If it were as easy to program our emotions as it is to program our milk wash line, marketing would be as simple as setting a timer for great results. Unfortunately, it’s not. Your emotions can run rampant when markets are volatile and you’re forced to make quick decisions to sell production or purchase inputs. The results can be painful. OK, so you can’t flip a switch to control how you feel and react to situations. But you can take control of emotions, and that’s a big deal for anyone trying to manage commodity prices.

In the book Switch: How to change things when change is hard , authors Dan and Chip Heath explore how the two sides of our brain, the rational and emotional, compete for control. The book has some valuable insights you can apply to your marketing.

Good marketers have to think rationally, yet it’s all too easy to execute emotionally. Borrowing from the authors’ analyses of how our brains work, it’s possible to change the habits that make us act emotionally and result in stress, frustration and poor results. The secret, in part, is learning how to get our rational and emotional sides to work together.

To help explain the role each side of the brain plays in the choices we make, the Heaths refer to psychologist Jonathan Haidt, who described our emotional side as an “elephant” and our rational side as its “rider.”

As you might imagine, the rider holds the reins and thinks he has control. The elephant, though, can be impulsive and is very powerful. When the two sides don’t agree, the elephant throws its weight around and drives decisions.

If you’ve ever made a marketing decision in the heat of the moment that you later regretted, you know what they’re talking about.

To further illustrate this point, let’s look at the hypothetical Wingate Family Partnership. This dairy milks 1,500 cows and ships the majority of its milk to a butter plant in northern Wisconsin. The owners tried marketing, using tools like futures and options. For a while, things were fine. When the market got rolling and milk prices began to increase, farm management jumped out of marketing. Their emotional side was asking, “Who needs marketing when prices are rising?”

As milk prices began to decline and feed prices remained high, the dairy struggled to make a profit. Management quickly became stressed. Their elephant jumped in and yelled, “Do something!” So the owners got back into marketing, only to get completely frustrated by associated costs and a lack of desired results.

Marketing ‘didn’t work’ so now what?
Wingate Farm experienced a classic situation. It tried marketing, went through an emotionally and financially painful time and concluded that either marketing didn’t make a difference or that the dairy was better off doing nothing.

Wingate’s actions predetermined its conclusion. Producers who jump in and out of marketing or market only when milk is sliding and feed is high are setting themselves up for failure. Successful marketers understand that marketing is a long-term endeavor that requires consistent application over time.

In order to position yourself to achieve a high average price for milk or protect against high input costs, it’s crucial to view marketing as an ongoing management function. It’s like maintaining herd health – you don’t do it some of the time.

Time to change, but change is hard
I could talk all day to the Wingate owners about the advantages of being a consistent, strategic and disciplined marketer. I could show them dairy after dairy that follows this approach successfully year after year. But, as the authors of Switch might say, my rational thoughts aren’t enough. The Wingate owners have to want to change.

When you look at your own marketing, do you see it as a management function requiring ongoing attention?

Your rational mind may see the logic in consistent commodity price management. But your emotional side may want to keep doing things the way they’ve always been done. It’s comfortable, right?

If you want to change your approach to marketing, you first have to get past your rider and elephant competing for control. The authors recommend that you help the elephant to get on board by appealing to it with positive emotion.

The Wingate management team chose to focus on the negative, which is human nature. To effect change, think back to small, positive emotions. The authors refer to these past moments of positive emotion as “bright spots.”

Looking at your own marketing, can you think of a bright spot? Let’s say you hedged feed to protect against a rise in price and the price dropped. Are you angry about the hedge or happy with the price drop? Blaming the hedge might be misplaced emotion.

Focus on a bright spot. Analyze what went right. Find out what worked and determine how you can do more of the same. No bright spots? Analyze the efforts of a fellow producer who’s been successful at managing price. The key to your rider and elephant thinking as one is to have a clear, concise bright spot and take small steps in a positive direction.

Isn’t it interesting that emotion, which gets the blame for bad or irrational behavior, is so important to positive behavior? When you stop to think about it, rational thinking alone is rarely enough to create change. Statistics don’t always compel people to take better care of their health, drive with seatbelts or even change the way they manage commodity prices. Emotion, the Switch authors say, is the catalyst for change.

Put another way, your rider knows that weather is unpredictable and commodity prices are volatile. It knows price risks can turn into financial hardship. Your rider might even conclude that consistent, strategic and disciplined marketing is the best approach to managing uncertainty and risk. But when it comes to taking action to protect against risk, your elephant has to want to do it. PD

Futures trading is not for everyone. The risk of loss in trading is substantial. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.

Mark Ludtke
Dairy Business Consultant
Stewart-Peterson Inc.