The High Stakes of Assumptions

Imagine investing millions into a product or strategy only to find out your core assumption was wrong. This isn’t just a costly mistake, it can destroy a company. Assumptions are the silent killers of great ideas, and their danger lies in how easily they form. A hypothesis can harden into an unchecked belief within teams if it goes untested. From internal group think to overconfidence in past success, businesses often mistake assumptions for truths.

In today’s fast-paced, interconnected world, the risks of relying on assumptions are higher than ever. Markets shift rapidly, technology evolves overnight, and consumer behaviors defy expectations. This blog dives into why assumptions fail, how they’ve taken down even the mightiest of companies, and how you can avoid falling into the same trap.

The Danger of Assumptions

Assumptions are untested beliefs about your market, customers, or competitors. They often arise because it’s quicker and easier to rely on internal opinions or limited past data than to test and validate ideas. While they can streamline decision-making, untested assumptions carry significant risks:

1. Misaligned Products:Assumptions about customer preferences can lead to products no one wants.
2. Missed Opportunities:Failing to recognize new trends can cost valuable market share.
3. Resource Misallocation:Investing based on a flawed premise wastes time, money, and talent.

However, perhaps the most dangerous aspect of assumptions is how easily they can proliferate within teams. When a hypothesis, such as “Our customers value price over convenience,” goes untested, it becomes an assumed truth. Over time, this unchecked belief informs strategy and decision-making, creating a foundation that’s destined to crack under pressure.

Case Studies: Lessons from the Trenches

1. Microsoft’s Mobile Misstep
   Microsoft, once a dominant player in the software world, assumed its desktop success would naturally translate to mobile. Instead of rigorously testing their hypothesis about customer needs, Microsoft focused on providing a desktop-like experience in their Windows Phones. They underestimated the importance of app ecosystems and user-friendly interfaces championed by competitors like Apple and Android. The result? Windows Phone floundered, and Microsoft exited the smartphone market entirely in 2017.
   Lesson:Even giants must test assumptions rigorously in new markets.
   Source:The Verge
2. Kodak’s Digital Blind Spot
   Kodak invented the first digital camera in 1975 but assumed its film business would remain dominant. Instead of embracing innovation, they sidelined digital development to protect their existing revenue streams. Meanwhile, competitors like Canon and Sony capitalized on the digital trend, leaving Kodak behind. By the time Kodak pivoted, it was too late, they filed for bankruptcy in 2012.
   Lesson:Protecting today’s profits at the expense of future innovation can be fatal.
   Source:History.com
3. Toys “R” Us and E-Commerce
   Toys “R” Us assumed that brick-and-mortar retail would remain strong, even as e-commerce gained traction. They outsourced their online operations to Amazon, losing control of their digital strategy. As online shopping became the norm, Toys “R” Us struggled to compete and declared bankruptcy in 2017.
   Lesson:Ignoring weak signals of market shifts, like the rise of e-commerce, can erode even the strongest brands.
   Source:CNBC

Why Untested Hypotheses Are Dangerous

Assumptions often start as hypotheses, ideas about how the market works or what customers want. However, when these hypotheses go unchecked, they calcify into dangerous beliefs that drive decision-making.

This is particularly prevalent in team environments where:

• Leadership prioritizes speed over validation.
• Internal pressures discourage dissent.
• Past successes create overconfidence in current strategies.

For example, Blackberry’s leadership assumed that customers would prioritize mobile devices with physical keyboards over touchscreen devices. This untested hypothesis persisted despite the growing popularity of iPhones and Androids. The result? Blackberry’s once-dominant market share dwindled to almost nothing.

The Risks of Unchecked Hypotheses:

• Misaligned Strategy:Resources are poured into projects based on flawed assumptions.
• Missed Trends:Early signals are ignored in favor of existing beliefs.
• Loss of Innovation:Teams become stagnant, clinging to past successes rather than exploring new ideas.

How to Avoid Falling into the Trap

1. Test Assumptions Early and Often
   Use customer feedback, market research, and prototypes to validate your hypotheses. Don’t let speed or convenience drive decisions.
2. Create a Culture of Inquiry
   Encourage teams to challenge ideas and assumptions, fostering an environment where dissent is seen as valuable, not disruptive.
3. Monitor the Market Continuously
   Use tools to track real-time data and emerging trends, ensuring your assumptions remain aligned with reality.
4. Engage Third Parties
   External consultants or research partners can provide fresh, unbiased perspectives to challenge entrenched assumptions.

The Cost of What You Don’t Know

Unchecked assumptions are one of the greatest risks businesses face. They lead to misaligned strategies, wasted resources, and missed opportunities. But the good news is that assumptions are avoidable, with the right mindset, tools, and processes.

The next time your team proposes an idea, ask: What assumptions are we making, and how can we test them? A simple question like that could be the difference between success and failure.

Ready to uncover the assumptions lurking in your strategy? Let’s start the conversation.

About Wade Strategy
Kate Wade, Managing Director of Wade Strategy, LLC, brings over 20 years of expertise in strategy, market insight, and competitive analysis to clients ranging from Fortune 200 companies to startups and private equity firms. Kate specializes in uncovering actionable insights that drive growth, improve market positioning, and navigate complex challenges. With experience spanning industries such as insurance, retail, consumer goods, industrials, and financial services, she has successfully helped some of the world’s largest organizations—and the smallest innovators—identify opportunities, develop strategies, and execute transformative solutions. To learn more, visit www.wadestrategy.com or connect with Kate at kate.wade@kwade.net.