How does Blind-Spot Analysis Help in Business?

  • Bhumika Dutta
  • Oct 14, 2021
  • Business Analytics
How does Blind-Spot Analysis Help in Business? title banner

In any industry, regardless of the line of employment, a lot of judgments must be made. These actions, which can be huge or little, can affect a lot of things and play a significant influence on the company's uplift or downgrade.

 

The blind-spot analysis is a very interesting concept related to decision making, especially in the field of Business. There are many cases in history where the most thoughtful decisions made by top-notch businesses led to their downfall. 

 

The blind-spot analysis deals with the mistakes made during such cases. Let us learn how blind-spot analysis affects the field of Business.

 

For that, we will focus on the following topics:

 

  • What is Blind-spot Analysis?

  • Blind-spot Analysis in Business

  • Importance and Application of Blind-spot analysis.

 

(Also read: MOST Analysis- A Business Success Tool)


 

What is Blind-Spot Analysis?

 

A blindspot analysis is a method of uncovering erroneous or outdated beliefs that might sabotage organizational decision-making. It is a systematic evaluation process that makes the process of decision-making easier and more efficient.

 

A blindspot analysis exposes process problems caused by prejudice or misunderstanding, whereas most decision-making frameworks encourage logical and objective behavior.

 

History of Blind-spot analysis:

 

The phrase was used by American economist Michael Porter to describe old-fashioned wisdom and assumptions that underpin a company's business plan while preventing fresh, modern ideas from prospering. 

 

Barbara Wertheim Tuchman, an American journalist, and historian coined the phrase in her 1984 book 'The March of the Folly.' She points out that the Blindspot Analysis shows policies and tactics that were demonstrably incorrect in their assumptions and are now regarded as biases by others. Finally, in his book 'Business blind spots',  Benjamin Gilad, an Israeli-born American psychologist, and philosopher developed a three-step method to uncover blind spots. 

 

Businesses can use this to replace ingrained and outdated convictions and assumptions with modern reality, thoughts, and convictions. This guarantees that their choices are more effective.

 

(Recommended read: How Business Analytics impacts Decision Making in Businesses)

 

Importance of Blind-spot Analysis:

 

The Blindspot Analysis is primarily intended for decision-making at the organization's management level. It considers both the government and the business community. Even though most top-level managers are well-educated and skilled, they work in a vacuum and do not have a direct touch with all of their staff. As a result of this lack of communication, they make judgments based on their position of power rather than considering alternative options and viewpoints. 

 

They have a limited ability for in-depth analysis and the removal of potential blinders as most of their decisions are based on factual knowledge over practical experience. 

 

The third stage in the blind spot analysis, in particular, is a useful tool for pointing out blind spots and opening people's eyes so they may learn to look at problems from a new viewpoint. This will lead to more strong and successful strategic and departmental decisions in the long run. It will also lead to workplace satisfaction as the employees will feel seen and important in any decision regarding the company. 

 

Although this can be considered a secondary factor, efficient and happy employees also lead to the growth of the company. 

 

(Recommended read: 7 Steps of Business Analytics Process)

 

Applications of Blind-spot Analysis:

 

The Blindspot analysis is generally used to make strategic decisions that affect the entire organization and span a longer length of time. It leads to a systematic approach including other groups and colleagues to check if significant elements in the decision-making process are being missed. 

 

As a result, many diverse viewpoints are employed in making choices, and senior management might query whether all possibilities have been thoroughly risk-analyzed. To make a choice, as many possibilities as feasible should be evaluated. When a single person is left out, a blind hole develops.

 

(Also read: What is People Analytics?)


 

How do blind spots occur in Business?

 

There are many ways for blind spots to occur in any decision, mostly if the management of the company is ignorant of strategically important issues or does not implement them in their decisions, or if they are late in doing so. Some of the things that manifest blind spots are:

 

  1. Invalid assumptions, such as corporate myths, corporate taboos, and other unquestioned assumptions.

  2. The consistent and blind belief that investment will always have equal value.

  3. Gains and losses are evaluated individually rather than as part of a wider picture from a restricted viewpoint.

  4. Overconfidence — includes confirmation bias, the illusion of control, and the idea that previous success predicts future success.

  5. Failure is not perceived as a learning experience when information is filtered. This can also happen when a broad variety of viewpoints is not taken into account while making choices.

  6. Analogy reasoning or making conclusions based on a small sample size of anecdotal data.

  7. Group thinking or herd mentality is an effect in which a group takes a sub-optimal option because it is safe and conservative.

 

By avoiding the above-mentioned practices, any company can avoid blind spots in its decisions. But sometimes, it is practically not possible to identify these problems beforehand in person. Thus there was a 3-step blind spot analysis devised for specifically identifying blind spots in business. 

 

(Suggested blog: Examples of Digital Technology)

 

Performing Blind-spot Analysis:

 

A psychologist and philosopher named Benjamin Gilad developed a three-step method for blind spot analysis for making the identification more methodical and accurate. The following are the infamous three steps:

 

  1. Step 1:

 

Learning from history is the first step towards identification. The previous strategic decisions are studied from the organizational perspective. 

 

All the points including the context of the decision, the solution, and its possible arguments, responsible factors, etc are taken into consideration before making any further decisions. 

 

These questions lead the management into finding any loopholes that they might be missing before and helps in shining light on important aspects that they might have overlooked before. 

 

Porter's Industry Structure (5 Force Analysis) may be used by businesses to discover change factors that have a structural impact on the five competitive forces.

 

(Related read: What are Strategic Analysis Tools?)

 

  1. Step 2:

 

An outside viewpoint is taken on the organization. It is investigated how an organization has represented itself, which decisions have been taken and which considerations have been used, as well as what outsiders thought of this, using public information. 

 

Public opinion plays a huge role in this step as it helps the organization get an overall perspective of the business from the outside. 

 

Consider interviews with key decision-makers within the company, top-level assumptions, information for stockholders, media interviews, public appearances and speeches, phone meetings, and maybe even director memoirs.

 

  1. Step 3:

 

The consequences of the first step and the second step are then compared in the final step. If any contradiction occurs between the two, that can lead to a potential blindspot, and hence give an early edge to the management to re-think their decision and find the loophole.  


 

Conclusion

 

The Blind-spot analysis is one of the most interesting and practical theories that has saved a lot of organizations from making wrong decisions on a whim. 

 

In this article, we have learned that the Blindspot Analysis is a systematic approach that analyses eight major causes of blind spots in biassed decision making and helps organizations discover choice faults and enhance strategic thinking in the process. 

 

(Similar read: Cost-benefit Analysis: Process, Benefits, and Limitations)

 

Comparing the competitive drivers of change with the external processes of a firm in a similar sector is what a Blindspot Analysis entails. Any discrepancy in findings is a possible blind spot that needs to be explored.

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