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The Harte Hanks Blog

Creativity and risk: a fine balance

Two heads are better than oneHighly-creative marketing campaigns are often labelled as ‘risky’. Any marketer will tell you that the more creative an idea is, the harder it is to get it signed-off.

Yet we all know that risk can reap rewards. And research has shown that a euro invested in a highly creative campaign had almost double the sales impact of a euro spent on a non-creative campaign (download the report here).

So the challenge marketers face is finding ways to manage risk effectively in the context of creativity. How can we make more intelligent, informed risk-based decisions?

“To be alive at all involves some risk.”

German psychologist Gerd Gigernezer held a fascinating talk about the role of risk in decision making at Bristol’s Festival of Ideas this week. Many of his points had interesting parallels with our industry.

Gigernezer began with Harold Macmillan’s infamous quote, “To be alive at all involves some risk.” In other words, it’s how you deal with it that matters.

Most of us are not good at forecasting risk – we tend to fear mass calamities, while ignoring more realistic and immediate dangers. For instance in the year after 9/11, long distance car journeys in the US rose dramatically – people feared flying. However, in that period zero people died in commercial aircraft crashes while the number of monthly deaths on the roads rose by around 45 per cent. This could reasonably be attributed to the fear of flying and it’s a dramatic example of the impact of not being risk-literate.

The reporting or communication of risk is often part of the problem. Frequently when we are told of a risk, we are not told the absolute, but only the relative risk. A tragic case study of this was a front page article reporting that the contraceptive pill ‘doubled’ risks of thrombosis. The actual risk study showed that 2 in 7000 pill takers developed the condition, compared to only 1 in 7000 non-pill takers. So the absolute increase in risk is 1 in 7000 or 0.0001 per cent. Sadly, the panic following the article led to a surge in unplanned pregnancies and an estimated 13,000 additional abortions the following year.

Always Ask, Percent of What? What is the Absolute Risk Increase?

Risk differs from uncertainty – the former is when the variables are (more or less) known. The second when they’re not. Risk not the same as uncertainty. The best decision under risk is not the best decision under uncertainty. It is important for marketers to understand this, since there is always some element of uncertainty in any communications campaign. You cannot predict what will be happening in the lives of your target audience on any given day, or what external factors may have an impact on how your activity is interpreted.

Heuristics are a good way of making complex decisions in uncertain situations. Heuristics are, in Gigernezer’s words, ‘rules of thumb’. The example he gave was catching a high ball – rather than trying to carry out the various equations required to know how fast to run to predict its flight and catch it, we instinctively know that if our eye-line to the ball remains steady as it falls we will intercept it. This is despite uncertainty around gravity, wind speed, acceleration rates etc. The pilots of the plane that ditched in the Hudson River in 2009 used this – they saw that the airport tower was ‘falling’ in their eye-line, and knew they would not make the runway.

Heuristics are in fact so useful in decision making in uncertain situations they tend to be more accurate than relying on ‘expertise’. The example was given of a famous Nobel Prize winning stock market investor who invented a complex algorithm for predicting stock performance. While this has been widely adopted, for his own investments he simply uses the formula 1/n (n=number of investments) to decide investment weighting, i.e. he evenly spreads them and never invests in a product he doesn’t understand. This simple ‘heuristic’ outperformed complex weighting algorithms 70 per cent of the time.

However people tend to prefer relying on experts. In business this is sometimes manifested in ‘defensive decision making’ – where the risk is outsourced by the decision maker. Even when he/she instinctively feels a decision is bad, by going with the ‘expert’ or the committee he/she does not take the blame. So the team suffers but the individual is protected. In Gigernezer’s research more than 90 per cent of senior execs admitted to using this tactic.

Leaders Take Risks

Leadership is about taking risks if instinct tells you it is the right thing to do.

On the dangers of relying on ‘experience’ over instinct Gigernezer described the ‘turkey illusion’. Initially turkeys fear humans, but as they are repeatedly fed and not threatened by humans, that fear reduces. And if the turkey decided to use algorithmic models based on its past experience forecasting risk, by the 100th day the turkey would perceive the risk to now be negligible. Except it’s now Thanksgiving Day.

If you don’t understand the context, you don’t understand the risk – so the situation actually remains uncertain, and the turkey should have kept listening to its instincts.

Key Takeaways

  • Complex problems often require simple solutions, driven by instinct or innate heuristics.
  • Risk is important – we need to take risks and sometimes fail, because by trying to avoid all risks we a) kid ourselves, and b) are actually more likely to fail.
  • To quote another German psychologist, Erich Fromm, ‘creativity requires the courage to let go of certainties’.
  • By understanding, and embracing, the inevitable uncertainties we face as marketers we can make better decisions. Highly creative campaigns will always involve an element of risk. But there is also inherent risk in non-creative campaigns, it is just less apparent.


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