Did You Verify the Assumptions On Which Your Strategy Is Built?
Take Your Strategy From Internal Logic to Market Reality
WHY THIS KEEPS HAPPENING
A research group in Arlington (Info-Tech Research Group) published a finding this month that should be uncomfortable reading for any executive team: up to 80 percent of new products fail. Not because the products are bad. Because the strategies behind them are built on internal assumptions rather than market reality.
That’s not a startup problem. It’s a mid-market problem. It’s a large-company problem. And it’s one we all sort of know, but we let hope outweigh sense when we launch either products or strategy. It’s especially a problem when the people making the strategic choices are getting their information primarily from each other.
The fix isn’t more analysis. It’s different input. Specifically, input from the people outside the organization whose behavior the strategy depends on.
Most validation involves talking to people who already agree with you. That’s not validation. That’s confirmation.
WHAT YOU’RE ACTUALLY TESTING
In the April 21 article, we covered WWHTBT (What Would Have To Be True?): for each strategic option, what conditions must hold for it to succeed? In the following week, those conditions got sorted into “priority uncertainties,” the assumptions that are both high-stakes and low-confidence (worth a re-read).
Stakeholder validation is how you find out whether those conditions actually hold.
This is not general market research. It’s not a customer satisfaction survey or an annual NPS score. You have specific conditions on your list and specific questions that would confirm or challenge each one. The research is focused because the questions are focused.
If one of your priority uncertainties is ‘mid-market professional services firms in our region will pay a premium for faster turnaround,’ you need to talk to mid-market professional services firms in your region and ask them directly. Not ‘what do you value in a vendor?’ in the abstract. Ask the specific question that tests the specific condition.
WHO YOU NEED TO TALK TO
The instinct is to start with your best customers. They know you, they like you, and they’ll take your call. That’s a reasonable starting point, but an incomplete one. Ask a range of stakeholders:
Current customers, including the awkward ones. The client who uses you for some things but not others. The one who reduced their engagement last year. The one who gives you decent reviews but never refers anyone. These gaps give you great insight. Your best customers will tell you what you do well. Your complicated customers will tell you what you don’t.
Customers who left. This is the most uncomfortable conversation and often the most informative. People who stopped working with you have a specific reason. That reason is usually more precise than anything you’ll hear from people who stayed.
People who evaluated you and chose someone else. They went through a decision process. They know exactly what mattered and how you compared. That’s precision information that’s hard to get any other way. Harder to find, but your salespeople can tell you who they are.
Frontline employees. They hear things leadership doesn’t. The customer complaint that keeps coming up but never makes it into the quarterly review. Objections the sales team encountered but didn’t escalate. The product limitation that clients work around (and the reason they may be ready to source elsewhere). This intelligence is usually available and rarely accessed.
Partners and suppliers. They see how clients talk about you when you’re not in the room. A partner who distributes your service knows things about perception and positioning that your internal team doesn’t.
WHAT GOOD VALIDATION LOOKS LIKE
It’s a good day when you hear something you didn’t expect.
If every conversation confirms what you already believe, one of two things is happening. Either your assumptions were accurate (possible), or you’re only talking to people with reasons to tell you what you want to hear. Or you are asking questions structured to produce confirmation rather than challenge.
Good validation interviews are organized around open questions that let the other person tell you what actually matters to them. Your WWHTBT conditions are the listening framework, not the question list. You’re listening for whether the conditions show up in what they say, not prompting them directly. Your best insights come from asking uncomfortable questions.
Think about a consulting firm planning an expansion into healthcare IT. Their priority uncertainty is likely whether their existing methodology would resonate with a buyer profile that had different procurement timelines and different success metrics than their current clients. This is the kind of assumption that lies at the core of their business model but is usually overlooked.
Let’s say, of the twelve people they interview, eight conversations were broadly positive. The four that weren’t are the ones that matter. Imagine if each of those four raise the same issue: the firm’s engagement model required a level of ongoing executive access that healthcare IT procurement that the consulting teams couldn’t sustain. It wasn’t a deal-killer. But it meant the engagement model needed to be adapted before the expansion, not after the first failed engagement. That’s what validation is for.
The four uncomfortable conversations will tell you more than the eight comfortable ones.
THE CONFIRMATION TRAP
It takes a bit of thought to validate effectively. The most common failure isn’t asking the wrong questions. It’s talking to the wrong people.
Across the categories of customers shown above, picking the right individuals is also important. We naturally gravitate toward accessible, friendly, and successful relationships when designing our validation process. The customer who loves us. The partner who’s enthusiastic about the opportunity. The board member who believes in the strategy.
None of those people is going to tell you that your expansion assumption is wrong, even if they suspect it is. Not because they’re dishonest, but because the social dynamics of existing relationships work against that kind of direct challenge.
The people most likely to tell you something true and uncomfortable are the ones you don’t already have a relationship with. Former clients. Prospects who chose someone else. Potential partners who’ve watched your competitors operate in the target market. Those conversations are harder to arrange and more likely to change your mind. That’s why they’re worth the effort.
HOW THIS FITS BUILD
Stakeholder validation is the core work of months two and three in a BUILD engagement. The future-state cascade is drafted. The priority uncertainties are named. Now the team goes outside.
Depending on the size of your company, plan on fifteen to twenty-five conversations across the stakeholder groups above, conducted with a consistent interview guide (i.e., not winging it in an unstructured conversation), built around the specific conditions on the WWHTBT list. Synthesize the findings, noting which assumptions held, which were challenged, and which demand a response before your strategy is finalized.
The second version of the Business Model Canvas, produced in month four of BUILD, incorporates what was learned. The gap between Canvas v1 and Canvas v2 is the record of what changed and why. That record is also what makes the final strategy defensible in a board presentation. The leadership team isn’t saying ‘we believe this.’ They’re saying ‘here’s what we learned, here’s how it changed our thinking, and here’s why we’re confident in the direction we’ve chosen.’
That’s a critical conversation for the board.
YOUR MOVE THIS WEEK
Pick one assumption your current strategy rests on. Something treated as settled, but not formally tested.
Identify two or three people outside your organization who are in the best position to confirm or challenge it. Not people likely to agree. People who would know if you’re wrong.
Then go have the conversation. Ask open questions. Don’t lead toward the answer you’re hoping for.
What you hear is more useful than what you believe.
Next week: The Strategy Stress Test. How the entire BUILD process challenges your choices against the scenarios most likely to break them, before the market does it for you.
ABOUT THE AUTHOR
Mark Haas is a strategy advisor to CEOs and boards of mid-market companies, with more than 30 years of experience across healthcare, defense, finance, social services, and biomedical research. He is the founder of Haas Strategy Solutions, a Certified Management Consultant, former Chair and CEO of the Institute of Management Consultants USA, and recipient of the IMC Lifetime Achievement Award. Mark also served as Ethics Officer for 20 years and holds degrees from Colgate and Harvard Universities.
Learn more about Mark | Connect on LinkedIn
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