When we assume, Oscar Wilde wrote, we make an ass out of u and me.
Much of the time we’re not sure what option to take.
Whether its something simple, like changing the order in which we do things in the morning or a more complex situation, like deciding to move to a different country or go back to University for a graduate degree, we still don’t know how things will turn out.
With organisations – we face the same problems when trying to get a new customer to work with us, pick a supplier or decide in which projects we should invest company money.
So, how do we make a decision in these circumstances?
Some people decide, on the basis of their experience, that a particular course of action is appropriate. Then, they take things personally.
Questioning that approach is the same as questioning their competence or experience – which makes it difficult to have a discussion about the range of options.
This leads us down a binary decision path – either we do what is suggested or we don’t, and we might succeed or we might not.
The thing is that often the options are not really binary – there are more things we could do, if we were open to them.
Take the moving to a different country choice, for example. It’s different having a holiday in a country to moving there permanently.
It might be wise to try a longer holiday, see if there is a way to experience it for a three-month period, or spend some time asking people that have already done a similar move about their experiences.
These are pilots – experiments and research that try and test and validate our assumptions.
Ideally, pilots should be something quick, easy and cheap that we can try out and see whether an idea is worth doing and investing more time, effort and money in.
This happens all the time with new television programmes – a pilot episode is shot to test with audiences – and how they react may make the difference between getting funding to create a series or having to go back and start again.
Good pilots are designed, however, with one clear thing in mind.
They limit the downside, while leaving the upside uncapped.
This is what Nassim Taleb calls optionality in his book Antifragile.
Adherence to this principle, according to Monish Pabrai in The Dhandho Investor, is what has made a particular Indian community, the Gujaratis, so successful in the United States – owning tens of billions of dollars worth of assets.
Dhandho is a word that means “endeavours that create business” and it is based around a low risk-high return strategy that is all about “Heads I win; tails I don’t lose much”.
Taking a more well-known example – it’s what Richard Branson did when he set up his airline in 1984. He leased a single used Boeing 747-200 on condition he could hand it back after a year.
His downside was limited to a year of operating the plane and he knew that he could get money back for it if things went south.
Virgin Atlantic now operates 39 planes and turns over more than £2.5 billion a year with nearly 9,000 employees.
The opposite of an assumption, perhaps, is not a certainty but a pilot.