Are your company's leaders know-it-alls? It's a common trait of executives to think they've heard it all, and know it all, but that's a dangerous assumption.

Have you ever seen a magnified picture of a fly's eyes? The common housefly has a compound eye, enabling it to perceive dozens of images at the same time.

Humans, on the other hand, have only two eyes, and our brains select a very small subset of what we will "see" and what we will not. This ability generally works to our advantage: in spite of millions of bits of information coming at us every second, we manage to focus on the right things.

The key is knowing, instinctually and through learning, what the right things are. In business, having assumptions is critical—you cannot see," much less verify, "everything" before making important business decisions. Particularly during strategic planning, assumptions about a company's situation and its capacity to achieve significant change can influence implementation and eventual performance. If the assumptions are wrong, the plan's chances for success can be seriously jeopardized. This article explores the most common ways mistaken assumptions can trip up business leaders, and shows you how to recognize and avoid these assumptions before you launch future strategic plans.

The key to a great strategy is to have disciplines that make it easier and more likely you will (1) focus your conscious attention and your work on the right things, (2) check out the assumptions that need scrutinizing, and (3) trust that the other assumptions were truly close enough. Let's look at the key elements of a disciplined process that helps you avoid mistaken assumptions.

Don't be blindsided by your assumptions. Although accounting firms routinely write assumptions into client reports, it's amazing how few companies include their assumptions in either their strategic planning process or their written strategic plans. Avoid being tripped up by the one assumption you were unaware of having made by bringing conscious intent to your thinking.

Remember the past. In a new planning cycle, start by recalling the assumptions (explicit or not) on which you based your last planning effort. Why did you pick certain options and not others? On what factors did the success (or failure) of your last plan depend, whether you realized it or not at the time? Identify which assumptions remain valid and which must be rewritten.

Update your understanding. Look at what you know today. How do those facts—especially the most painful ones—change your assumptions, moving forward? What new assumptions must you form as a result of a realistic look at what is, and what is likely? What sources of new information could help you challenge and test your assumptions? Craft a new set of assumptions that offers a judicious balance, given what you do know.

Make it a team exercise. The "Johari window" concept reminds us that there is a reality known to us and others, a reality known only to ourselves and not to others, a reality known to others but not ourselves, and a reality known by no one. Wrong assumptions are most likely to go undetected if you do not share them. Sit down with all key stakeholders and review your assumptions. In these volatile economic times, you and your team ca'’t afford not to reassess your 2009 strategy together.

Evaluate assumptions holistically. Since we do not necessarily interpret isolated facts or perceptions correctly without benefit of the larger context, working with your team to surface and evaluate assumptions is much more likely to produce sound, comprehensive, and properly integrated thinking.

Assess, categorize, and rank assumptions. The safest assumptions are those transmuted into facts; yet clearly, you cannot collect hard data about "everything." Which assumptions are most important? Which have the highest risk if your assumption turns out to be incorrect? Which assumptions are least informed by adequate, relevant experience or hard data? Rank-order your assumptions, and take the time and resources to scrutinize the ones that create the greatest opportunities and/or vulnerabilities for you.

Set up an early warning system. How do you recognize whether your assumptions are mistaken or not? Inoculate your strategy with team agreement as to the measures you will use, throughout the plan period, to ensure timely, appropriate responses to new disconfirming data.

Assumptions are an evolutionary necessity; we simply cannot function without them. Explicit assumptions, broad buy-in, and clear performance indicators enable both a sound strategy and some assurance that if circumstances change, you will respond appropriately, and in a timely fashion, to adjust it. Build your decision making process to be as collaborative and robust as possible about identifying and evaluating assumptions. This disciplined process establishes a sound foundation for the right strategy, which in turn helps you and your organization to focus on the right work. Take the time—it's worth it.