How to Identify Strategic Assumptions

Strategy execution depends upon the ability to identify specific actions, resource them, and tie action and results to milestones. In other words, the strategic initiative team needs to create and follow an execution plan. All plans depend upon assumptions, so it is essential to recognize their presence and manage them.

Basics

Assumptions are tools for planning, and the basic definition of an assumption (in the context of planning) is:

Assumptions are those factors that are considered true, real, or certain for the purpose of creating a shared understanding of the plan.

People MUST make assumptions when they plan, using their best judgment and available data.  Otherwise, the thing called “the plan” is simply a document that few people believe.

Implementation teams must then move from planning to action: they have to accept the risks that assumptions might be wrong.  Fortunately, following two commonsense rules helps avoid major mistakes: always document the assumptions and always validate them during execution.

Examples of Strategic Assumptions

Strategic assumptions are those critical factors that, if invalid, would cause termination or significant changes to the initiative. For contrast, compare them to estimating assumptions are those factors that are the basis of assumptions for cost, time duration, or resource commitments.

Here are four examples of strategic assumptions:

  • We assume that the market will respond favorably to our new product, and we will steal 10% market share from our competitors.
  • We assume that the organization will not be acquired by another organization during the next 12 months.
  • We assume that the development engineers can solve the compatibility and integration issues.
  • We assume that there will be no new significant legislation or regulation of our industry in the next 12 months.

What makes them strategic?  It is that if they are invalid, there would be good reason to cancel the initiative or redirect it in a major way in order to achieve the pre-determined definition of success.

Use M.O.Te.R. to Find Strategic Assumptions

It turns out that you can find strategic assumptions in four areas

  • Marketing – Describe the response of customers and the marketplace
  • Organizational – Describe the configuration and stability of the organization.  It is hard to sustain strategic change in the face of corporate reorganizations.
  • Technical – Technical problems and challenges that affect solution design.
  • Resources – Availability of capital, knowledge, skill, and human resources.

How an Executive Tested for Bias in the Implementation Team

I once advised an executive with privately-held doubts about the implementation team’s ability think strategically. He suspected that the implementers had a “technical big-system bias” that would lead to designing a solution that was inappropriate for the need.

As part of a “strategy implementation readiness meeting” that involved him and the team, we asked the team to prepare questions for the executive. He was right: they had many erroneous assumptions:

  • The team never asked about the political climate, they asked about due dates! Traditionally the goal of projects was date-driven deliverables, not strategic benefits realization.
  • The team never asked about the desire to penetrate an unexploited market niche, they assumed that they were going to address a problem in the mature part of their business. (Important-but-often-missed-principle: you have to recognize the different types of strategies and the role of business model definition.)

This particular executive had a generous and nurturing spirit. He coached the team to think more strategically.

A Core Leadership Challenge this….

Technical people have been trained to find and apply the “right formulas.” That training and mindset works well in areas that are well bounded. It does not work well in strategic areas.

They are making the mistake of making assumptions
rather than asking questions.
Often these assumptions are invalid, and lead to
wrong solutions and wasted resources.

The strategic initiative leader has to assume the Chief Learning officer role.  This means be curious, watch for mistakes, expect change, and ask more and better questions.

 How do you identify and manage strategic assumptions?

Copyright Greg Githens – Please properly attribute this article if you use any part of it.

Advertisements

About Greg Githens

Thought leader who helps others think strategically, make strategy, and turn vision into action. Coach, advisor, board member, and hands-on leader. Seminar leader and speaker of popular offerings "How to Think Strategically & Apply Business Acumen" and "Leading Strategic Initiatives (Program Management)." Experience in driving change in Fortune 500 and mid-size companies through strategic initiatives and business transformation.
This entry was posted in Strategic Planning Issues for Strategic Initiatives, Strategy Coaching and Facilitation, Useful Practices & Management Tools and tagged , , , , , , . Bookmark the permalink.

3 Responses to How to Identify Strategic Assumptions

  1. Pingback: How to Energize Strategic Initiatives with Outcomes | Leading Strategic Initiatives

  2. Pingback: Designing Strategic Initiatives for Results: The Two Kinds of Coherence | Leading Strategic Initiatives

  3. Pingback: Complexity: Four Principles for Program Managers | Leading Strategic Initiatives

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s