Wednesday, June 06, 2018

Clinging to Old Mistaken Assumptions

Why do leaders cling to assumptions that are outdated, and/or long since proven untrue by reams of data?   Many reasons exist for this cognitive trap.  However, one common reason is that flawed decisions and strategies have resulted from those mistaken assumptions.  Leaders don't want to acknowledge those failures, and thus, they somehow convince themselves that the assumptions are actually true despite the evidence to the contrary.   They rationalize away the data that demonstrates the failed outcomes of strategic choices that have been made.  

Of course, leaders also confuse facts with assumptions all the time.  Consider the following statement:  We need X units of volume to cover our fixed costs.  That seems like quite a reasonable statement, presumably grounded in the data about revenues, contribution margin, and the like.  However, the statement contains a powerful hidden assumption.  It presumes that those fixed costs are set in stone, forever unchanged.  What if the organization could reduce those fixed costs over the longer term?  Of course, that would change the breakeven volume level, perhaps by a considerable degree.  Asking the what if question is critical.  It often opens up new possibilities.  

Of course, asking the what if questions about critical assumptions can be threatening to leaders.  Consider the example above once again.  Asking the what if question might mean initiating a dialogue about a pet project or favorite strategic initiative endorsed or perhaps even created by the leader.   Eliminating that project or initiative might reduce fixed costs considerably, and change the breakeven level.  However, the leader doesn't want to have a debate about that possibility.  Thus, they never ask the what if question about this assumption.  


Andrew Procca said...

The first question that popped into my mind: how does someone respected by the c-level executives (but at a lower level) ask the important "what if" question. Without danger of retaliation. In other words, how could we help the exec save face and come out looking better for changing his (or her) mind?

Andy Kaufman, PMP said...

Perhaps you first give the leaders a copy of the book Why Great Leaders Don't Take Yes For an Answer!

Andrew Procca said...

That might be to subtle. :-)