Biases, Bubbles & Blind Spots in Strategy

Making solid strategic decisions is hard. Making solid decisions in general is hard, but strategic decisions are especially tough for the very fact that they are complex by definition and about an uncertain future.

But this doesn’t mean they can’t be improved. There are good strategic decisions and there are bad strategic decisions. The bad ones suffer from people’s cognitive limitations. The good ones are less affected by such limitations. They are not perfect, but they are better because they are made by more aware and better informed decision-makers.

We can distinguish three categories of cognitive limitations that hinder solid strategic decision-making: biases, bubbles and blind spots. Let me explore all three and conclude with a few remarks about how to generally overcome them.

Biases In Strategic Decision-Making

In general, a bias is a distorted judgment that results from opinion, prejudice, and human cognitive limitations. Biases rarely happen on purpose, and people are rarely aware of them. And that’s the key issue because it means that, whenever people make a decision, biases are at play. And if people aren’t aware of them, wrong decisions are made. Here are some examples that play a crucial role in strategy:

• Planning Fallacy: vastly underestimating the time and money it costs to achieve goals or execute a strategy.
• Sunk Cost Fallacy: sticking to a strategy simply because you have already spent a lot of time and money on it.
• Overconfidence Bias: being too confident about being right or about how the future will unfold.

There are many more biases and many of them exist for a reason. They are shortcuts that help us make decisions fast and that tend to be right most of the time in ordinary life. And that’s the problem, while biases help us act instantly in everyday life (imagine one would need to carefully think about every decision one makes), they are a problem in strategic decision-making because, by definition, strategy is not about “most of the time” or “ordinary life.”

Bubbles In Strategic Decision-Making

Bubbles are the specific groups people are part of and by which they distinguish themselves from other groups. Their main effect is that people are more exposed to people that are similar to them, than to people that are different from them. The term “bubbles” is most known and used in a social media context where there are algorithms at play that bring likeminded people together. But the term applies more broadly. In strategic decision-making at least the following three come to mind:

• Company Bubble: employees of an organization tend to develop specific ways of thinking, especially if they work there for a long time.
• Industry Bubble: each industry has its own “rules of the game,” telling you how the industry works and what should and shouldn’t be done.
• Professional Bubble: each role in the organization, such as executives, sales and IT has its own language, codes and habits.

Bubbles are great, because they bring likeminded people together and foster collaboration. They are also misleading because, the stronger one identifies with a particular bubble, the more distorted one’s view on reality may become. In everyday business this may not be a big problem. But, since strategy is about the big picture and often about change and renewal, looking beyond one’s own bubbles is essential.

Blind Spots In Strategic Decision-Making

A third category of cognitive limitations that distort people’s view on the world are blind spots. These are the things people don’t see because of their particular viewpoint, position or perspective. They often occur because something stands in the way of people’s line of sight—sometimes literally, but more often figuratively. Like biases and bubbles, blind spots can be a risk in strategic decision-making. These are three examples:

• Technology Blindspot: not seeing new technology coming because one is so invested in an existing technology.
• Market Blindspot: not seeing a new market or customer type emerging because one is focused on another market.
• Organizational Blindspot: not seeing developments going on in the organization because one is so much focused on one’s current job.

Everyone has blind spots. Because, as soon as one focuses one’s attention on something, the attention moves away from something else. In general this is a strength. To get things done, people need to be able to focus and ignore a lot of the “noise” out there. In strategy, though, the “noise” that may not seem relevant today, may be crucial to know toward the future. As such, these blind spots distort strategic decision-making more than other types of decision-making.

How To Avoid Biases, Bubbles and Blind Spots

All three are related and they are not mutually exclusive. But, they do highlight three different distortions that play a role in strategic decision-making. Biases are generic and part of being human, Bubbles stem from the particular group one is part of, and Blind spots refer to themes or developments one is not aware of. Together they have a significant impact on the quality of strategic decisions.

The bad news is that there is no way to avoid biases, bubbles and blind spots. They are part of life and we even need them to survive. But, there are a couple of steps that you can take to reduce their impact on strategic decision-making:

1. Be aware that you have them. Know that you always have biases, bubbles and blind spots that affect your worldview.
2. Make them explicit. Identify which biases, bubbles and blind spots you and other strategic decision-makers have.
3. Flip them. Deliberately generate alternative and opposing viewpoints that show how things look differently if another perspective is applied.
4. Involve others. Diversity is key here. The more different people and perspectives are involved, the less biases, bubbles and blindspots play a role.

While perfect strategic decisions do not exist, applying these four steps can help to significantly improve their quality.

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