Key Assumptions Check (KAC)

Analytical diagnostic approach used to critically evaluate the foundational assumptions underlying strategies, projects or decision.

Mark is a homeowner in his mid-30s, who is in the market for a new car to accommodate his growing family's needs. Excited about the prospect of upgrading to a larger and more reliable vehicle, Mark begins researching different makes and models, confident that he knows exactly what he wants.

Eager to make a smart purchase for his family's future, Mark sets his sights on purchasing a new SUV. He believes that buying new will provide him with peace of mind in terms of reliability, warranty coverage, and higher resale value. In fact, the 5 years warranty and a guaranteed future value feel like a no-brainer.

After the purchase, and the initial excitement of having a brand-new vehicle, Mark starts to realise that there were more cost-effective alternatives available to him at the purchase. Mark starts to weighs his options, being now aware of the hidden costs and implications of his decision. He almost regrets his purchase. How is it even possible? After all, Mark felt like he has made the best possible choice and took all relevant information into account?

What is KAC?

The term "Key Assumptions Check" refers to a methodical approach used in various fields:

• business analysis,

• project management,

• medicine,

• personal decision-making,

It is designed to critically evaluate the foundational assumptions underlying strategies, projects, or decisions, and to identify, scrutinise, and validate or challenge those assumptions to ensure they are sound, realistic, and evidence-based before proceeding further.

It helps in mitigating risks associated with wrong assumptions, leading to more robust and resilient planning and execution. While there isn't a universally standardised tool named "Key Assumptions Check” (KAC) the concept is widely recognised and applied in various forms across disciplines.

Assumptions are made and most assumptions are wrong
- A. Einstein

What are the benefits?

Imagine the few following scenarios:

1. You are at a brink of making a significant purchase (eg. a house or a car). KAC helps to prevent overspending and limits dissatisfaction later on.

2. When faced with a disagreement in a relationship, KAC can quickly uncover motives, intentions, or values that lead to a more constructive resolution.

3. In a business setting, KAC can inspire innovative solution, increase accuracy of forecasting, dramatically improve business planning and inspire new strategic initiatives.

4. Misidentifying assumptions about personal perspectives or capabilities may prevent you from seizing opportunities for growth, development or financial success.

5. When prescribing a treatment or qualifying a patient for a surgery, KAC can mean a differences between life and death.

6. When investing your money, a quick KAC check can inform your investment plans to reduce the likelihood of losses.

What are assumptions?

We will define “assumptions” beliefs, statements, or previously acquired information that is accepted as true, without re-evaluation of evidence.

In medicine, assumptions can kill. This is why doctors are trained to replace assumptions with assessments.

Why do we need assumptions?

Assumptions form the backbone of any further reasoning, planning, forecasting and decision making. In order for any analytical process to be accurate and have valid outcomes, the assumptions must become validated (assessed) each time.

Here is a breakdown of their nature and significance:

• Basis for Planning: Assumptions fill in gaps where data or knowledge is incomplete, allowing for planning and decision-making in the face of uncertainty.

• Inherent to Predictions: They underpin forecasts and predictions by setting conditions believed to hold true in the future, affecting outcomes of those predictions.

• Risk and Uncertainty Management: Recognizing assumptions helps in identifying areas of risk and uncertainty in plans and strategies, enabling better risk management practices.

• Foundation for Models and Theories: In science and economics, assumptions form the basis of models and theories, simplifying complex realities to allow for analysis and understanding.

• Subject to Validation: While some assumptions may be based on historical data or trends, they often require validation or adjustment as new information becomes available.

Types of assumptions

We can broadly split assumptions into two categories:

• Explicit Assumptions: Clearly stated and acknowledged by those making decisions or analyses. They are documented and considered in the planning process.

• Implicit Assumptions: Not clearly stated or documented but underlie thoughts and actions. They can be harder to identify and evaluate.

Assumptions are the thermites of relationships
- H. Winkler

Importance of identifying and validating assumptions

• Critical for Accuracy: Unvalidated assumptions lead to wrong conclusions and decisions. Identifying and testing them is crucial for the accuracy and reliability of analyses.

• Improves Decision Making: Understanding the assumptions behind decisions helps in assessing their soundness and in making more informed choices.

• Facilitates Communication: Clearly articulated assumptions improve communication among team members or between different stakeholders by providing a common understanding of the foundational beliefs guiding decisions.

When to use Key Assumptions Checks?

While KAC is most useful at the beginning of any project, it should also be re-evaluated each time a new information becomes available.

Ideally, each project team should spend at least 1-2 hours at the start of a project articulating and reviewing key assumptions PRIOR to initiation of any further work. A quick check is recommended and at the end of the project, but PRIOR to finalising any judgments, recommendations or decisions.

Since all decisions, plans and strategies rely on the initial set of assumptions, there TWO important tasks to complete before moving forwards with any project:

• Uncovering hidden assumptions and making them explicit

• Validating and reassessing key assumptions.