Invalid Business Assumptions


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Businesses are doomed to repeat the same mistakes if they are making decisions based upon invalid assumptions.

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Invalid Business Assumptions

  1. 1. November 2008 Invalid Business Assumptions
  2. 2. Every day! Assumptions Copyright: 2008 We make hundreds of assumptions
  3. 3. The sun will rise in the east The shower will have hot water We will connect to the internet Assumptions Copyright: 2008
  4. 4. We don’t see our assumptions because events do not challenge them. Without realizing it our assumptions are strengthened every day. Assumptions Copyright: 2008
  5. 5. <ul><li>Assumptions are mental habits and serve a similar purpose to learning how to tie shoes. </li></ul><ul><li>Initial Learning = much attention and slow </li></ul><ul><li>More practice = less attention and faster speed </li></ul><ul><li>Skilled = no attention and fastest speed </li></ul><ul><li>Movement without thought can be a good thing – </li></ul><ul><li>ask any athlete. </li></ul>Assumptions Copyright: 2008
  6. 6. Assumptions are often referred to as something bad.  Assumptions Copyright: 2008
  7. 7. If making assumptions is a bad thing then it follows that not making assumptions is a good thing. Assumptions Copyright: 2008
  8. 8. What would our lives be like if we didn’t make any assumptions? Assumptions Copyright: 2008
  9. 9. Every situation and condition would have to be thought through before making a decision or taking a step. How does that sound? No Assumptions Copyright: 2008
  10. 10. By making assumptions we relieve ourselves of the active thinking about events that almost always occur based upon our experiences. Assumptions are time savers… Assumptions Copyright: 2008
  11. 11. … until the assumption does not work in our favor. We are blind to our assumptions until things do not go according to plan. Assumptions Copyright: 2008
  12. 12. Then we look for what we missed and try to see how it could have gone differently.   Quite often we discover an action we overlooked but did not recognize because we made an invalid assumption. Assumptions Copyright: 2008
  13. 13. This is especially true in business. Decisions based upon invalid assumptions can lead to disastrous results but we are blind to the assumptions until we see the results. And then it is too late. Assumptions Copyright: 2008
  14. 14. Business leaders are doomed to run in circles because they are using invalid assumptions without knowing it. Assumptions Copyright: 2008
  15. 15. Here is a partial list of Invalid Business Assumptions that are having an adverse effect on the performance of every company. Read through them and see which ones apply to your business. Probably most of them. Assumptions Copyright: 2008
  16. 16. I would like to know who is reading through my materials therefore I am only putting out this partial list. People tend not to comment on slideshows. Your cost is the time to request the complete list by sending an email to [email_address] * You won’t find this list any where else – it is original. * My contact with you will be limited to sending the complete presentation unless you wish me to respond to a question or ask my opinion about a business-related topic. If you elect to use this presentation I ask that you leave the copyright banner on the bottom of each slide so those watching the slideshow become familiar with my name. Being Honest Copyright: 2008
  17. 17. <ul><li>This list of invalid assumptions hurting business performance falls into five categories. </li></ul><ul><li>Goals </li></ul><ul><li>Design </li></ul><ul><li>Strategies </li></ul><ul><li>Performance </li></ul><ul><li>Alignment </li></ul>Assumptions Copyright: 2008
  18. 18. Goals Assumptions Copyright: 2008
  19. 19. <ul><li>Thoughts around goals: </li></ul><ul><li>Every management team sets goals </li></ul><ul><li>Goals are used as a baseline to determine how </li></ul><ul><li>well the business has performed </li></ul><ul><li>Goals define and quantify the desired level of </li></ul><ul><li>performance of a company </li></ul><ul><li>Goals are used to motivate employees </li></ul>Goals Copyright: 2008
  20. 20. <ul><li>1 st invalid assumption about Goals </li></ul><ul><li>“ All goals are achievable” </li></ul><ul><li>Because a goal is set does not mean it is attainable. </li></ul><ul><ul><li>Can your car go from 0 – 60 in 2 seconds just </li></ul></ul><ul><ul><li>because you set the goal? </li></ul></ul><ul><li>Goals need to be SMART*. </li></ul><ul><ul><li>(Specific, Measurable, Attainable, Realistic, Time-based) </li></ul></ul><ul><li>Setting a goal that can not be attained is harmful. </li></ul><ul><ul><li>Wastes time, money and opportunity </li></ul></ul>Assumptions around Goals Copyright: 2008
  21. 21. <ul><li>2 nd invalid assumption about Goals </li></ul><ul><li>“ Goals are motivational to everyone” </li></ul><ul><li>Goals can be motivational if you are in the </li></ul><ul><li>position to influence the outcome. </li></ul><ul><li>Unrealistic goals are de-motivating to </li></ul><ul><li>employees. </li></ul><ul><li>Goals are motivational when attainable and </li></ul><ul><li>when the outcome has value. </li></ul>Assumptions around Goals Copyright: 2008
  22. 22. 3 rd and 4th invalid assumptions about Goals are available in the complete presentation Assumptions around Goals Copyright: 2008
  23. 23. Design Assumptions Copyright: 2008
  24. 24. <ul><li>Thoughts around design: </li></ul><ul><li>Business designs are invisible until they are </li></ul><ul><li>documented </li></ul><ul><li>Design dictates Performance </li></ul><ul><li>Alignment can only be achieve by design </li></ul><ul><li>Design has the greatest influence on the </li></ul><ul><li>performance of a business, process or product </li></ul>Design Copyright: 2008
  25. 25. <ul><li>1 st invalid assumption about Design </li></ul><ul><li>“ Improving information will improve the design of the business” </li></ul><ul><li>Executives constantly fall into the trap of replacing </li></ul><ul><li>IT systems and thinking it will result in better performance. </li></ul><ul><li>Does changing your dashboard on your car change how fast </li></ul><ul><li>it can go or how well it can maneuver? </li></ul><ul><li>Better, faster information has value if you are designed to </li></ul><ul><li>take advantage of the information. </li></ul>Assumptions around Design Copyright: 2008
  26. 26. <ul><li>2 nd invalid assumption about Design </li></ul><ul><li>“ Optimizing pieces will optimize the whole” </li></ul><ul><li>The aim of every business should be Total Business </li></ul><ul><li>Performance </li></ul><ul><li>Individually optimizing each piece/department leads to a </li></ul><ul><li>dysfunctional organization </li></ul><ul><li>Would you design anything by starting with separate parts </li></ul><ul><li>and then try to force them fit together? </li></ul>Assumptions around Design Copyright: 2008
  27. 27. 3 rd and 4th invalid assumptions about Design are available in the complete presentation Assumptions around Design Copyright: 2008
  28. 28. Strategy Assumptions Copyright: 2008
  29. 29. <ul><li>Thoughts around strategy: </li></ul><ul><li>Strategies are how a company will achieve its </li></ul><ul><li>goals </li></ul><ul><li>Relationship between strategy and design </li></ul><ul><ul><li>Strategies influence design long term </li></ul></ul><ul><ul><li>Design influences strategies short term </li></ul></ul><ul><li>Designs are implemented, strategies are executed </li></ul>Strategy Copyright: 2008
  30. 30. <ul><li>1 st invalid assumption about Strategy </li></ul><ul><li>“ Strategies are strategies” </li></ul><ul><li>Not all strategies are the same </li></ul><ul><li>There are four different types of strategies </li></ul><ul><ul><li>Design </li></ul></ul><ul><ul><li>Implementation </li></ul></ul><ul><ul><li>Execution </li></ul></ul><ul><ul><li>Management </li></ul></ul><ul><li>Each business, department and market needs its </li></ul><ul><li>own strategic plan </li></ul>Assumptions around Strategy Copyright: 2008
  31. 31. <ul><li>2 nd invalid assumption about Strategy </li></ul><ul><li>“ S trategies can be implemented” </li></ul><ul><li>“ Strategic planning is easy, it is when it </li></ul><ul><li>comes to implementation where it all falls </li></ul><ul><li>apart.” </li></ul><ul><ul><li>CEO of consumer goods company </li></ul></ul><ul><ul><li>Strategies are executed, designs are implemented </li></ul></ul>Assumptions around Strategy Copyright: 2008
  32. 32. 3 rd and 4th invalid assumptions about Strategy are available in the complete presentation Assumptions around Strategy Copyright: 2008
  33. 33. Performance Assumptions Copyright: 2008
  34. 34. <ul><li>Thoughts around performance: </li></ul><ul><li>Performance = Design x Execution </li></ul><ul><li>A poor design can never result in good performance </li></ul><ul><li>“ Performance by Design” </li></ul><ul><ul><li> </li></ul></ul><ul><li>Design dictates Performance </li></ul><ul><li>Performance issues can be traced back to one </li></ul><ul><li>of three issues: </li></ul><ul><ul><li>Poor design </li></ul></ul><ul><ul><li>Poor implementation of design </li></ul></ul><ul><ul><li>Poor execution of design </li></ul></ul>Performance Copyright: 2008
  35. 35. <ul><li>1 st invalid assumption about Performance </li></ul><ul><li>“ Performance problems are always execution problems” </li></ul><ul><li>Executives can see execution problems and </li></ul><ul><li>therefore invest most of their money in execution- </li></ul><ul><li>related activities. </li></ul><ul><li>First update your business design and then </li></ul><ul><li>invest in execution-related activities </li></ul>Assumptions around Performance Copyright: 2008
  36. 36. <ul><li>2 nd invalid assumption about Performance </li></ul><ul><li>“ Activity = Accomplishment” </li></ul><ul><li>Department of Defense: </li></ul><ul><ul><li>“ Don’t mistake activity for accomplishment” </li></ul></ul><ul><li>Executives hate to see people standing around. They would </li></ul><ul><li>prefer to have them busy making parts they don’t need than </li></ul><ul><li>to have them idle. </li></ul><ul><li>Being busy does not mean much. You can be quickly going </li></ul><ul><li>in the wrong direction. </li></ul>Copyright: 2008 Assumptions around Performance
  37. 37. 3 rd and 4th invalid assumptions about Performance are available in the complete presentation Assumptions around Performance Copyright: 2008
  38. 38. Alignment Assumptions Copyright: 2008
  39. 39. <ul><li>Thoughts around alignment: </li></ul><ul><li>An aligned organization will outperform the </li></ul><ul><li>competition </li></ul><ul><ul><li>Eliminates drag </li></ul></ul><ul><ul><li>Reduces waste </li></ul></ul><ul><ul><li>Clear roles and responsibilities </li></ul></ul><ul><ul><li>Maximizes Performance Management efforts </li></ul></ul><ul><li>Alignment is the “Holy Grail” of business </li></ul><ul><ul><li>People talk about, refer to it but do not know how to do it </li></ul></ul><ul><ul><li>Alignment is achievable and not that difficult when you know </li></ul></ul><ul><ul><li>how to do it </li></ul></ul>Alignment Copyright: 2008
  40. 40. <ul><li>“ IT must be aligned with the business” </li></ul><ul><li>This assumes there is one entity for IT to </li></ul><ul><li>be aligned to </li></ul><ul><li>“The business” is actually many small </li></ul><ul><li>functions carrying on independently </li></ul><ul><li>Alignment is something that needs to be </li></ul><ul><li>designed into a business </li></ul>Copyright: 2008 Assumptions around Alignment
  41. 41. 2nd invalid assumption about Alignment is available in the complete presentation Copyright: 2008 Assumptions around Performance
  42. 42. <ul><li>For more information on Invalid Business Assumptions contact me by sending an email to </li></ul><ul><li>I am available for presentations on various ideas surrounding business design </li></ul><ul><li>Components of any business model </li></ul><ul><li>Importance of process design </li></ul><ul><li>How to design alignment into your organization </li></ul><ul><li>Difference between strategy and design </li></ul><ul><li>Invalid Business Assumptions </li></ul><ul><li>Common Business Fundamentals </li></ul><ul><ul><li>Any sized organization in any industry </li></ul></ul><ul><ul><li>Includes agencies and non-profit organizations </li></ul></ul>Contact Me Copyright: 2008