As humans, making assumptions is a natural part of our thought processes. Sometimes, it is because we do not have all the information we need to make a fully informed decision. Other times, we are trying to understand a situation quickly.
In some cases, assumptions can be useful. They help us navigate our world without stopping and considering every little detail. However, assumptions can also be harmful. When we make assumptions about people, situations, or things without verifying them, we risk creating misunderstandings and making decisions without the support of accurate information.
In business, assumptions can be particularly dangerous because making one wrong assumption can be the difference between business success, or missed opportunities, lost revenue, and a flawed B2B business strategy. Therefore, it is essential to be aware of how assumptions impact decision-making and avoid making incorrect assumptions that impact your business strategy.
What are assumptions in business?
Assumptions are beliefs that we hold without verifying or testing them. They can help craft your business strategy by enabling you to estimate the outcomes for potential situations. For example, one of your customers has become distant; you might assume they are no longer interested in doing business with you. Even if this is not the case, the assumption might prompt you to devise a strategy to resolve the issue and then reach out to verify your assumption. Essentially, your assumption will drive action that leads you to resolve a potential problem.
However, assumptions can also be dangerous to your strategy. For example, you might assume that your customers value cost above all else when making purchasing decisions. However, you might learn that many customers in your industry are willing to pay a premium for quality or convenience. This incorrect assumption can lead you to prioritise cost-cutting measures while ignoring opportunities to differentiate yourself based on quality, service or innovation. As a result, your strategy may fail to effectively address your customers’ needs, resulting in lost market share and missed revenue opportunities.
So, it is essential to verify your assumptions with data and research, stay current with industry trends, seek feedback, and remain open-minded to new ideas and changing circumstances.
The impact of incorrect assumptions on business strategy
In the highly competitive world of B2B business, incorrect assumptions can significantly impact your business strategy. Let’s take a closer look at some ways incorrect assumptions can hurt your business.
Poor decision-making: You may make strategic decisions based on incorrect assumptions, leading to a flawed strategy.
Missed opportunities: If you assume that your customers will always be loyal and you do not invest in market research to identify their changing needs, you may lose opportunities to offer them new products or services that better meet their evolving needs.
Lost market share: You may struggle to regain lost ground if you assume that your competitors will not innovate. You might find yourself caught off guard when competitors introduce new products or services that capture your market share.
As such, it is crucial to ensure that you base your business strategy on accurate information about the market and a deep understanding of your customers’ needs, preferences, and behaviours.
How to avoid assumptions in business strategy
To mitigate the negative impacts of assumptions, you should build a business strategy that is responsive, agile, and focused on delivering value to your customers. I recommend the following approaches:
Verify your assumptions: Testing your assumptions with data and research helps you ensure that they are accurate and informed by reality. You might conduct surveys, speak with focus groups, or leverage A/B testing to validate your assumptions and make informed decisions. By testing your assumptions, you can avoid costly mistakes and make strategic decisions based on solid evidence rather than guesswork.
Stay current with industry trends and competitor activities: By staying up-to-date with the latest news, attending trade shows or conferences, and monitoring social media, you can stay ahead of the curve and avoid being caught off guard by unexpected changes in the market. With this information, you can identify new opportunities, respond to changing customer needs, and differentiate yourself from competitors.
Be open-minded and willing to adjust your assumptions and strategy. Change is a natural part of business and you must remain flexible, agile, and willing to try new things and take risks. By staying open-minded, you can identify new opportunities, respond to changing customer needs, and build an adaptable and resilient business in the face of uncertainty.
Incorrect assumptions can have a significant impact on your business strategy. They can lead to poor decision-making, missed opportunities, ineffective marketing, and lost market share. It is important to verify your assumptions with data and research, stay current with industry trends, seek feedback from customers and stakeholders, and remain open-minded to new ideas and changing circumstances. Doing so can ensure that your B2B business strategy is based on accurate information and is flexible enough to adapt to changing market conditions.
Resonate can guide your business strategy
We help B2B business leaders define or refine their strategies. We provide strategic advice and consulting on various facets of strategy; business strategy, corporate strategy, product/service strategy, functional strategy, go-to-market, competitive strategy, pricing strategy, etc.
If you are starting a new role as a business leader, or you have been with the business for a while, and you need to hone your strategy, let’s connect, let’s talk. We have extensive experience guiding leaders on all facets of business strategy. Visit our Strategy page for more information.