Blind Spots

So your business effort failed, even though it seems that you did everything right. But what, asks an article in that latest McKinsey Quarterly, did you overlook?

“If you answered ‘the competition,’ you’re far from alone,” write the article authors Marla M. CapozziJohn Horn and Ari Kellen. “In our experience, companies making decisions about developing and launching new products commonly fail to anticipate their rivals’ motivations and actions.”

In fact, the authors add, “neglecting to think about competitors is one of dozens of natural human biases—along with excessive optimism and overconfidence—that subconsciously affect strategic decision making.” To counteract this tendency, they suggest using “war games” to try to suss out what seen and unseen market rivals might do to attack you.

Blindness to the competition was a pitfall that Peter Drucker also encountered time and again. “Failure to go out and look is the typical reason for persisting in a course of action long after it has ceased to be appropriate or even rational,” Drucker wrote in The Effective Executive. “Moreover, in any business I know, failure to go out and look at customers and markets, at competitors and their products, is also a major reason for poor, ineffectual, and wrong decisions.”

Photo credit: Ben Matthews

The remedy for this, in Drucker’s view, wasn’t as elaborate as engaging in war games. His counsel: Simply go out and look. “The people who are running a new venture need to spend time outside: in the marketplace, with customers, and with their own salespeople, looking and listening,” Drucker advised in Management: Tasks, Responsibilities, Practices.

Unfortunately, Drucker saw the failure to go out and look as a flaw of more than merely individual companies. Entire sectors of American industry had suffered from blindness to competitors, causing them to be displaced. “We were convinced that American management reigned supreme, just as the Japanese were about to run circles around us in mass production and customer service,” Drucker lamented in Managing in the Next Society. “I’m afraid our complacency about our entrepreneurship and innovation is going to have us outflanked again, not only by the Japanese but also by the Koreans.”

Where have you seen a business fail because of blindness to competition?