Anthony Hilton: Most firms seem optimistic about their own future. They can't all be exceptions

 

I'm not a great believer in business awards, having been a judge in too many to have kept faith in the integrity of the judging process. But if an exception can be made, it should be to recognise the justice in the fact that the annual report of WPP, the advertising and marketing services group, picks up gongs on a regular basis.

It gets the accolade because it looks good and is worth reading, as I was reminded earlier this week when browsing through the current version and finding an article by Jeremy Bullmore, one of the great figures in British advertising.

His subject was the placebo effect. In drug trials it is customary to give one half of a test group the new drug being trialled and have the rest of the group take a compound with no active ingredients and then plot the differences between the two. The problem is that those getting the worthless compound frequently report that they also feel better.

Wine tasting is similarly susceptible. Put some average stuff in a bottle and label it house plonk, put the rest in a bottle and label it as if from an expensive French château, and the test group will swear that the château wine is far superior.

Mr Bullmore's purpose was not to mock the people coming up with the duff answers, but rather to point out that they genuinely believed what they reported. His point is that through some complex process in our brains, perception influences reality. What people believe – whether it is true or false – influences the way they feel, what they believe and the way they behave without them knowing it. In the sample they did really feel better; they did prefer one wine over the other.

It set me thinking about a placebo effect in the economy. On Thursday I was in Newcastle addressing the local Entrepreneurs forum – a brilliant organisation which provides mentoring advice and support for several hundred local entrepreneurs determined to lead the revival of the North-east as a business hub. What you find talking to groups like that, or reading surveys of sentiment in medium-sized firms up and down the country, is that they mostly report that they are doing all right. But ask them about future prospects, and the mood immediately darkens. They are far more optimistic about their own business than about the economy as a whole. All the stuff which hits them daily about the euro and double-dip recessions makes them think they must be an exception.

So we need to worry about the placebo effect in business – that perception will again become reality. If everyone is exposed to a remorseless diet of gloom – whether or not it is true – it will change their behaviour. Even if their own business is doing well they will lose confidence, and gradually fall victim to the downturn themselves.

Inspirational leadership has a role to play here. Cameron and Osborne lose no opportunity to tell us how brave they are in seeking to impose austerity on everyone. They would do a lot more good if they started dispensing hope – talking about the glass being half full rather than half empty and giving us a vision of how and when things are likely to improve. If they don't believe, how can they expect anyone else to?

a.hilton@independent.co.uk

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Content Writer - Global Financial Services

£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Web Developer - PHP

£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Field Sales Consultant - Financial Services - OTE £65,000

£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Loan Underwriter

£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory
Ashes 2015: Alastair Cook not the only one to be caught in The Oval mindwarp

Cook not the only one to be caught in The Oval mindwarp

Aussie skipper Michael Clarke was lured into believing that what we witnessed at Edgbaston and Trent Bridge would continue in London, says Kevin Garside
Can Rafael Benitez get the best out of Gareth Bale at Real Madrid?

Can Benitez get the best out of Bale?

Back at the club he watched as a boy, the pressure is on Benitez to find a winning blend from Real's multiple talents. As La Liga begins, Pete Jenson asks if it will be enough to stop Barcelona
Athletics World Championships 2015: Beijing witnesses new stage in the Jessica Ennis-Hill and Katarina Johnson-Thompson heptathlon rivalry

Beijing witnesses new stage in the Jess and Kat rivalry

The last time the two British heptathletes competed, Ennis-Hill was on the way to Olympic gold and Johnson-Thompson was just a promising teenager. But a lot has happened in the following three years
Jeremy Corbyn: Joining a shrewd operator desperate for power as he visits the North East

Jeremy Corbyn interview: A shrewd operator desperate for power

His radical anti-austerity agenda has caught the imagination of the left and politically disaffected and set a staid Labour leadership election alight
Isis executes Palmyra antiquities chief: Defender of ancient city's past was killed for protecting its future

Isis executes Palmyra antiquities chief

Robert Fisk on the defender of the ancient city's past who was killed for protecting its future