The only thing surprising about the British General Election was that everyone was surprised by it. Herein lie some valuable lessons for business and life.
What were the fundamentals? A Conservative (“Tory”) government that had inherited an economic mess and put things on an even keel. Rising employment – up by nearly two million, the most impressive increase in jobs under any single administration outside wartime. Zero inflation – not seen for eighty years. A lead on economic competence of 20 percent over Labour, the main opposition party, and a similar lead for the Prime Minister personally over the Labour Leader. A widespread feeling that Labour would tax and spend too much, as they did last time. And, to cap it all, a fear that if Labour got into office, it could only be under the thumb of a rampant Scottish Nationalist party which would export even more money from England to north of the border, and interfere in purely English matters.
What could possibly happen under those circumstances, but the re-election of the Prime Minister’s party, this time with more seats and a majority over all other parties?
Which is what did happen.
Yet almost nobody expected it. It is true that I tweeted that it would happen, and backed my judgment with the bookies, time after time after time as the odds against a Conservative majority went out to the absurd level of 14-1 against. Even after the BBC’s generally reliable exit poll showed large Tory gains, and the results started to flood in, you could still get 4-1 against a Tory majority. Again I tweeted that nobody would believe it, but a Tory majority was now inevitable. And nobody – or very few people – did believe it even then. For hours you could back it at odds against.
Why was everyone blind?
Two words. Polls. Groupthink.
Never before had there been so many opinion polls in a British election. And all the polls were remarkably consistent, and did not budge through the campaign. Labour and the Tories were neck-and-neck. There was almost no possibility of either side getting a majority. One website, Elections Etc., went so far as to tweet its verdict a few days before the election: Probability of a Hung Parliament 100%. Probability of a Labour or Tory Majority 0.0%. And this was an academic site.
The betting markets were scarcely better. As the election approached, the electronic markets showed that deadlock was 90% probable.
And this is where the groupthink kicked in. Because everyone expected a tight finish, it was impossible – or very hard – to sustain a view based on the fundamentals. As the polls refused to move in the Tories’ favour, even I came to have doubts. As the betting odds got beyond 10-1 against, I had a few more bets but then stopped. Everyone could not be wrong, could they?
The whole campaign was seen through the prism of the polls. The common narrative early on was that Ed Miliband, Labour’s Leader, could not possibly be Prime Minister. He was snapped trying to eat a bacon sandwich, which is not that easy. But then, as the polls showed he could easily win, and he was reasonably coherent on television, the narrative changed. He was having a good election. He had successfully raised the issue of inequality. He would become Prime Minister, and as punters rushed to back him, he looked like a Prime Minister in waiting. Meanwhile, the Conservative campaign was judged to have been a poor affair, lurching from crisis to crisis, and banging on about the economy, which the polls showed was only the fourth most important issue to the voters.
And then the exit poll, which caused widespread consternation and incredulity. Paddy Ashdown, a former leader of the Liberal Democrats, interviewed on television, said that if his party lost nearly all its seats and went down, as predicted, to just ten lawmakers, then he would eat his hat. In the event, his party retained just eight seats. After the results, suddenly it all made sense again. Mr Miliband had led his party to the left, and wasn’t that credible after all. As Tony Blair, the only Labour leader ever to win three consecutive elections, had observed beforehand, if the Labour Party took its traditional position – on the Left – and the Tories took theirs – on the Center-Right – then there would be a traditional result.
Seven 80/20 Lessons for Business, Careers & Personal Life
- Too much data creates a sense of certainty that is not deserved. Nicholas Nassim Taleb has written that too much information is not just useless, but “toxic”. Less is more. Choose what you measure very carefully and be very stingy with how many things that is.
- In vital matters – such as elections, but also business start-ups, deciding where to work, which boss to have, which partner to live with – be sure that you have the right target in mind. In the British election, the Labour Party targeted getting 35 percent of the vote – their so-called “core vote”. So they talked a lot about poverty and inequality and how bad the Tories were. This did not work. The Tories did not target a percentage vote, but rather 40 seats that they needed to defend or win. And they got nearly all of them. Narrow targets are hugely better than broad ones.
- Logic and common sense can trump data.
- We are all blind. We believe what we want to believe – unless we are hardened pessimists. Few people are really good at judging what will happen. Those few can make a lot of money, even if they are less smart than the majority.
- We all fall for groupthink. “When someone agrees with me,” said Oscar Wilde, “I feel I must be wrong. Every significant reform enhancing freedom and human dignity began as a minority opinion, derided for its eccentricity. “Think different.”
- A message will be heard only if it is simple. This means a single message. The Tories had one message – the economy. Labour had several. When you really need to persuade somebody, have one simple message. Strip away everything else.
- Doing the right thing is usually rewarded. If you want to do well, do good. People are not stupid. If you do the right thing for them, in politics, business, and life, you will be rewarded.
Of course, it’s not as simple as that, is it?
Just possibly, it is.
