-Wilson Mizner
We all play the odds. Sometimes the gamble is unconscious--as when we board an airplane, drive to work, or eat a Twinkie. We may recall fragments of statistics comparing the odds of death from eating dessert to being struck by lightning or meteors.
Ok, well, maybe we don't think about the odds of death by death-by-chocolate, but you get the idea: we understand that there are statistical risks to all of our actions...and mostly we ignore the cold, quantitative heart of risk assessment in day-to-day living: we have lives to live afterall!
But what about in our professional lives?
What's so odd about risk?
No self-respecting executive invests resources in pursuit of an objective without having considered the odds of success, right? Shoot, even gamblers generally know the odds of success associated with the game they play...and then they play it anyway!
As planners, though, marketers are usually pretty good at identifying objectives and aligning appropriate measures. In some quarters, we even make regular eye contact with return-on-investment forecasts. But what about risk?
Or put another way: how do we calculate the odds of success in our plans to pursue and deliver the perfect brand experience?
Here's one way for marketers to cut through unaccountable hyperbole and promises written in air: use a table of combined probabilities.
What are the odds?
Combined probabilities is simple really. We've used this technique with clients to help identify program risks and to frame investments in new programs. It consists of 5 general steps:
1. Identify the individual critical events or activities that must take place to create the successful program or experience. These can include granular elements like advertising, sales, customer support and distribution or they can be higher level activities like Demand Generation and Fulfillment, Regulatory Approval or Research and Innovation.
2. Assign a best estimate of success for each event or activity. In other words, what do you believe to be the realistic odds of success. You can base this on prior, similar experiences, industry benchmarking data or the best instincts of your colleagues.
3. Repeat step 2, only this time be pessimistic.
4. Repeat step 2, only this time be optimistic.
5. Multiply the odds of success (as a percentage) for all activities and events in each of your baseline, optimistic, and pessimistic scenarios to get your combined probability of success.
You'll quickly notice how quickly the odds move against you...even when you are 85% certain that each and every required activity will be successful.
So what?
The point of the exercise isn't to keep us from taking risk, it's to put the risk that exists into perspective. Some prefer to throw things on walls to see what sticks. That's an approach. This isn't for those situations.
Combined probabilities are for marketers who want to understand risk in a broader context that helps focus investment decisions among competing areas. In the process, activities whose success or failure might place an entire endeavour at unreasonable risk can be identified and supported in ways that increase the odds of success.
Like any quantitative tool, combined probabilities is no substitute for critical thinking. If marketing success were as easy as plugging numbers into a spreadsheet, then marketing wouldn't have a seat at the adult table.
But when one sits at that table, knowing your odds of success can improve them.
To download a simple (i.e., five events or activities, no weighting) spreadsheet version for you own use, click here.
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