The Danger and Value of Assumptions

Matt Harvey, Stanford University July 12, 2011

“Most of our assumptions have outlived their uselessness.”

Marshall McLuhan

Human beings have an amazing ability to create assumptions. In fact, this ability is only trumped by the human race’s ability to rely on these assumptions as facts. The old adage goes, “you know what happens when you assume…,” however, you only risk embarrassment if you refuse to test your assumptions. In this collection of ECorner video insights, Tom Kelley, Ann Winblad and Randy Komisar explain the role assumptions play as starting points for entrepreneurs and, when left untested, as inhibitors to innovation.

Assumptions Blind You to New Products

As the general manager at design firm IDEO, Tom Kelley constantly sees clients anxious for new products. However, companies struggle to innovate when they can’t let go of industry assumptions about customers.

When IDEO was charged with helping a corporate client to design a new children’s toothbrush, Kelley’s team performed hands-on field research on how children actually brush their teeth. Blowing up tired assumptions about pint-sized users allowed IDEO to create a new bestselling product for their client.

Keep Testing Core Assumptions

“As time goes on, turn the assumptions into facts.”

Ann Winblad

Venture capitalist Ann Winblad advises entrepreneurs to boil down their business plan to identify the “top five core assumptions” for success. Particularly in the case of young startups, founders might make large changes to their product or service, often based on assumptions and incomplete evidence. This is an acceptable course of action, if the company is willing to constantly test these assumptions. “As time goes on, turn the assumptions into facts,” says Winblad.

Assumptions as Starting Points

Even though many ventures do not find success until discovering the pivot, KPCB Partner Randy Komisar sees the value of assumptions in an initial business plan. According to Komisar, any “Plan A” must flesh out your business assumptions, challenges and risk mitigation insights.

Those critical first thoughts on paper help an entrepreneur create the language with which to discuss their strategy. Here assumptions can serve as jumping off points for testing ideas and moving the organization forward.