Blindspot Analysis In A Nutshell

A Blindspot Analysis is a means of unearthing incorrect or outdated assumptions that can harm decision-making in an organization. The term “blindspot analysis” was first coined by American economist Michael Porter. Porter argued that in business, outdated ideas or strategies had the potential to stifle modern ideas and prevent them from succeeding. Furthermore, decisions a business thought were made with care caused projects to fail because major factors had not been duly considered.

Understanding a Blindspot Analysis

The Blindspot Analysis starts with a question: how can a business identify these factors if they are, by all accounts, hidden?

The blindspot analysis is a systematic decision making evaluation process. While most decision-making frameworks favor rational and objective action, a blindspot analysis uncovers process flaws caused by bias or misinterpretation.

Blind spots typically manifest in 8 ways:

  1. Invalid assumptions – such as corporate myths, corporate taboos, or other unchallenged assumptions.
  2. Winner’s curse – or a belief that investment will always equal value.
  3. Escalating commitment – when a company doubles down on a particular plan to its detriment. 
  4. Constrained perspective – where gains and losses are assessed individually, and not as part of a larger picture.
  5. Over-confidence – encompassing confirmation bias, an illusion of control, or a belief that past performance is a predictor of future success.
  6. Information filtering – where failure is not seen as a learning experience. This also occurs when a diverse range of opinions is not considered when making decisions.
  7. Reasoning by analogy – or decisions based on a limited sample set or anecdotal evidence.
  8. Groupthink or herd mentality – an effect where a group makes a safe and conservative decision that is sub-optimal.

How do blind spots occur in business?

Blind spots can only manifest in business in one of three ways, with management playing a key role in each:

  1. Management is ignorant of strategically important issues.
  2. Management is aware of strategically important issues but does not interpret them correctly.
  3. Management is aware of the problem and how to address it correctly, but it is discovered too late. Any action, no matter how significant, is too late and ineffective.

Performing a Blindspot Analysis

Many businesses choose to simply run through the list of eight primary causes before making decisions.

For those who want a more methodical approach, however, psychologist and philosopher Benjamin Gilad developed a simple three step method.

Step 1 

Look at a previous strategic decision from the organizational perspective. What was the context of the decision? How was the solution argued? Which factors played a primary role? 

Businesses can use Porter’s Industry Structure (5 Force Analysis) to identify change drivers that have a structural effect on the five competitive forces. Is the company in question overlooking one or more important aspects?

Step 2 

Look at an organization from the outside by researching publicly available information (preferably in a similar market or industry). 

This so-called competitive intelligence can be found in interviews, speeches, public appearances, shareholder communications, and industry meetings. What inferences or assumptions do executives from these organizations make? 

Step 3 

In the final step, compare results. A potential blindspot occurs when the analysis of Step 1 is contradicted by the results of Step 2. 

Key takeaways:

  • The Blindspot Analysis helps businesses identify flaws in decision making and, in the process, improve strategic thinking.
  • The Blindspot Analysis is a systematic process that considers eight primary causes of blind spots in biased decision making.
  • Performing a Blindspot Analysis involves comparing the competitive drivers of change with the external processes of a company in a similar industry. Any contradiction in results represents a potential blind spot that must be investigated.

Connected Analysis Frameworks

Cynefin Framework

The Cynefin Framework gives context to decision making and problem-solving by providing context and guiding an appropriate response. The five domains of the Cynefin Framework comprise obvious, complicated, complex, chaotic domains and disorder if a domain has not been determined at all.

SWOT Analysis

A SWOT Analysis is a framework used for evaluating the business’s Strengths, Weaknesses, Opportunities, and Threats. It can aid in identifying the problematic areas of your business so that you can maximize your opportunities. It will also alert you to the challenges your organization might face in the future.

Personal SWOT Analysis

The SWOT analysis is commonly used as a strategic planning tool in business. However, it is also well suited for personal use in addressing a specific goal or problem. A personal SWOT analysis helps individuals identify their strengths, weaknesses, opportunities, and threats.

Pareto Analysis

The Pareto Analysis is a statistical analysis used in business decision making that identifies a certain number of input factors that have the greatest impact on income. It is based on the similarly named Pareto Principle, which states that 80% of the effect of something can be attributed to just 20% of the drivers.

Failure Mode And Effects Analysis

A failure mode and effects analysis (FMEA) is a structured approach to identifying design failures in a product or process. Developed in the 1950s, the failure mode and effects analysis is one the earliest methodologies of its kind. It enables organizations to anticipate a range of potential failures during the design stage.

Blindspot Analysis

A Blindspot Analysis is a means of unearthing incorrect or outdated assumptions that can harm decision making in an organization. The term “blindspot analysis” was first coined by American economist Michael Porter. Porter argued that in business, outdated ideas or strategies had the potential to stifle modern ideas and prevent them from succeeding. Furthermore, decisions a business thought were made with care caused projects to fail because major factors had not been duly considered.

Comparable Company Analysis

A comparable company analysis is a process that enables the identification of similar organizations to be used as a comparison to understand the business and financial performance of the target company. To find comparables you can look at two key profiles: the business and financial profile. From the comparable company analysis it is possible to understand the competitive landscape of the target organization.

Cost-Benefit Analysis

A cost-benefit analysis is a process a business can use to analyze decisions according to the costs associated with making that decision. For a cost analysis to be effective it’s important to articulate the project in the simplest terms possible, identify the costs, determine the benefits of project implementation, assess the alternatives.

Agile Business Analysis

Agile Business Analysis (AgileBA) is certification in the form of guidance and training for business analysts seeking to work in agile environments. To support this shift, AgileBA also helps the business analyst relate Agile projects to a wider organizational mission or strategy. To ensure that analysts have the necessary skills and expertise, AgileBA certification was developed.

SOAR Analysis

A SOAR analysis is a technique that helps businesses at a strategic planning level to: Focus on what they are doing right. Determine which skills could be enhanced. Understand the desires and motivations of their stakeholders.

STEEPLE Analysis

The STEEPLE analysis is a variation of the STEEP analysis. Where the step analysis comprises socio-cultural, technological, economic, environmental/ecological, and political factors as the base of the analysis. The STEEPLE analysis adds other two factors such as Legal and Ethical.

Pestel Analysis

The PESTEL analysis is a framework that can help marketers assess whether macro-economic factors are affecting an organization. This is a critical step that helps organizations identify potential threats and weaknesses that can be used in other frameworks such as SWOT or to gain a broader and better understanding of the overall marketing environment.

DESTEP Analysis

A DESTEP analysis is a framework used by businesses to understand their external environment and the issues which may impact them. The DESTEP analysis is an extension of the popular PEST analysis created by Harvard Business School professor Francis J. Aguilar. The DESTEP analysis groups external factors into six categories: demographic, economic, socio-cultural, technological, ecological, and political.

Paired Comparison Analysis

A paired comparison analysis is used to rate or rank options where evaluation criteria are subjective by nature. The analysis is particularly useful when there is a lack of clear priorities or objective data to base decisions on. A paired comparison analysis evaluates a range of options by comparing them against each other.

Related Strategy Concepts: Go-To-Market StrategyMarketing StrategyBusiness ModelsTech Business ModelsJobs-To-Be DoneDesign ThinkingLean Startup CanvasValue ChainValue Proposition CanvasBalanced ScorecardBusiness Model CanvasSWOT AnalysisGrowth HackingBundlingUnbundlingBootstrappingVenture CapitalPorter’s Five ForcesPorter’s Generic StrategiesPorter’s Five ForcesPESTEL AnalysisSWOTPorter’s Diamond ModelAnsoffTechnology Adoption CurveTOWSSOARBalanced ScorecardOKRAgile MethodologyValue PropositionVTDF FrameworkBCG MatrixGE McKinsey MatrixKotter’s 8-Step Change Model.

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