MONTREAL – In a car, blind spots are the areas of the road that the rearview and side-view mirrors do not show. A driver must constantly be aware of them – and of the potentially deadly perils they can conceal.
Businesses can have blind spots, too – and they can be equally costly, causing companies to overinvest in risky ventures or fail to take advantage of emerging opportunities. Successful leaders are careful to identify their company’s blind spots and introduce mechanisms to ensure that no harm will come from them.
One common source of businesses’ blind spots is judgment bias. This arises when executives have overly narrow views of their industry, underestimate their competitors’ capabilities, or fail to see how the competitive landscape is changing.
A good example of a company that suffered from this kind of blind spot is Nestlé. For decades, the Swiss multinational defined itself strictly as one the world’s leading food companies. The label created a self-imposed restriction, constraining Nestlé to sell a relatively narrow range of products. In 2010, however, the company’s CEO, Paul Bulcke, redefined Nestlé as a “nutrition, health, and wellness” company. It was a brilliant strategic decision, allowing the firm to offer dozens of new product lines and services.