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10 Really Bad Assumptions, Part 2

This is the second of two articles dealing with making assumptions. As was said in last month’s article, we have little choice but to deal with assumptions, so here are the final five to avoid.

Bad Assumption #6: We always develop new products/services on time and on budget.

If you’ve done it once, there’s no guarantee you will do it again. New products on time and on budget is a great target but one that’s too seldom reached. And if we believe, because of a prior success, that this will always be the case, then we need some time in a rest home where this delusion, and any others we may have, can be treated professionally.

Bad Assumption #7:Our competitors will react rationally.

This is one of those notions of which we must be disabused. More often than one might think, emotions, rather than rational thinking, will rule a competitor’s reaction. When challenged, people’s first reaction is almost always emotional followed, one hopes, by a rational one. Sadly, that first, emotional reaction is true of your competitor’s competitor—you know, it’s that person you see in the mirror.

Bad Assumption #8: We don’t really have any competitors.

This may, on occasion, and for all too brief a time, be true for a new drug from a pharmaceutical company. But those of us who work in the construction arena are surrounded by competitors. And those competitors may not even be in our specific market. After one of my first visits to a builder’s expo, it was apparent that the word “competitor” was more encompassing than I had imagined. To wit, the choice of high-end European kitchen cabinets for a residence, or in a commercial project, the choice of a new company-wide software package that might well reduce the available funding for your cladding or ceiling product—and yet you may not envision them as competitors. And, of course, there are those pesky direct competitors nipping at your heels.

Bad Assumption #9: We can quickly gain substantial market share by reducing our prices.

Reducing prices may gain some market share but only until a key competitor reduces its prices. Any reduction in price results in a disproportionate negative hit on both gross and net profits. And the next thing this person says is, “We’ll make it up in volume.” That is rarely possible.

Bad Assumption #10: Everyone else in the company agrees with what I’m doing.

If you’re the boss, they may be telling you they agree with you, but beware sycophants and yes men. Ask for—nay, require—that people challenge your views as a test of your decision-making process. Don’t assume that they agree; find out if they really do.

L. Douglas Mault is president of Executive Advisory Institute, Portland, Ore. The Web site is; he can be reached at (888) 428.3331.

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