Author: mxmadmin

By Ashoke Agarrwal

Good judgment is critical in all areas of life, as it is in business and marketing decision-making. From everyday decisions like launching a new SKU to the big ones like deciding on the scope and direction of new product development, good judgment is a crucial factor in good marketing across the spectrum. Advertising makes much of creative judgment, and many an advertising honcho’s reputations rest on their supposedly excellent creative judgment. More on that later.

Philip E Tetlock, a well-known social scientist and researcher, launched in 2011, along with Barabara Mellers, a project entitled the Good Judgment Project (GJP). An arm of US intelligence – the Intelligence Advanced Research Project Activity (IARPA), collaborated and funded GJP in launching large-scale research to get to the roots of whether Good Judgment is a god-given attribute of an individual or borne out of deep experience in a relevant field.

GJP and IARPA discovered after years of painstaking experimentation that good judgment is a skill that any individual can pick up in any field, provided they are of above-average intelligence, exhibits the right attitudes and works hard along the right lines.

Tetlock has detailed the experimentation and its findings along with an eminently readable general survey of the field in his bestseller – “Superforecasting – The Art & Science of Prediction.”

The GJP findings delve into many dimensions of forecasting that can impact good judgment. In his book, Tetlock explores these various dimensions concerning appallingly lousy judgment shown by the JFK administration about the Bay of Pigs invasion and how the team turned around by instituting simple procedures and showing good decision-making powers during the subsequent Cuban missile crisis.

While the GJP focuses on the broad areas of socio-political and economic forecasting, it offers insights useful for day-to-day decision-making in the business and marketing arenas.

One such insight is how foxes are better than hedgehogs in forecasting and decision-making. Hedgehogs are like experts who have firmly held views on how things work in their field of expertise. Their decision-making in any given situation is coloured by these views and is dictated by snap judgments. The much-feted creative director who can, at a glance, judge to merits of an innovative idea or a creative campaign is an example of a hedgehog. Another example would be the eminence grise Marketing Director who does not need any marketing research or other persons’ insights before setting the new product development plan for the next five years.

Foxes also make snap judgements but temper them with a healthy dose of doubt before they act on them. Many are experts in their own right but do not let their expertise work as blinkers.

In his book “Thinking Fast and Slow”, Daniel Kahneman wrote about System 1 and System 2 thinking. System 1 is the snap judgements we pass on a situation based on core human impulses like survival, ingrained habits and deeply assimilated expertise. System 1 thinking is spontaneous and arises in a human in any situation which requires judgement and decision-making.

System 2 thinking, on the other hand, is an act of deliberation. It subjects the output of System 1 thinking to doubt and seeks to verify, modify or negate it through seeking further data and inputs from any available resources.

For example, foxy creative directors might dislike an advertising idea or campaign on sight. However, before proceeding with a go-no-go decision or seeking modification, ask the creators for their rationale in creating the campaign, ask their colleagues from other disciplines for their views, and they might even commission advertising research before making a decision.

Foxes can improve their judgment by increasing the data points and viewpoints they incorporate into their System 1 thinking. Dragonflies are uniquely sighted. Their eyes consist of multiple lenses with a different focus and, therefore brain processes various views of the same scene. Foxes will do well to be actively open in developing a dragonfly-like approach to evaluating a situation or at least having a dragonfly-like colleague to who they listen closely. That’s why consistently successful marketing and advertising decision-makers are eclectic in their cultural consumption and societal interactions.

GJP discovered that a well-coordinated and managed team makes better forecasts and decisions than any team member acting alone. The reason behind the better performance of a team is that the team members taken together provide more varied viewpoints than any team member and thus reinforce the dragonfly effect. The assumption is that the team is well-managed – members can disagree without being disagreeable and that every member’s viewpoint carries equal weight. GJP also discovered that teams often make better forecasts and enable better decision-making if the leader – the boss- does not express his views but is a careful and patient listener and absorber.

The third insight that GJP offers is that it is essential to state clearly the rationale behind every decision made and the desired outcome. For example, suppose a Marketing Director and his team forecasts a market surge and decide to double advertising spending. In that case, it will be of help if they put on record the reasoning behind the forecast. The recording of the rationale is not for bureaucratic cover-your-arse reasons but for the fact that putting down the explanation in block-and-white will help him validate and fine-tune the decision. As necessary, is that the team states precisely the outcome targeted from the action of doubling advertising spending. The rationale behind asking for precise specifications of the desired effect of decisions is that it enables teams to evaluate every decision without bias and thus continuously improve into the future.

Conversely, a loosely specified outcome allows teams to succumb to the human tendency for self-justification, thus short-circuiting the learning process. For example, suppose the Marketing Director and his team loosely specify the outcome of doubling advertising spending as an “increase in sales”. In that case, it allows them to conclude that they were right in various situations. For example, they will contend that they were correct if the sales increase in the year was 20% while the market grew by 30%. Or if sales over the next three years grew but stagnated in the first year. The alternative is a precise statement of the outcome – “a doubling of advertising spends this year we anticipate a 10% increase in our market share this year over last year as also a 20% increase in our brand in the consideration set of potential buyers.”. Well-specified outcome statements allow teams to judge and diagnose success or failure, leading to a virtuous cycle of constantly improving forecasting and decision-making.

Change is accelerating in today’s world, and the need for better forecasting and good judgment confronts marketing decision-makers not only for long-term or medium-term decisions but also for short-term day-to-day decisions. At the same time, no marketer can today rely on experience being sufficient to tackle emerging opportunities and challenges. In this scenario, a marketing leader needs to invest in a team of good forecasters with sound judgement outcomes and give them the resources and the ecosystem to fine-tune their abilities constantly.