Assumptions and heuristics help us navigate and progress despite uncertainty. Relying on old maps can be high risk in accelerating and increasingly complex world.
In systems engineering, assumptions and unknowns are identified, tested, and managed throughout the process. The goal is to understand and mitigate risks but not be paralysed by them.
This is humility in practice.
However, in strategy, many organisations don’t do this. The process often doesn’t include a structured approach to identify the assumptions inherent to thinking, financial models, and forecasts.
The dangerous rule being followed is that the past is the best prediction of future performance.
Nassim Nicholas Taleb observed that that we’re often blindsided by unexpected events. He said we underestimate the likelihood and consequences of unlikely events.
Or in other words: humans don’t understand risk. And everyone perceives it subjectively.
This may be ok in a static environment. But our reality is increasing complexity, accelerating pace, and accelerating pace of change.
The old assumptions aren’t reliable. The old ways of working are not guaranteed paths to success.
The new assumption we need to hold is: the status quo does not extend into the future.
Four questions for better strategy
- What biases and assumptions are in our models, strategies, and plans?
- What risks do these present?
- How can we quickly validate what we think is certain?
- Whose perspective, outside of our own normal reference group, can we borrow to see a different view?
