The assumptions identification and validation process is a critical part of effectively managing risks as part of a risk assessment for an organization’s initiative, objective, or strategy. Assumptions are identified, classified by category (e.g., people, process, technology), and validated by the group. Each assumption is then assessed based on its impact and confidence level, then an action plan is developed in order to validate the high priority assumptions (i.e., high impact and low confidence).
The process consists of 5 simple steps:
- Identify the assumptions made about your initiative.
- Classify each assumption by category.
- Vote for the assumptions you agree apply to the initiative.
- Rate each assumption based on its impact and your confidence level.
- Discuss results, view alignment, and finalize an action plan to validate the assumptions.
In order to maintain control over your initiatives, you need to ensure that you’re addressing the various assumptions that are being made and monitoring them as part of an ongoing process. Without identifying and tracking these assumptions, your initiative could be impacted at any time, leaving you and your organization scrambling to get back on track. Allowing your stakeholders to participate in this process puts everyone on the same page and ensures that you’re taking all the different perspectives into consideration.
Stakeholders feel secure knowing that their insight and rationale are heard and valued, and that everyone benefits from identifying and investigating assumptions, even if the facts show that they’re wrong (McKinsey & Company, 2010): “Push yourself and those around you to make assumptions explicit. Tease the assumptions out of arguments if you need to. Challenge whether you agree with the assumption or not. Step back and see if it is in fact accurate. This approach will create better debates, better analysis and certainly better decision making.” (Kaplan, 2012)
Validating high priority assumptions on an ongoing basis will allow for quick course corrections to keep your plans on the path to success (McKinsey & Company, 2010): “By identifying your [assumptions] early and devising ways to test hypotheses that will prove or refute them, you are in a position to learn whether or not your Plan A will work before you waste too much of your time, and your and your investors’ money.” (Mullins & Komisar, 2009)
1) NOODLE & TAG: Identify the assumptions that your initiative’s success depends on, then categorize each assumption using the following tags (can be customized):
2) COMBINE to eliminate duplicates and move forward with only unique assumptions.
3) VOTE for assumptions that you agree apply to your initiative.
4) MULTI-CRITERIA RATE each assumption based on Impact and Confidence. In the comments section, provide rationale for why each assumption was rated the way it was and attach any supporting documents to each tile.
5) SHARE AND DISCUSS RESULTS: Display the graph of results to view alignment. You can apply a heat map to the graph to easily identify the high priority assumptions (i.e., low confidence and high impact).
6) ACTION PLAN: Develop a specific action plan to validate the assumptions.
- Valuable insight into the assumptions being made and the impact they would have if found to be false
- Shared stakeholder understanding and alignment on assumptions
- Action plan to validate each assumption made about the initiative
BENEFITS & IMPACT
This exercise will enable:
Quality – Integrate stakeholders’ ideas and contributions into your assumptions identification process. This allows you to proactively manage assumptions and avoid surprises down the road.
Efficiency – Engage stakeholders at times that are convenient for them to contribute – 24/7.
Engagement – Create a rich discussion with stakeholders while analyzing and critically evaluating how different assumptions can impact your initiative.
Agility – Develop a shared understanding about your initiative’s key assumptions, as well as an action plan to keep high priority assumptions in check.
Kaplan, R. S. (2012). Have you checked your assumptions lately? Inc. https://www.inc.com/robert-kaplan/have-you-challenged-your-assumptions-lately.html
McKinsey & Company. (2010). How we do it: Three executives reflect on strategic decision making. McKinsey Quarterly March 2010. http://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/how-we-do-it-three-executives-reflect-on-strategic-decision-making
Mullins, J. & Komisar, R. (2009). Getting to plan B: Breaking through to a better business model. Boston, MA: Harvard Business Press