How do you balance an entrepreneurial optimism versus unrestrained recklessness? And how do you stop your innovation and marketing activities being more reliant on ‘ hope’ – than reality? An excellent recent lecture at The Royal Society of Arts and Commerce (The RSA) – by neuroscientist and author Tali Sharot – whose latest work is ‘The Optimism Bias – Why We Are Wired To Look On The Bright side‘ – highlighted the intriguing tendency for more than 80% of us to accentuate the positive and eliminate the negative.
Sharot’s research and thinking into optimism is an interesting addition to the current debates on entrepreneurship, innovation, collaboration and reinvention. Her latest research, which builds upon her earlier work examining memory and emotion shows that the human brain edits or decodes the negative – and that we are biased towards an optimistic outcome through all areas of our life. In matters of love, in our self perception, in our estimation of our health and in business too – the majority of us overwhelmingly project a positive outcome even if facts show that is false. Most of us vastly over estimate a good future outcome. Incredibly – 10% of us think we will live to our one hundredth year, whereas the reality is that only 0.02% of the population will receive the telegram from The Queen (if they do indeed send them still?) . And humans as a whole also generally posses a ‘superiority illusion’ too – with 93% of us thinking we are in the top 25% of the population.
In commercial matters too optimism bias clouds our view of on outcome with that famous rose tinted glow. In just one example, the final cost of the Sydney Harbour Opera House was 14 times the first projection – and that tendency to build an overly optimistic budget, is far from rare. Many believe it was an optimism bias that led to the financial disasters of 2008; blurring the vision of private sector investors, consumers, government officials and analysts. As Sharot points out;
“ Whether it is a construction job, a film, a theatre project, a dinner party, a renovation, in war or peace – costs over runs and delays in implementation are the norm”. And she goes on; “If humans maintain an unrealistic view of the future even when accurate data is available, it must be the case that the brain processes the information regarding the future in a selective manner. A learning bias. A bias that allows us to incorporate desirable information into our future but not undesirable information – resulting in optimism” –
Does this suggest we need a healthy dose of scepticism and a reality check when we are presented with ambitious marketing, innovation and other business plans? Possibly. Does it mean we have to nurture pessimism? Likely not. Firstly, there is a clear link between the 20% of the population that have a ‘pessimist bias’ and those that fall into unhappiness and depression. On the balance of things, the benefits of optimism bias out weigh the possible negative ones. There are not many successful pioneers, innovators, entrepreneurs, sports people, artists and leaders who are not optimists.
As Sharot says; “Overall – this (optimism bias) is beneficial. Data pointing towards the upside of optimism is plentiful; optimists live longer, are healthier, happier, make better plans and are more successful”
Pioneering the new, developing the unconventional and the unknown has always been the domain of the optimists. Entrepreneurs and innovators create new products, processes, or services that help improve the lot of their customers – whilst turning that initial rough idea into a profitable commercial reality. (Those last three words of the previous sentence being the most pertinent, as the heart of good marketing beats to the mantra; ‘serve customers profitably’). So – what are the implications of the Optimism Bias – for marketing planning, innovation and partnerships? No matter how good the thinking, the plans, the research, the logistics and budgets – any new innovation requires a degree of risk and it is worth understanding that the author and instigator of a plan is likely an optimist. Unfortunately, unrestrained optimism can be misguided. As a colleague explained to me recently, most marketing campaigns involve planning, pricing, production and launching. And then the final part of the plan: you hope. Understanding that we have an optimism bias suggests incorporating a degree of challenge into a new business idea – but you also need to avoid pessimism too. As Thomas Friedman says; “Pessimists are usually right and optimists are usually wrong but all the great changes have been accomplished by optimists.” Pick up any tome that encourages business leaders to reinvent their stalling corporates – and the message is normally the same: that their failure to innovate, renew and adapt has been a consequence of their inability to change and that to evolve and progress, there is a need to take risks. From open innovation, to collaborative partnerships, from product re-designs to entering new markets, no matter what the projections say something new is always a calculated risk. Innovators need to be optimistic but we need to understand that many of us have an optimism bias. As Tali Sharot says;
“The brain provides a distorted view of reality. It deceives, yes. But it does so for a reason and at the very same time it allows the realisation that each of us is susceptible to illusions and bias”
You can hear a Pod Cast of Tari Sharot’s talk at The RSA.
For media & marketing partnership consulting please see Benchstone Limited.
- The Optimism Bias (drronahart.wordpress.com)
- The Optimism Bias and our Brains may be Hardwired to Look on the Bright Side (wanderlustmind.com)
- Being too optimistic linked to brain”s ‘faulty’ function (news.bioscholar.com)