How do you stress test assumptions?

1 Why stress test assumptions?

Assumptions are often hidden, implicit, or taken for granted, but they can have a significant impact on your outcomes and performance. If your assumptions are wrong, unrealistic, or outdated, they can lead to errors, biases, or missed opportunities. Stress testing your assumptions can help you uncover and validate them, as well as expose any gaps or inconsistencies in your logic or data. By doing so, you can increase your confidence, accuracy, and resilience, as well as generate new insights and ideas.

2 How to identify assumptions?

The first step in stress testing your assumptions is to identify them. You can use different methods and tools to do this, such as brainstorming, mind mapping, interviewing, surveying, or observing. The goal is to list all the assumptions that you have about your problem, solution, goal, market, customer, competitor, or any other relevant factor. You can categorize your assumptions into different types, such as factual, causal, normative, or predictive. You can also rank your assumptions by their importance and uncertainty, which can help you prioritize which ones to test first.

3 How to test assumptions?

The next step is to test your assumptions using data, evidence, or experiments. You can use different sources and methods to do this, such as research, analysis, benchmarking, simulation, prototyping, or feedback. The goal is to verify or falsify your assumptions, or to refine or revise them based on new information. You can use different criteria and metrics to measure and evaluate your results, such as validity, reliability, relevance, or impact. You can also document and communicate your findings and recommendations to your stakeholders or team members.

4 How to create scenarios?

The final step is to create scenarios that simulate different situations or events that could affect your assumptions or outcomes. You can use different techniques and tools to do this, such as scenario planning, sensitivity analysis, what-if analysis, or Monte Carlo simulation. The goal is to explore how your assumptions and outcomes would change under various conditions, such as changes in demand, supply, price, regulation, technology, or competition. You can use different parameters and variables to define and adjust your scenarios, such as probability, magnitude, duration, or frequency.

5 How to use scenarios?

The last step is to use your scenarios to inform and improve your decisions and actions. You can use different methods and tools to do this, such as risk assessment, contingency planning, optimization, or innovation. The goal is to identify and mitigate the potential threats and challenges that your scenarios reveal, as well as to leverage the potential opportunities and advantages that they offer. You can use different strategies and tactics to do this, such as diversifying, hedging, adapting, or innovating.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?