If you look at the history of big obstacles in understanding our world, there’s usually an intuitive assumption underlying them that’s wrong.
– Jeff Hawkins

You may have learned in your college economics class that controlling for all factors is necessary when trying to understand a task or a problem, but the real world rarely allows us to do that. Thus, we must make assumptions.

What are assumptions? In mathematics, an assumption is something taken for granted, based on which theories are formed. In the business world, we don’t and shouldn’t have such a firm view of our assumptions. Things rarely, if ever, work as we assume they will. Indeed, in business, assumptions are not facts; they are closer to educated guesses – and, since we’re preparing for them, hopes.

From the moment you wake up, you begin making assumptions. Some assumptions, when they are wrong, will not hurt you as much as others. Assuming you can arrive at the office in 30 minutes in rush hour traffic may make you late for a meeting, while overestimating the demand for a new product even slightly may require you to adjust revenue forecasts significantly.

The ability to make well-reasoned assumptions in the business world can make you very successful – if they’re right.

So, the question becomes, what do we do with assumptions? The answer: contingency plans. If assumptions prove wrong, we need contingency plans (and we often still need those contingencies when assumptions are right, too).

Contingency plans may be the ability to run a factory 24 hours for a week, a cash reserve, property that’s ready to sell or any number of things, but knowing your options and keeping lines of communication open with others who affect these plans is all part of being a good leader.

Wherever there are assumptions there must be contingency plans.

How do you make assumptions? Do you often go with your gut or do you strive to gather every piece of information you can before making an assumption?