Decision-making, uncertainty and probability
I have embraced uncertainty
In the past, I judged my decisions by their outcomes. Over time, I recognised that many choices I once deemed "bad" only had unfavourable consequences. Today, I realize that what truly matters in a decision is not its outcome but its optimality given the circumstances and available information—or, more accurately, how closely it approximates the optimal decision.
Decision-making in marketing and advertising
Can a decision with a negative outcome be more optimal than one with a positive outcome? Yes.
During my experience in optimising budgets for online advertising, I have discovered that specific days within seasonal campaigns present exceptional opportunities. However, capitalising on these opportunities requires embracing a higher level of risk than on ordinary days. It is impossible to rely on data from the previous day with certainty, and waiting a few hours for data on a given day means the irreversible loss of many opportunities.
Without divulging sensitive details, the essential lesson I've gathered is that accepting a higher level of risk in these cases is advisable. Rather than fixating on individual situations, I focus on an 70% probability of a positive outcome in these cases. With this probability in mind, each decision of this type can be considered suitable, regardless of the impact of a single decision. What is important here is the high probability that the profit of decisions with a positive effect will cover the losses.
Navigating the Sea of Uncertainty
I strive to implement this mindset when making all managerial or investment decisions. My anchor in these uncertain waters is the weak law of large numbers. It states that as the number of trials increases, the average of the outcomes will likely converge to the expected value. Through the lens of probability, I can maintain a strategic perspective, ensuring that, for example, my approach to online advertising optimisation remains resilient in the face of uncertainty.
After reading this, it may seem like a simple thing. But answer how many people around you are result-oriented and looking for certainties.