HOW WORKING WITH ASSUMPTIONS CAN KILL YOUR BUSINESS RELATIONSHIPS

Assumptions are a fundamental part of human and business behavior, serving as necessary mental shortcuts that enable planning and action in the face of uncertainty. However, when left unexamined, these assumptions transition from useful tools into a corrosive force that can kill business relationships, stifle innovation, and lead to catastrophic failures. This article provides a definitive analysis of this phenomenon, deconstructing the mechanisms through which unmanaged assumptions breed distrust, trigger communication breakdowns, and undermine strategic decision-making.

By examining assumptions at the strategic, project, and interpersonal levels, this analysis reveals a critical, often-overlooked threat to organizational health. From the downfall of industry giants like Blockbuster to the failure of multi-million-dollar projects, the evidence points to a single, recurring problem: the failure to actively identify, validate, and manage core assumptions. This document presents a comprehensive, multi-tiered framework for building organizational resilience, empowering individuals with mindful communication techniques, equipping teams with structured management processes, and establishing an organizational culture founded on transparency, data, and critical inquiry. The path to sustained success lies not in the impossible task of eliminating assumptions, but in the proactive, systematic, and transparent management of their inherent risks.

 

1. The Foundation of Risk: Understanding Assumptions in a Business Context

 

1.1 What Is an Assumption?

An assumption can be defined as a statement of belief regarding the outcome of a future event or an unknown factor that is treated as true, real, or certain for the purposes of planning and decision-making. They are an inherent part of human cognition, arising from an element of uncertainty and serving to fill in missing information when a full picture is not yet available. In essence, assumptions help us to complete our own “story” when key details are absent, which is a natural cognitive shortcut to avoid being paralyzed by inaction.

It is vital to distinguish assumptions from other planning concepts. Unlike a forecast, which is a prediction based on data, an assumption is an unverified belief. It also differs from a constraint, which is a definitive limit on freedom of choice, whereas an assumption is a belief about what may happen in the future. While assumptions are deeply rooted in an individual’s past experiences, beliefs, and values, which inform how they perceive and process information, their power lies in their ability to shape judgments and draw conclusions without conscious thought or critical questioning.

 

1.2 The Two Faces of Assumptions: Catalyst and Corrosive

Assumptions serve a paradoxical role in business. They are, on one hand, an essential catalyst for initiating projects and developing strategic plans. In the early phases of a business or project, a number of assumptions must be made about the market, the business case, or the project scope to move forward. For instance, a new startup might assume a specific market size or a particular customer churn rate to generate initial financial forecasts. Without these foundational guesses, an organization would be unable to deliver on its commitments, instead finding itself stuck in a state of “analysis paralysis”.

The true danger, however, lies in the corrosive potential of assumptions when they are left unchecked. This process is known as “ossification,” where a belief hardens into a fact without any formal validation. The moment a business begins to operate on an unverified guess, it introduces a fundamental vulnerability into its operations and strategy. This uncritical acceptance of assumptions leads to flawed decision-making, which can culminate in immense financial losses and a higher risk of project failure. The journey toward failure often begins when a necessary, but unverified, assumption is mistaken for truth.

 

2. The Taxonomy of Assumptions: Identifying the Hidden Threats

Assumptions can be categorized into three distinct, yet interconnected, types, each with its own set of dangers. A comprehensive understanding of these categories is a prerequisite for effective assumption management.

 

2.1 Strategic and Business Model Assumptions

These are high-level beliefs that form the bedrock of an organization’s business model and long-term strategy. The most prominent of these include:

• Market Assumptions: Beliefs about the external environment, such as the total addressable market (TAM), the business’s projected market share, competitor dynamics, and customer behavior. A business might assume its competitors will not innovate or lower prices, leaving it vulnerable to disruption. The most significant strategic errors often stem from incorrect assumptions about what customers truly want or need.
• Financial Assumptions: The guesses that underpin a business’s financial viability, including revenue assumptions, operational expenses (e.g., salaries, rent), and cash flow forecasts. Overly optimistic financial assumptions can lead to a business plan being rejected or, more dangerously, an inadequate allocation of resources that results in cash flow issues and decreased profitability.
• Operational Assumptions: Informed estimates about the day-to-day functioning of the business, such as supply chain reliability or the efficiency of internal processes. A seemingly minor assumption about a supplier’s punctuality can trigger a chain reaction of workflow disruptions across the organization when expectations are not met.

 

2.2 Project and Tactical Assumptions

While strategic assumptions guide the overall business, project-level assumptions are made for the day-to-day execution of a specific initiative. These are unique to each project and must be meticulously documented. Without a formal process for identifying and tracking them, these assumptions can lead to tactical failures.

The case study of the support service providers in the TAFT project is a prime example of tactical assumptions leading to millions, and potentially billions, in wasted capital. These companies had made critical assumptions about environmental permitting processes, local government relationships, and landowner trust. The failure to identify and validate these assumptions led to massive delays and financial losses, proving that assumptions at the tactical level can be as damaging as those at the strategic level.

 

2.3 Interpersonal and Cultural Assumptions

These are perhaps the most pervasive and insidious types of assumptions, operating on an unconscious, daily basis. They are rooted in an individual’s personal biases and can derail professional relationships silently.

• Assumptions about Intent: These involve jumping to conclusions about another person’s motives. For example, a person might assume a client who cancels a meeting does not value the relationship, without considering any alternative reason. Similarly, assuming a colleague’s terse email is a sign of rudeness can create unnecessary tension.
• Assumptions about Capability: These assumptions are often tied to preconceived notions about a person’s character or work ethic. The well-known management concepts of Theory X and Theory Y are based on fundamental assumptions about a worker’s innate motivation and capabilities. A Theory X manager, who assumes workers are lazy and unmotivated, will adopt a management style of close supervision and limited autonomy. Conversely, a Theory Y manager, who assumes workers are naturally motivated and responsible, will grant more trust and autonomy to their team. These underlying assumptions fundamentally shape the dynamic of the relationship.

The interconnectedness of these assumption types is a critical element of their danger. A strategic assumption about market trends can lead to an operational assumption about a seamless supply chain, which, when it fails, can create an interpersonal assumption that a team member is incompetent. The report’s solutions must address this cascading failure by providing a holistic framework that operates at all three levels.

 

3. The Ripple Effect of Failure: How Assumptions Kill Business Relationships

Unchecked assumptions have a profound and detrimental ripple effect, undermining communication, eroding trust, and hindering strategic action. This section delves into the mechanisms of this destruction, supported by real-world examples.

 

3.1 The Breakdown of Communication

At the root of every miscommunication and misunderstanding lies an unstated assumption. We often assume that our audience understands our meaning, interprets our message the same way we do, or possesses the same context and background information. When a gap in understanding exists, and a person acts on an unverified assumption, the result is a failure to achieve the desired effect of the message.

This is evident in the daily professional environment. Misreading the tone of an email or text message is a common source of conflict. Similarly, misinterpreting nonverbal cues, such as assuming a colleague’s frown is directed at you when they are simply concentrating on a problem, can lead to a downward spiral of avoidance and tension. These small breakdowns can have enormous consequences, from reduced productivity and efficiency to missed deadlines and project failures.

A powerful illustration of this is the 1998 failure of the NASA Mars Climate Orbiter. The mission, valued at over $327.6 million, was lost upon entering Mars’ atmosphere due to a fundamental communication breakdown. One engineering team used metric units for their calculations while another used English units, an unstated assumption that resulted in a catastrophic navigation error. This example serves as a potent reminder that even a small, unverified assumption can have a devastating impact when it is allowed to become a fact in a complex system.

3.2 The Erosion of Trust and Rise of Conflict

Assumptions are a direct threat to trust, the bedrock of any successful business relationship. When a person assumes another’s intentions, they often do so based on their own biases and experiences rather than the other party’s true feelings or motives. This can create a false narrative that leads to unnecessary conflict and a rift in the relationship.

Unchecked assumptions can trigger a devastating “distrust feedback loop”. This is an emotional, vicious cycle where actors, based on their negative expectations, actively try to protect themselves from harm. In this state, even positive signals are interpreted negatively, as the distrusting party assumes the other is intentionally trying to conceal the truth or mask deception. This dynamic limits opportunities for positive interaction and learning, as individuals and teams attempt to reduce their engagement with one another. This process can escalate from a state of healthy suspicion, which motivates the search for more information, to a state of pervasive distrust or paranoia, which is based on an unchangeable belief in the malevolence of the other party.

The consequences of this ossification of assumptions can be seen in the downfall of once-dominant industries. Both Blockbuster and the traditional hearing aid industry fell victim to unverified strategic assumptions that left them vulnerable to disruption.

 

3.3 The Hindrance of Strategic Decision-Making

Beyond interpersonal and project failures, assumptions fundamentally impair a business’s ability to make sound strategic decisions. When organizations rely on guesswork, they prevent themselves from truly understanding their customers, leading to flawed forecasts and misallocated resources. This can have a ripple effect on the entire budgetary process, ultimately damaging the organization’s financial health.

A business that assumes a particular market growth rate or a competitor’s static pricing strategy may fail to create a viable plan, leading to a loss of capital and missed opportunities. Conversely, a business that overestimates risks may devote excessive resources to contingency planning, diverting capital from critical growth-driving activities such as research and development or marketing. This highlights a crucial challenge: the business must avoid not only the paralysis of indecision but also the peril of uncritical action. By operating on assumptions, organizations close themselves off from their customers’ true desires, limiting the chance for deeper connection, collaboration, and problem-solving, and allowing unresolved issues to fester.

 

4. Building Resilience: A Framework for Managing Assumptions

The inescapable nature of assumptions means that the path to success lies not in avoiding them, but in actively and transparently managing them. This requires a three-tiered approach that addresses the problem at the individual, team, and organizational levels.

 

The Individual’s Arsenal: Mindful Communication and Self-Awareness

The first line of defense against assumptions is the individual’s commitment to self-awareness and mindful communication.

• Assess Your Beliefs: Before acting on an assumption, it is crucial to pause and identify its origin. A person must reflect on whether their belief comes from a past experience, a personal opinion, or simply a gut feeling. This intentional pause helps to ground the individual and prevent them from reacting to a situation in a defensive or emotional state.
• Assume Positive Intent: This is a powerful mindset that involves giving others the benefit of the doubt. By choosing to believe that others are acting from a place of good intentions, even if the outcome seems negative, a person can remove the emotional charge from a situation and open the door to understanding and resolution. This approach reduces conflict, fosters trust, and encourages open communication, while also promoting a growth mindset that views mistakes as opportunities for improvement rather than personal attacks.
• The Power of Active Listening and Clarifying Questions: Questioning is the direct opposite of assuming. Instead of guessing, one should seek clarification by asking open-ended questions like, “Could you explain what you mean by that?” or “Can you tell me more about that?”. Another effective technique is paraphrasing what was understood back to the speaker, such as, “So, what you are saying is…” to ensure both parties are on the same page. This approach demonstrates engagement and builds trust, while preventing mistakes that can happen due to misunderstandings.

The Team’s Toolkit: Fostering Openness and Accountability

For a team, managing assumptions moves beyond individual habits to a formal process.

• The Assumption Management Process: A structured approach is critical, especially in projects. Assumptions should be formally identified, documented in an “Assumption Log,” and prioritized based on their potential impact on the project’s success. These assumptions should be regularly reviewed to assess their validity and to develop contingency plans in case they prove to be invalid. Documenting decisions and their rationale is also a key component of this process, helping to create a shared understanding of why a particular path was chosen.
• Seek Multiple Perspectives: No single person holds the entire truth about a situation. A team should be encouraged to gather diverse, and even competing, perceptions of reality. This practice not only makes the team more knowledgeable but also fosters a respectful environment where every individual’s perspective is valued.
• Embracing a Data-Driven Approach: The ultimate countermeasure to flawed assumptions is a reliance on facts, metrics, and data. A business that prioritizes data proficiency can use visual analytics to identify trends, challenge assumptions, and make decisions based on evidence rather than on intuition. This approach moves the organization from a reactive state of being blinded by assumptions to a proactive state of being guided by informed analysis.

 

Common Business Assumptions and Mitigation Strategies
Common Assumption
“Our customer base will not change, so we don’t need to innovate.”
“The client is upset because they haven’t replied to my email.”
“Our supplier will always deliver on time, so we don’t need a backup plan.”
“My colleague isn’t pulling their weight because they are quiet in meetings.”

 

5. From Assumption to Insight

Assumptions are an unavoidable part of human experiences and, by extension, the business world. They are the cognitive grease that allows us to move forward in a state of uncertainty. However, this report has demonstrated that their power to accelerate progress is matched by their potential to cause catastrophic failure when they are allowed to ossify into unverified facts. The invisible undertow of unmanaged assumptions can quietly and insidiously kill business relationships, erode trust, and sabotage even the most well-intentioned projects.

The path to building a resilient, high-performing organization lies not in the impossible quest to eliminate assumptions but in a commitment to actively and transparently manage them. This requires a three-tiered approach that empowers individuals with the tools of mindful communication, equips teams with formal management processes and data-driven methods, and establishes an organizational culture founded on transparency and open communication. By adopting a mindset of critical inquiry and a willingness to challenge the status quo, businesses can transform their deepest vulnerabilities into their greatest strengths, turning assumptions into validated truths and guiding their future success with clarity and confidence.

 

Ayo Emakhiomhe.