Strategic industry and competitive analysis models rely on rational and objective behavior. They almost completely ignore the mental filters through which individuals process information. This often results in the decisions made being flawed, perhaps fatally, without the firm even knowing it.
First highlighted by Michael Porter, blind spots manifest themselves in three ways:
- The firm may be completely unaware of strategically important developments, in their market or inside the firm itself.
- The firm may interpret strategically important developments incorrectly.
- The firm may interpret the strategically important developments correctly, but too slowly to allow for a timely response.
It follows that identifying and removing blind spots is a critical skill in effective strategic decision-making.