Are you Avoiding the Pain of Unconscious Assumptions?
By Aaron Cox
Unconscious assumptions plague almost every organization, it's time we weed them out.
Throughout my career I have had the opportunity to lead several teams of varying size and importance to their overall organization. One activity common to leadership roles is the need to select and support projects and business opportunities that will benefit the company and the objectives of the team. I found more and more often that as I tested proposals the information provided was rarely fact and typically guesses with augmented results that the proposers knew would resonate and likely get their projects the greenlight by multiple layers of management. This always troubled me but was common in several organizations I worked with or for. The more convincing the guesswork, often the harder the failure.
A few years ago, I had the opportunity to read what has become one of my favorite business books, Clayton M. Christensen, James Allworth & Karen Dillon. “How Will You Measure Your Life?" It has impacted my career and my life very positively in multiple ways, I recommend it regularly to those I mentor that aspire to leadership opportunities. One principal I connected with immediately from the book was the "Unconscious Assumption".
What exactly is an Unconscious Assumption, and why should you care?
In "How Will You Measure Your Life?" the authors share the use case of a well known initial failure, Euro Disney. Disney, a strong brand and efficiently run organization seemed tuned to success with their fifth theme park at the time of construction. Early on, after opening the gates, Euro Disney experienced a shocking 2 Billion Dollar loss. How did this actually happen? With a little work the financial issues could be traced back to specific assumed performance metrics. Lets take a look at the performance assumptions Disney made that were laid out by the authors.
Disney’s Key Assumptions
- Total number of visitors to Euro Disney and "visitor days" (number of days per visitor)
- It was assumed that Disney could attract 11 Million Visitors staying for 3 days on average for 33 Million Visitor Days to establish financial projections.
- The visitor days assumption was based on the average number of days for visitors across their 4 other parks. In practice this should be a safe assumption.
Results
- 11 Million Visitors and 11 Million Visitor Days
Cause
- Euro Disney was established with 15 rides (a visitor could be complete all attractions in one day)
- Other Disney parks at the time, were built with 45 rides (required a visit of 3 days or more to complete all attractions in the other 4 parks)
The projection was accurate and successful in the number of visitors attracted to the park, however assumptions used to forecast visitor days and eventually financials were not accurate, eventually leading to the financial issues and missed targets. Assumptions are are often made deep in an organization, buried and forgotten with no visibility to leadership. I imagine a scenario where a financial analyst asked for the average visitor days at their existing parks, assuming they were using a safe and valid number, likely with no line of sight to the number of rides planned for the park, or their impact on "visitor days". Then packaging their financial projections and passing them up the chain to be packaged with other projections with no idea of the negative outcome awaiting the organization.
How do we transition to Conscious Assumptions?
If we are all being honest, this could easily have been any of us somewhere in this storyline, or maybe it already has been. So how do we break free? As a conscientious leader how do you stop this common behavior? The authors lay out a simple approach:
- Rather than focus only on projections, include and elevate assumptions to all levels
- Rank these assumption by importance and uncertainty
- Which of these assumptions need to prove true in order to realistically expect that the forecasted numbers will materialize?
- Test validity of the assumptions in the most efficient and inexpensive way possible for the most critical and impactful assumptions
(Above Excerpt From: Clayton M. Christensen, James Allworth & Karen Dillon. “How Will You Measure Your Life?”)
Now, most of us will not need to make the last decision on projects at the scale of a Euro Disney size investment. However, badly managed assumptions of our critical projects could potentially have the same affect on our organization. Often in our field we focus on the technology, what can it do, how much will it cost, and how does it work. I encourage you to look around though, what unconscious assumptions are underpinning your Cloud Strategy? What may be diverting the professional development plan of your team? What were the assumptions used to select your operations tools? What decision caused you to favor a certain cloud provider or platform? As I put this model into practice with my teams I noticed a significant reduction in failed projects, but more importantly I saw less guess work and greater focus on validity of assumptions and the formulas used to develop projections.
Buyer beware, this is not a utopian cure-all for achieving planned results for your projects or investments, but it will reduce poor results and increase the likelihood of success, it will also encourage your team to use more effective behaviors as they prepare and package proposals for you and your customers. Ultimately this helps your team and organization better achieve its goals and desired results, as well as helps you to develop your next generation of leaders among your team as it challenges them to think deeper, communicate more clearly, and act with known, conscious assumptions.
