with the senior people I heard again and again about their high margin and discerned an underlying worry that growth would only lower it. When I had gathered enough information and understanding about the company, I broached the idea to the CEO that I knew how to increase their current margin a few points. He looked at me a bit askance—but they were already doing so well! Better than most in their industry.

He took it as an article of faith that the only direction their margin could go was down. He thought this in spite of having a highly skilled workforce, a collection of exceptional and loyal clients, a wonderful product, and being an award winning company. He assumed that since they were already winning the profit margin race they had hit the ceiling. He assumed wrong.

Everyone assumes many things. We go through life acting on these assumptions as if they’re based in fact although far more often than not, they aren’t. (Think of the fact-less basis for so much of our political dialogue.)

Much of the time the consequences of our making false assumptions are minor. If you assume a restaurant will have a table and show up to find it full, you walk down the street to another place for dinner.

But often our assumptions lead to dire consequences.  They limit our thinking, and create artificial barriers we can’t break through. Assumptions that no one would actually hop in a random car for a ride allowed Uber to get a huge foothold before the taxi companies realized the extent of the threat. Believing that the price of oil would stay high due to decreasing supply has led to large financial losses for energy companies and countries that depend on oil revenues.

When working with clients it’s not uncommon for me to notice places their assumptions have blinded them to new possibilities and opportunities. When I ask why they haven’t considered these possibilities and explain my thinking, often a stunned look appears on their faces. As we discuss my ideas, it’s as if a door unlocks in their minds. Their ideas flow forth and excitement builds.

Take a look at your assumptions. Evaluate whether you have facts to back them up or they’re just “common knowledge”, historic industry beliefs, or something said so often it becomes true via re-telling.

Many times when I have questioned a client’s policies or practices, I hear “this is the way we do things” meaning “we’ve always done it this way since Mr. X and Ms. Y founded the company x decades ago and so it’s the best way”. As though nothing has changed since 1948 or 1982 or last year or even last week…

Gold is hidden behind false assumptions. Break through their wall and mine it.