Blindspot Analysis

Why is it that so many carefully researched
decisions go wrong?
One reason is that the decision-maker failed
to consider key factors – with often disastrous consequences.
We often say things like, "I've got a bit
of a blindspot when it comes to Anna's designs," acknowledging
that there's an area of our decision-making where we're not quite
as rigorous as we'd like to be.
However, even if we're aware of
one personal blindspot, we may not realize how many others we
have.
But how can we identify this sporadic failure
in our decision making, given that it is, by nature, "hidden" in a
blindspot?
The answer is to use Blindspot Analysis. This
technique leads you through a systematic audit of your decision
making. One way of doing this is to check your decision-making
against a list of common blindspots. One such list was first
drawn up by Michael Porter in his 1980 book "Competitive
Strategy," and further developed by Gilad, Gordon and Sudit
in their 1993 article "Identifying Gaps and Blindspots in
Competitive Intelligence."

Note:
Blindspot Analysis isn't a decision making
tool in itself. Rather, it is a safety net that you can
use to check the quality of your decisions.

Common Types of Blindspot
The original work on categorizing blindspots
focused on blindspots in strategy formulation. However, many of
the blindspots that are found in strategic decision-making can
occur in other types of decision-making, and this is what we focus
on here:
1. Invalid Assumptions
Many decisions involve making assumptions. But it's important that
assumptions are based on facts, and are subject to sufficient
scrutiny.
Invalid assumptions are often accepted because they are
unchallenged. Sometimes this is because they have been assumed for
so long that they've gained the status of a "non-negotiable"
corporate myth or taboo: "Customers always go for the lowest
price" or "Pink has to be one of the colors available in our
blouse range."
To avoid the blindspot of invalid assumptions:

List all of the assumptions used in your decision.
Check, as far as you sensibly can, whether
each one is valid, and see if you can find good data that will
support or knock down the assumption. The 5 Whys technique can be useful in getting to the root of an
assumption.

If you're part of a group involved in taking a decision, don't be
afraid to speak out if you want to check the assumptions used. It
is common for groupthink to occur, where other people may be
avoiding challenging an assumption, even if they realize that that
assumption may be invalid.
2. "Escalating Commitment"
This blindspot involves refusing to recognize that something
you've been doing just isn't working, and you could better use
your money or time doing something else, even if this means
abandoning a project you've been pursuing.

Logically, the options you have in this situation are:

Abandoning the initiative altogether.
Switching your money, effort or time to another initiative.
Investing more in the existing project to try and make it work.

People choose the third option, in which they "escalate" their
commitment, far more often than rational decision-making would
dictate.
This is partly largely because they tend to
cling to an over-optimistic view of the future in the hope that
their original decision will eventually be proved right. It can
also occur because they already have a strong emotional investment
in the hard work that's gone into the project so far.
In addition, they may consciously or subconsciously feel that
"cutting their losses" is an admission of personal incompetence.
As a result, this blindspot is more commonly found when an
individual, rather than a team, is responsible for making the
decision.
3. Tunnel Vision
When you're in a tunnel, you can see what's
directly ahead of you, but you have no idea what's happening outside
your area of focus. When you're suffering from this blindspot,
(which the creators of blindspot analysis referred as "constrained
perspective") you tend to weigh up your decision considering many
fewer factors than you really should consider.
A typical example of suffering from the tunnel vision
blindspot
would be to assume that everything else will stay the same while
you change.
To avoid this, it's important to analyze the wider environment in
which you're operating. Useful tools for doing this include SWOT
Analysis , PEST Analysis and Value Chain Analysis .
4. Over-Confidence
Blindspots caused by over confidence often
involve underestimating risks arising from "unknown unknowns"
– issues people are not even aware of.
Typical blindspots which over-confident decision makers suffer
from include:

Treating guesstimates as facts (this can
also be regarded as a particular type of unchallenged assumption,
and should be avoided in the same way).
Only considering the most likely external
situations, and ignoring less likely ones which could nevertheless
totally derail the situation if they were to occur.
Giving more weight to evidence that supports
their gut instinct.
Assuming that, if they've made a decision
in the past that turned out well, they have a good enough "gut
instinct" not to need to analyze the situation in detail.
Assuming that, if one option has a larger
amount of data supporting it than do other options, that that
information is of higher quality than the data supporting other
options.

You can try to reduce the risk of over-confidence
blindspots by guarding against the negative effect of overconfidence
in decision making, by involving others in your decision-making
process, and by encouraging people to challenge your reasoning.
5. Leaping to Conclusions
When decision makers suffer from this
blindspot, they make
decisions that are backed up by faulty logic, or by inadequate
data.
One common example of this is to confuse "correlations"
and "causality." Correlations involve two things happening at
the same time. For example, a survey might show that children
raised by single parents do less well at school than the children
of married parents. This may be a good example of a correlation,
however it may not be a good example of causation – if single
parents are, on average, poorer or have less time than married
parents, this could be the underlying cause.
Another very common example of this blindspot is basing decisions
on engaging or emotionally significant anecdotal evidence rather
than on data from a representative sample.
This tendency to give inappropriate weight to some observed data
is, in fact, yet another form of invalid assumption and can be
avoided in the same way.
Avoiding Blindspots
The first step in avoiding decision making blindspots is to
acknowledge that they occur: you mustn't have a blindspot for
blindspots!
In addition to the steps given for each specific
blindspot, there are other, practical things you can do to avoid
developing blindspots. Some of these would clearly take a lot
of implementing, and so are more appropriate if you're involved
in far-reaching strategic decision making; others are worth using
for much smaller choices.

Blindspots can easily multiply as research
and short-lists of options pass up a corporate hierarchy. If
this is likely to be a problem, consider decentralizing decision-making
as much as possible.
If someone has made a poor decision because of sloppy
decision-making, give feedback as soon as possible. Work to make
sure that decision making is well-considered, and based on
thorough analysis.
For particularly important decision, try to involve someone from
outside your team who has no vested interest in the decision, and
get them to challenge your assumptions and review your reasoning
(this is where a technique like the Ladder of Inference can be
useful.)
Map out how your proposed course of action could go wrong. Doing
this will help you identify gaps in your data and reduce
over-confidence.

Also, download our free


Blind Spot Busting Checklist and use it to audit your decision-making
at regular stages during the decision-making process each
time you make a decision. (It's important not just to wait until
the final stage to do this; if you do, you risk wasting time analyzing
options suffering from blindspots such as invalid assumptions.)

Tip:
In rapidly changing environments, you
can spot your blindspots quickly, simply because their
consequences quickly become obvious.
In more stable environments, you need to
be particularly diligent about blindspots. Their
consequences may take a long time to emerge, by which time a
great deal of damage may have been done.


Key Points
By our nature, we can all be prone to
blindspots in our decision
making. Sometimes these can lead us to draw the wrong conclusions
and make the wrong decisions.
By being aware of common blindspots, by being thorough and
professional in your decision-making, and by auditing your
decision making process to look out for the most common errors,
you can improve the quality of your decisions, thereby making your
projects more successful.


Download Worksheet