Does your business and strategy rest on knowledge or assumptions when it comes down to it? It's important to remember the difference.

Hope is not a strategy. So wrote the now legendary Head of Department at the Prime Minister's Office to his colleagues when the corona crisis hit.

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Of course, few companies deliberately base their strategy on hope - after all. Often hope creeps in without managers even noticing. In a way, that's even worse.

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But why does it happen - and what do you do about it?

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Part of the answer lies in a rather banal realisation: business leaders are people too. And humans are "programmed" to look for patterns and connections.

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ALSO: SDGs: Bullshit bingo or building blocks?

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As biologist Anders Kofoed writes in his thought-provoking book "The Meaning of Life", this ability may have been crucial to our survival as our species evolved on the savannah. It was clever that we associated a tussle in the grass with danger. The problem is that this ability also leads us astray. Rain dancing, for example, has been an integral part of several cultures for centuries. Today we know it probably has a limited effect on the formation of low pressure.

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The wild trail occurs when we forget the difference between coincidence and causation. That is, when we forget to ask ourselves what actually drives change, development and progress for our organisations - and what we just think works because it seems so.

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It happens every day - to all of us. Today we're smiling a little at the rain dance. But how many marketing departments can actually explain the exact causal link between a bus ad and increased hair shampoo sales?

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I can certainly still be amazed at how often I come across companies that base their strategy on everything from IT systems to marketing campaigns, without being able to give a deeper, data-driven, logical reason why it will actually help or how it will lead to the desired goals for the company.

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Warning: you will not be popular

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The main risk of strategies based on hopes and assumptions is not the potential waste of resources. Although that can be bad enough. The real danger is that as a business leader, you don't realise your assumptions are wrong until it's too late. If the rain dance doesn't work when the drought hits - you're screwed.

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ALSO READ: Hello top boss: Give the middle manager a fair chance

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That's why you need to spot the "assumption disease" in peacetime - before action is urgently needed. You can turn many levers here, but first and foremost you need to create a culture in your company where you dare to ask each other fundamental questions before launching new projects or making major strategic decisions: 'Do we know or do we think? How do we know? Do we have data to confirm it?"

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Warning: you will not become popular by demanding causality. Quickly, more people around you will probably think it complicates everything. You may also think things are moving too slowly when assumptions have to be replaced with knowledge before you can move on. But the more frustration it causes, the more it's a sign that it's necessary. And the sooner you get started, the greater your chance of replacing the rain dance with an irrigation system.

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This column was published on Jyllands-Posten Finance and in Jyllands-Posten, Erhverv on 3 November 2022.

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