Assumption: The Mother of All Failure

The underlying cause of many failures is that one or many incorrect, unchecked and unmanaged assumptions have been made.

Assumption: The Mother of All Failure
Photo by Kind and Curious / Unsplash

There are many causes for failure, at all levels, during the life of any project, and, by their very nature, startups are perhaps more prone to failure than most. Failures can range from small issues which you can cope with easily to full-blown disasters which can threaten the very existence of the company or product you have worked so hard to build. In the vast majority of cases that I have seen during my career, the underlying cause of failure has been that one or many incorrect, unchecked and unmanaged assumptions have been made.

Launching new products or services is challenging and full of risk. The more cutting-edge your idea, the more difficult it is to get the information you need to develop, market and sell successfully. If this is your first startup, you are inexperienced in a market, or you are launching into a brand new or immature market, the difficulty and risks are even more significant.

Sometimes the only way to move forward towards launch is to make assumptions. These assumptions may be about a whole host of things. Market readiness, product design, pricing, and market size are examples of areas in which you may need to make assumptions at some stage. It is generally okay to use these assumptions to move forward in the short term when a lack of ready information prevents progress. However, these assumptions must always be noted and tested at the earliest possible opportunity. The earlier a hypothesis can be tested, the lesser the risk to the project and the lesser the work to correct it if invalid assumptions were made.

The work to validate assumptions generally involves conducting some relevant research and need not always be particularly onerous. This essential work is easy to forget as the excitement of developing a business, product or marketing plan overtakes you. A lot of time and money can be wasted working on a product or marketing plan that doesn’t appeal to customers or investors. If this is allowed to run unchecked, significant incorrect assumptions can threaten the very existence of a business.

Run a usability test
Photo by David Travis / Unsplash

Validation of assumptions often involves some level of user, market or investor research. It can often be as simple as building a prototype and getting it in front of your intended audience. However, it may require some deeper digging into investors or competing products or services. The effort expended validating assumptions is seldom wasted and is a good use of your time.

Many of the most common reasons given by founders to explain the failure of their startup have one thing in common; they relied on incorrect and unvalidated assumptions. “We overestimated the size of the market” can be re-written as “we failed to validate our assumptions about the size of the market”. “Customers were unwilling to switch from Product X” is better expressed as “we assumed that the additional features our product offered would cause users of Product X to move to our platform”.

Keep a log of all the assumptions you make throughout the lifecycle of your startup. You should check this list periodically to ensure that the assumptions on which you rely are still relevant and valid, as the environment within which you operate changes and your knowledge grows through feedback and experience.