Surprise, Surprise!

Life has never been more predictable.

Tripadvisor tells us what a hotel is going to be like, the highs and the lows before we even get there. Facebook lets us investigate a potential romantic interest before the first date. Turn-by-turn instructions from Google Maps prevent us from ever getting lost.

This is all great and we are making use of the technology available to us but doesn’t too much predictability make things a little…erm.....boring?

Emotion as a tool - what the marketeers do

There has been a plethora of research in this area and the one conclusion that stands out is that surprise is addictive. Surprise is like crack for your brain.

Scientists at Emory and Baylor University in the US used MRIs to measure changes in human brain activity in response to a sequence of pleasurable stimuli, using fruit juice and water. The patterns of juice and water squirts were either predictable or completely unpredictable. Contrary to the researchers’ expectations, the reward pathways in the brain responded most strongly to the unpredictable sequence of squirts. “The region lights up like a Christmas tree on the MRI,” said Dr. Read Montague, an associate professor of neuroscience at Baylor. “That suggests people are designed to crave the unexpected.”

This research won’t come as any surprise(!) to the marketeers amongst you but to put this into a business context this can be used to help influence and ensure people make the decisions that you want them to make.

The more people feel, the more people buy. That’s the clear conclusion from the last decade of work by two of Britain’s top marketing analysts, Les Binet and Peter Field. If we think of buy as in buy into our idea then let’s follow this through.

People have two modes of thinking for making decisions, according to behavioural scientist, Daniel Kahneman;

System 1 is the fast, instinctive, emotionally-driven one.

System 2 is the considered, slower one.

When we try to persuade people we’re right, with logical arguments and lists of facts, we’re pitching to System 2. But System 1 is faster and more powerful, and in most cases has already decided.

All those persuasive arguments are likely to go ignored if System 1 isn’t already on your side. So always have System 1 in mind when you’re trying to influence or sell an idea.

You speak to System 1 by making yourself easy to choose. According to Gerd Gigerenzer, another behavioural scientist, human beings like “fast and frugal” decisions – ones that don’t take too much time or energy.

Creating positive emotion is one vital way you can make your idea easy to choose. Surprise is a positive emotion that can be used but it could just as easily be as simple as using brighter colours or more positive messages – if people come away feeling good about you, that will be more helpful than any single powerpoint presentation slide.

Good Surprises / Bad Surprises

So we have some context about how to use the emotion of surprise in a business setting but what does this mean?

“I work in finance and I don’t like surprises”

This isn’t unusual. When working in a regulated area of business surprises are more often than not bad news.

Most leaders can usually handle small surprises such as a slightly off forecast that doesn’t show a material difference in the accounts or even the bankruptcy of a minor supplier by just winging it. But big surprises, such as regulatory trouble, a big new competitor, a shift in consumer behaviour, or a new technology, require a more systematic approach.

It makes sense to reflect on previous surprises (both threats and opportunities) to understand if there are any clues in these that are leading indicators for the future.

Internal threats

This can range from IT bugs and internal trading scandals, like Libor, to sexual misconduct. 

In all these cases there are usually many warning signals before something goes surprisingly wrong and as much as possible you need to keep on top of these.

Let’s take an IT virus as an example. Some of the warning signs that your computer may have a virus starts with your computer being slow to load and applications running slowly. You then might notice annoying ads opening at random and unknown messages appearing. From there you might realise that your homepage has changed and you don’t remember changing it or there are unfamiliar icons on your desktop. Finally, you might get told by people from your email address book that they’re getting random messages from you that you didn’t send. All the way through this process there are warning signs so whatever the situation it’s important to take heed of these warnings to avoid a terrible surprise.

External threats

Studies show that most companies get hit by about three major external shocks every five years.

Blackberry, IBM, and Nokia were badly blindsided by Apple and Samsung in mobile phones. Netflix arguably killed off Blockbuster as everyone embraced digital technology over VHS and DVDs. Mattel's Barbie doll got a black eye when an edgy doll named Bratz sneaked up and took a third of the market share

Although you can't see all external surprises early, you can scan the periphery and amplify weak signals. The warning signs may be right under your nose. Someone in your own company probably knows about a threat but doesn't realise its importance or feels uncomfortable sharing the information.

To detect early warning signals, leaders need great curiosity. Ask many questions and develop wide and diverse external networks. Collect all the rumours and paranoia that blow around and then separate the signal from the noise.

Internal Opportunities

Companies harvest a wealth of new ideas that never make it into plans and budgets.

Most companies run innovation schemes or idea forums that encourage input from people in the operation or on the ground who actually do the jobs and can see things that can be done more efficiently. Don't let the suggestion box turn into a black hole where bright ideas go in but nothing useful ever comes out. Be an idea-driven organisation that values fresh thinking inside the company.

Successful bottom-up innovations include 3M's famous Post-It notes, faster luggage off-loading in London for British Airways, and even Viagra.

To tap into creativity within the business, leaders must be open to suggestions, incentivise teams to take appropriate risks, encourage fast and cheap learning, and create cultures where well-intentioned mistakes are celebrated, not punished.

External Opportunities

Often companies miss opportunities right in front of them.

Organisations need to use more of an outside-in mindset so they can see opportunities sooner than everyone else. Explore the outside world for new ideas beyond your core markets.

Entrepreneurs like Richard Branson or Elon Musk see sooner and farther because they think outside-in. They explore the outside world and take elements from other industries that are outside their sphere to build something new whilst using all of the latest technology.

To see the world through your customers' eyes, follow the journey of a purchase order. Follow it throughout your company to experience what the customer experiences. Take inspiration from anthropologists and observe without filters or prejudice and let the data speak.

Bringing it all together

So there we have it. Surprise is a tool that can be used and impacts decision making, reviewing threats and opportunities and also turbocharges emotions.

Psychologist Robert Plutchik’s psychoevolutionary theory of emotion classifies our feelings into primary emotions, such as anger or fear, and more nuanced secondary emotions that combine these, like bittersweet (happiness + sadness) or guilt (happiness + fear). The interesting thing about surprise is that it appears to amplify whatever you’re feeling. When we’re surprised and angry, we’re outraged. How you might feel if your subscription fee for a service gets increased without warning! Combine happiness with surprise, and you hit the upper register of the feeling-good scale. This helps explain why the word “delight” is almost always preceded by the words “surprise and.”

Used in excess surprise can be overwhelming but used sparingly you will be surprised by the impact it has.

#financefundamentals

#RobinKiziak is an experienced finance manager with over 10 years experience in the distribution/logistics and retail industries