Sitting on the Branch You're CuttingThis question came from Sara

You could ask 30 different business people and likely get 30 different answers to this question – reflecting personal experiences of the business people you ask.

Ultimately, the biggest mistake comes down to a very simple concept – making decisions without understanding

  • The consequences of the decision or
  • The assumptions the decision was based on.

These are two sides of the same coin.

The Consequences of the Decision

Peter Drucker once wrote that we can’t change the past or even the present – we can only change the future by the decisions that we make NOW. Unfortunately, the decisions we make are often spur-of-the-moment without much thought about what will happen as a result of that decision. (See our posts How Not to be a Hero and Winning, Failure, and the Washington Post Test for examples of not considering what might happen.)

There are a lot of reasons for this behavior:

  • We’re often able to predict future results based on the past because today will likely be similar to yesterday and so will tomorrow.
  • The consequences of many problems are minor in scope or severity.
  • We have enough reserves of time, money and resources to deal with the consequences without them becoming crisis.

In short, we’ve been lucky that the decisions haven’t blown up in our faces.

But we follow the same behavior for too long or push into conditions that don’t apply and forget that markets are cyclical or O-rings get brittle in cold weather and the results are investment portfolios losing 10-25% value or space shuttles falling out of the sky.

The Assumptions the Decision was based on

Every decision involves assumptions – so-called facts that we think are true or applicable to the problem but we don’t know that they are. Often based on stereotypes, assumptions are helpful because they allow us to make decisions without spending an inordinate amount of time analyzing or researching before we can make a decision. It is this very human behavior that allows scam artists to fleece senior of life savings (“He was so nice looking!” – assumption: nice people don’t do bad things) or to believe that the police have the bad people in custody (see our post The Quality of the Hit – The St. Valentine’s Day Massacre 1929).

The biggest problem with assumptions is that we often don’t realize we are making them. They are so engrained in our thinking that we accept them automatically. I remember talking with an auto salesman once who walked into the showroom and saw several of his fellow salesman sitting talking among themselves while a young man sat in an expensive car nearby. Rather than join the salesmen, he walked over to the young man and asked if he could help him. The young man replied, “Yes, I want to buy this car.” Which he did because he was wealthy even though he didn’t look it. The other salesmen made the assumption that the young man didn’t have the money to buy an expensive car based on his clothes. Their loss.

Another common assumption is that millionaires drive nice cars – but the truth is that the most common vehicle millionaires drive is a Ford F-150. Jim Fallon recently stated he bought a F-150!

So how do you identify the assumptions you are making when you make a decision? There are three practices you can use to identify assumptions:

  1. Explain to someone you trust to speak the truth basis for your decision. It helps if they are critical thinkers and will challenge your thinking.
  2. Make a small bet – ask yourself if there is a way to cheaply test the effects of your decision or the basis of your decision.
  3. Practice challenging yourself to identify your assumptions and testing yourself against the first two methods – this way you will eventually be able to quickly identify your assumptions yourself.


A physicist by trade, author by choice, a born teacher, a retired veteran, and an adamant problem solver, Frank has helped the White House, federal agencies, military offices, historical museums, manufacturers, and over 250 technology startups get stuff done, communicate effectively, and find practical solutions that work for them. In his spare time, he makes sawdust and watches Godzilla movies.