3. Hidden Assumptions

False assumptions are the main cause of projects that fail. The problem is not that we cannot assess the assumptions as false, but that we do not even realize we make them. When presented with clearly articulated assumptions, managers are usually perfectly able to validate or reject them; the problem is that incorrect assumptions are hidden and usually pass unnoticed. A real-life example is the following: The decision, in an entrepreneurial company, to incentivize salespersons exclusively by commission (percentage of sales) led to sales agents working hard for only 3 weeks each month, until they reached a comfortable, self-set threshold income. The underlying (false) assumption that went unnoticed and unchallenged was that “a potentially unlimited income will motivate salespersons to maximize their effort.” This chapter will discuss methods for identifying hidden, unvoiced assumptions behind business plans.