In the context of growing turbulence and the complexity of market structures, even the most stable business empires face unobvious threats – the so-called “blind spots”. Multidisciplinary holdings are particularly vulnerable in this regard, where diversification, designed to reduce risks, can paradoxically generate them. What is this phenomenon, how does it affect strategy and, most importantly, how not to miss the alarm signals when it seems that everything is under control?
Where do we lose focus more often?
In managing a multidisciplinary company, each founder faces “blind spots”. At first glance, everything is going according to plan: businesses are developing, sales are increasing year by year. However, this is not yet a solid foundation.
As we scale up and separate out independent branches, we are forming a business system that is somewhat similar to the game “Jenga” in its development. The players take turns carefully removing one bar each, then placing it on top. In business, it looks like this: we redistribute personnel and resources, use the working capital of one project to develop another, etc.
The goal of the game is to avoid the collapse of the tower, so it is important to understand the consequences of your actions and take into account the non-obvious issues.
A blind spot in business is an area where information is either missing, distorted, or misinterpreted by management. These can be both missed opportunities and hidden threats.
Internal blind spots
Conventionally, blind spots in business can be divided into internal and external ones. The first ones are related to the level of development of the company and the way the management system and corporate culture are being transformed.
Over the course of 25 years of working in our businesses, we have passed through many stages, but some of them continue to remain undefeated for us. Nevertheless, working on errors and correcting actions has shown that from time to time we need to seek help from external experts.
With their help, the transformation of the management system takes place more objectively, namely, the introduction of a structural approach to building business processes and the organization of necessary changes in the corporate culture.
In other words, you should present the group’s activities as a system of interacting processes, describe and standardize them, define goals and performance criteria, and implement monitoring and improvement procedures. In particular, it is necessary to work regularly with nonconformities, current and potential risks.
I once read the phrase “Culture eats strategy for breakfast”, so any changes inevitably run into a transformation of corporate culture. It is also important to be able to notice changes in consumer preferences and market trends. A striking example is the situation in February 2022, when Russian businesses began to explore the vacant niches after the departure of global players. To occupy a niche is one thing, but the willingness of a company is quite another one.
External blind spots
External blind spots in business include factors that can affect a company’s operations, but are overlooked or underestimated by its management or employees. One of them is the subjective choice of a niche for a business. I’ll explain with an example. Our company has a production line operating in the B2B segment. It is developing successfully, but at some point we decided to scale it in such a way as to enter the B2C market and master marketplaces.
However, it wasn’t that simple. The B2C market requires a completely different approach than the one we are used to in B2B. Different laws apply here, and there are many significant factors: the target audience and its preferences, the level of competition, demand dynamics, and the specifics of working with sites. In our case, we did not take into account our lack of expertise in this area. We thought our B2B experience would be enough. However, the reality turned out to be different, the attempt to master the B2C market at that time turned into a failure.
Where do blind spots come from?
Psychological ones. Very often, managers are unable to make an objective assessment, and they are used to “always doing this” and “this scheme works”. This is the inertia of success. If one or more areas show steady growth, it is tempting to extrapolate this success to the entire group, ignoring problems in other segments or impending changes in the market situation that may hit seemingly unshakable positions. Department heads tend to show the best and keep silent about problems, hence the lack of growth points. Another psychological factor is the trap of the owner, in other words, top management does not leave the operating system. For many managers— this is the most difficult transition: from operational to strategic management.
Economic ones. There are not enough resources. There is not always enough money to hire professionals, implement end-to-end analytics, automate funnels, etc. Often, one employee carries several zones. In such conditions, it is easier not to notice the “weak” points than to try to close them. And in a multidisciplinary business, the more areas there are, the higher the chance that one of them will fade into the shadows.
The price of inattention
The consequences of such blind spots can be very deplorable: from lost profits and loss of market share to serious financial difficulties and even loss of directions. A classic example is the underestimation of new technologies or business models that initially seem niche, but then radically change the rules of the game.
In a multidisciplinary business, this can manifest itself in an inefficient allocation of resources, when investments continue to go into outdated areas, while promising ones remain underfunded. Or, for example, in the absence of synergy between seemingly related businesses due to internal barriers or incorrectly structured processes.
Ignoring these points breaks the structure in the first place. That is, the external environment is changing, but the organizational structure remains the same. There are tasks that simply no one performs. Functions are sagging, responsibilities are blurring.
How to deal with blind spots?
First of all, it is necessary to determine the stage of the company’s development. Conduct meetings devoted to quality issues. For example, you can organize meetings where you will discuss not only the numbers, but also the principles of management themselves. This is not about sales plans, but about how the system works: where it fails, where there is no connection between the zones. To sort out the root cause, to find the person responsible.
Secondly, switch to process management. The departure of an employee should not mean the collapse of the direction. If there are no described functions, regulations and areas of responsibility, then the business operates on individuals, not on the system.
Finally, top management should work on themselves, go into strategy and not be afraid to delegate the operating system. And always keep your finger on the pulse, as the Russian business environment is very turbulent and the planning horizon is short.
It is important to understand that the elimination of “blind spots” is not a one-time campaign, but an ongoing process integrated into the management system. Markets are changing, technologies are evolving, and new competitors are emerging. What is a strength today may become a vulnerability tomorrow. Therefore, the ability to scan the horizon constantly, critically evaluate your own activities and adapt to changes is a key factor in the long-term success of any multidisciplinary business.
By Vladimir Ugryumov, Founder of the Regionkhimsnab Group of Companies