Transcription
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Just to explain, first of all, innovation isn't a spelling mistake. It's the internal psychological half-sister of innovation. If you think about it, there are two ways you can create economic value. You can find out what people want and you can work out a really clever way to supply it, or you can work out what you can supply and find a really clever way to make people want it. And in economic terms, they're indistinguishable. They're equally valuable. We tend to spend 90% of our effort looking at the first. I would argue that the biggest future economic gains are actually going to come from the second.
I get even further and say that most, I mean, innovation without behavior change isn't really innovation at all. It's self-indulgence. It's a very good quote by Stewart Butterfield of Slack, saying that. And I would argue that the biggest determinant of what succeeds and what fails is now psychological, not technological. And it's a vitally important thing for you to understand that whether something is good or bad does not depend exclusively on what it is. It also depends on what you expect and how you look at it.
Now, the original meaning of advertising is simply to direct attention towards something. And what we pay attention to, this is Daniel Kahneman's favorite insight from his Nobel Prize-winning 40-year career in psychology, is that what we pay attention to affects what we think is important. And by changing what people pay attention to, you change what people think is important. And by changing what's important, you can make something that's bad good, or good bad.
Well, my favorite examples of advertising, which I cite every time, is, you know, that business where you're about a mile, you just landed on a plane, and you're about a mile from the terminal, and you're expecting a nice little air bridge to walk off the plane with some semblance of dignity. And then suddenly the engine starts spooling down, and everybody on the plane, as of one, goes, "Oh, it's gonna be a bus." And we've always had that, and we've always had that kind of slight feeling of resentment and feeling shortchanged because we don't even get a proper air bridge. I'd always have that feeling until one day, a pilot on an EasyJet flight into Gatwick, the engines are winding down, we're all there getting our, "It's gonna be a bus." Instead, he performs this brilliant mind trick. He said, "I've got some bad news and some good news. The bad news is we won't be able to get you an air bridge because there's a plane blocking our gate. But the good news is the bus will take you all the way to passport control, so you won't have far to walk with your bags." And suddenly we all thought, "Hold on, that's always true, isn't it? It's just that nobody told us before. We'd never realized there was an upside." I actually had quite a heavy bag. I was quite grateful. Those of us next time we're on a plane, engines wind down, you're miles away, say very loudly to your companion, "Actually, I'm glad there's a bus because it'll take us all the way to passport control." You've just synthesized happiness and appreciation in everybody within earshot. So, if I'm changing what people pay attention to, you change what's important. And by changing what's important, you can make something bad good, and something good bad.
I mean, this trick is being played on you right at the moment, by the way. You've had some dry ice in the room. You've got probably the most impressive screen backdrop I've ever presented in front of. You've got magnificent lighting. You've got some cubes, fantastic sofas. Just look above your head. You're actually in a shed, okay? Right, look at the roof. You haven't noticed that, have you? You're in a bloody shed, okay? Without all this, you'll be sitting there going, "Oh my god, it's like being in prison." And so innovation is simply the knack of going, "Actually, what's valuable isn't a product of what something is. It's also a product of how we look at it."
So, I can just move on to the next slide. This is where I look for the best innovation, complexity economics, not standard economics, not conventional logic. You won't find innovation in conventional logic because if there were a logical solution to a problem, someone would already have found it. Okay? In every really great idea, there's always an aspect of it that doesn't make sense. One of the problems of the human brain is we've been conditioned. The power of human reason has evolved not to help us make decisions. It's evolved to help us defend decisions, justify decisions, and argue a case. We don't have the mind of a scientist. We've evolved the mind of, it's not Stephen Hawking in your prefrontal cortex, it's George Carlin QC. We've evolved a faculty of reason to argue, not to reason. And what that means, which is good news for any cynics among you, is that just because something's reasonable doesn't mean it's right. And just because something's unreasonable doesn't mean it's actually wrong. You're wrong to absolutely judge decisions on how convincing a reason for that decision may be. No, it's incredibly hard in a business culture which values reason above everybody, everything else, to get that across. But in a world of complete uncertainty, we have to get used to this.
I also look for evolutionary psychology and I look for what technology makes possible. And I describe what we do is the science of doing what economists are wrong about. It's essentially, there are loads and loads, this isn't the Middle Ages, okay? There's no shortage of people deploying reason and logic, conventional reason and logic. They're probably people from McKinsey crawling all over your company doing that at this very moment. What's actually become really valuable is actually non-reason and non-logic, the kind of alchemy which comes from things that make second-order sense, not first-order sense. And I hope to give you a few examples of this coming up.
What economics and what conventional logical thought is, is a Tube map. And we crave the illusion of certainty and fact. About 50% of business activity, I think, is just creating the false illusion of certainty. A large amount of big data, I would argue, is actually misdirected efforts to create a kind of certainty which, in a real world, can't exist. If you want advice on this, watch Amy Chen's TEDx talk where she describes how big data actually destroyed Nokia. They had lots and lots of data points which said that the world's population would only spend so much on a mobile phone. Amy Chen was an anthropologist in a very poor part of China, and she said, "When the phone is a smartphone, all those rules go out of the window." And they said, "Yes, but you've only got a hundred data points. We've got thousands." You'll remember that all big data comes from the same place. It comes from the past. And the volume of data is not really a guide to its importance or even its reliability. If you think about it, on the Titanic, they had loads and loads of data points saying where icebergs were likely to be found. And "iceberg dead ahead" is only one data point. It just happens to be a really important one. And so trying to create this illusion of certainty, as if volume of information correlates with quality of information, seems to me really dodgy.
What the Tube map does is it makes the Tube navigable. It does so at a huge price. I could talk, I give loads and loads of arguments. The most common tourist journey made on the Tube is between Leicester Square and Covent Garden, which is a distance where you can pretty much throw a tennis ball. This series of course, the Tube doesn't faithfully represent distance because Tube stations are much more densely clustered in central London than the outskirts. The other thing to it, the Tube map doesn't pay virtually no attention at all in South London because for historical reasons, South London runs on rail, North London runs on the Tube. If you want to buy a property, Mark, bargain, just go move to Herne Hill, okay? So people moved from Fulham to Herne Hill. These are the two maps. They always thought that Fulham was central. It's not as 20 Bristol as you asked me, okay? And they thought that Herne Hill, which wasn't on the Tube map, and because it was caught, it had "hill" in the name, they were moving to the outer darkness. They discovered on their first day at work that their commute was 50% shorter than it had been from Fulham. But the Tube map creates this fundamental distortion. And economics is exactly the same. It's very, very good at certain things, but there are South London problems, as I call them, where economics is absolutely hopeless and misleading guide to everything. And we've got to learn to distinguish between when economics is actually useful and when it's dangerous.
And this is exactly my point. There are situations where you want to be illogical and predictable. Air traffic control is one of them. There are other situations where being logical is fatal. Military strategy, marketing strategy. If you're logical as a marketer, you end up in the same place as everybody else, which is a crowded field. If you're logical as a military strategist, you end up being predictable, which means you're dead. If you got procurement to organize the D-Day landings, they would have insisted on crossing between Dover and Calais to minimize fuel costs. Okay? That's exactly where everybody was expecting people to land. And so one of the things you have to, which is why being a marketer is difficult, is because you're in an air traffic control environment where everything is trying to be predictable, logical, best practice, standardized, routine. And you've got to manifest a military strategy mentality, which is, we've got to try to be different, and it may cost us to do so. And of course, the greatest joke of all of a military man in an air traffic control environment occurs in 15 seconds of airplanes where Kramer. Well, you all remember there's a plane for the Millennials among you. There's a plane coming in to land, and in extremely difficult conditions, with inexperienced ex-military pilots, and they're wondering what to do at the airport to cope with what's going to be a kind of emergency landing. And this is the 15 seconds you get. It's just what we're expecting. That's essentially the marketing man in modern business. You're surrounded with air traffic control mentality of best practice, standardization, optimization, incremental improvements. And you've got to have this perverse mentality that goes, "No, we're gonna do something really strange. We're gonna feature a meerkat in our advertising." That's why it's such a lonely life. And remember, as I said, logic is overused simply because if the answer were logical, someone would already have found it.
Imagine for a second, okay? You're working in a soft drinks company and you want to compete with Coke. And for 150 years, Coke has been the most popular cold non-alcoholic drink in the world, apart from water. And you sit down. Now, remember, in any business setting, it's much easier to get fired for being illogical than it is for being unimaginative. I met Sir John Hegarty the other day, and I said, "The funny thing is, if you turned up at the Audi factory and hadn't bothered to ask, 'What does 'Vorsprung durch Technik' mean?' no one would have given you a bollocky, right? If you're illogical, your job's on the line." So what you do? You're in the soft drinks company, you want to compete with Coke. Can you say, "What we need to do is produce a drink that tastes nicer than Coke, costs less than Coke, and comes in a really big can, so people get great value for money." And nobody disagrees with you. And you put it out to research, and everybody agrees that's a brilliant idea, right? In fact, even if you fail, you won't get into any trouble. The only problem is, the most successful attempt to compete with Coca-Cola in 150 years is this: it comes in a tiny can, costs a fortune, and it tastes disgusting.
PG Tips were sitting there as brand leader in the tea bags category in the UK. And every now and then, someone would try and innovate, and they ignored it because they said, "We've got a pretty safe market dominance here." And then someone came along with an idea at which they thought was laughable. In fact, it was so laughable, they never really even bothered to consider it as a threat. They lost their number one position. What was the idea? Making teabags round. Okay? Literally. Bear in mind, okay? The great thing about being 53 and having worked in advertising for 30 years is eventually you reach this strange, zen-like point where you've just stopped trying to make things make sense. And it takes a huge amount of effort and an over-educated, over-logical world to cope with what I call, I mean, this is actually a philosophical question about radical uncertainty that you never completely know.
And so, just to move on. I mean, someone comes to me with a mail pack two years ago, they go, "This is three times as successful as any other mail pack we've done, even though the offer is the same, the proposition is the same, and basically the target audience is the same. Why is this?" And they've been all around the agency asking. I said, "I really hate to tell you this, okay? It's because there are rabbits on the envelope." About the only thing we've learned absolutely robustly in advertising in 40 years is ads with animals in tend to work better than ads without animals in. Now, actually, evolutionary psychology can explain Red Bull. Evolutionary psychology can explain why we really pay attention to rabbits. We've evolved to notice things with faces, particularly cute things, or indeed things you might eat. Red Bull, if you want people to believe something has medicinal or psychotropic powers, it has to taste weird. Medicine has to taste a bit strange for us to believe it's effective. That's just how we're wired.
And so what I love to look at is I love to look at not only those freak things like round teabags and Red Bull, which are the freak successes. My view is basically working in consumer capitalism is like the Galapagos Islands for understanding human behavior. You know, all the weird anomalies are concentrated there in one place. Most toilet paper, anybody? Well, anybody had mitts using it? I will. But anyone else? So they're about four people in the room who actually practice rectal hygiene. The rest of you, the rest of you are frankly disgusting. The fact that people don't use moist toilet paper is really, really weird. Because let's face it, if you went potting plants in the garden and you came in with your hands covered in mud, you wouldn't go, "Oh, I've got mud on my hands. Let me rub them vigorously with some dry paper." You wouldn't do that with you. You'd use some sodding water, right? And yet, this fails my theory, and I hope they've listened to me at Kimberly-Clark, is the reason it fails is just facings. You go into a shop, there is literally half an acre of dry toilet paper on sale. And then there are two small things on the top shelf of moist. And so unconsciously, the human brain goes, "So the mainstream, a swipe is dry toilet paper. And there's that thing for weirdos and people with a medical condition up on the top shelf." How do you change this? You do what Walkers did. You produce loads and loads of variants to dominate the shelf space. And it looks like this is what they've done. There are now tons and tons, I was going to say flavors, that's the wrong word, you get my drift. Again, similarly, I'm fascinated by things that fail.
Videoconferencing. My hunch is it was sold too rationally. That instead of being sold as the rich man's British Telecom, it was sold as the poor man's British Airways. It's what you're allowed to do when you aren't allowed to get on a plane. And it became a low-status form of communication. There's a whole amount of weird Darwinian psychology in business communication. Quite a lot of it involves costly signaling, that you make a lot of trouble to get to a meeting to signal the importance of your client. You know, "So important to you, Mr. Client, I was prepared to get up at 4 o'clock in the morning and travel to Heathrow." So in business, things that are actually easy encounter a weird kind of resistance. We noticed this with telephone conference calls that even senior people, in fact, especially senior people, it's a badge of honor to be on telephone conference calls. You dial in late. You know, you dial in from some new literacy, inappropriate place like the local sawmills or a rocket testing ground, okay? And you do that almost to say, "Look at the sacrifice I've made to attend this meeting." You could have just gone to a quiet place and dialed in five minutes early, but that would make it look easy.
Now, I think there is a technology. I just bought the first one in the UK. I had one imported in the US. This is an interesting video conferencing technology. It's called the Meeting Owl from Owl Labs, funded by Mark Rubin, who's the guy who sort of created Android. What's interesting about is it sits in the middle of the table. It has a 360-degree camera which automatically zooms in on whoever's talking. But if two or three people are talking, like an early episode of 24, it creates a split screen and shows everybody at the same time. Why is that important? Because for a million years, bit of evolutionary psychology, and for a million years, every human meeting has involved sitting around in a circle around something. And it might be a fire, it might be a boardroom table. But the old video conferencing mode where you all sit as if you're on a bus, facing the same way, that just feels weird. So there's Meeting Owl, Amazon, $799 quid. I don't get any commission. I just think it's great, okay? This thing might be a game-changer in terms of remote working. Remote working, by the way, is fantastic. The other from inform is it's easy. I once realized I could do my job from Barbados. But then I realized that people will be so resentful of me living in Barbados, they'd never give me any work. And so I catch this brilliant plan to invent an ill relative who needs to be looked after in Leeds, okay? And then I'd buy a Leeds phone number which diverted to Barbados, okay? And I'd just have to hope the monkeys would be quiet when anybody phoned me up. So this is the sort of weird, oblique, non-logical, non-rational stuff you have to understand when you innovate.
As well as innovating, we're wrong about things. Just because something looks logical doesn't mean it's true. You've got to be really careful about this. I was doing, I didn't have time to give a whole talk about agardisity because it'll do your heads in anyway. It does my head in. One times seven doesn't equal seven times one. Not in marketing. Might in maths, it might in physics, in economics. In marketing, genuinely, it often doesn't. I've argued against High Speed 2. I've said High Speed 1's a great idea because one person saves an hour 200 times a year. If you live in Canterbury, commute to London, one person saves an hour 200 times a year. No one commutes from Manchester to London 200 times a year. So what High Speed 2 does is it saves 200 people 1 hour once a year. Now, there are extreme examples, but I think you'll agree they're not the same. It's not worth spending 660 billion quid to save lots and lots of people 1 hour very infrequently. By the way, if you want another example of this, Amazon Prime. Seven people don't mind paying three pounds for delivery once. One person doesn't mind paying three pounds for delivery seven times. That's why Amazon Prime has to exist. But most mathematical models that attempt to capture the market in maths don't distinguish between seven times one and one times seven. I've had a long argument with airlines about this. I've said, "One businessman paying 26 quid to check in one bag is probably fine. A father of five paying 104 quid to check in four bags is not the same thing at all." And yet, most of our models of pricing don't even take account of really simple things like this. But when one online retailer introduced their own version of Amazon Prime, the average number of sales annually went from one to six. Okay? That's how big a deal this stuff makes. And maths hides it. It hides as much as it reveals. Because when you multiply, okay, one times seven and seven times one, both come out of seven. But they're not the same thing. Just because something's expressed in a mathematical form doesn't mean it's particularly useful information. You may have destroyed information in the very process of calculating things.
So, I'll go very quickly here. Is a David Rock model? He's a New Zealand-based in New York. And here are five things which humans care deeply about, which economists don't understand at all: status, called staff, status, certainty, autonomy, relatedness, fairness. Just to prove how innate this is. In fact, it isn't just humans that care about fairness. I'll very quickly show you this example from some of our, some of my and your close relatives. This is what happens when you pay capuchin monkeys unequally. The volume bit louder. Ten years ago, I first became very well-known, and we did that originally with capuchin monkeys. And I'm going to show you the first experiment that we did. It has now been done with dogs and with birds and with chimpanzees. This buttresses our applause. And we started out with capuchin monkeys. So what we did is we put two capuchin monkeys side-by-side. Again, these animals, they live in a group, they know each other. We take them out of the group, put them in a test chamber. And there's a very simple task that they need to do. And if you give both of them cucumber for the task, the two monkeys side-by-side, they're perfectly willing to do this 25 times in a row. So cucumber, even though it's really only water in my opinion, but cucumber is perfectly fine for them. Now, if you give the partner grapes, the food preferences of my capuchin monkeys correspond exactly with the prices in the supermarket. And so if you give them grapes, there's a far better food. Then you create inequity between them. So that's the experiment we did recently. We videotaped it with new monkeys. We've never done the task. Thinking that maybe they would have a stronger reaction, and that turned out to be right. The one on the left is a monkey who gets cucumber. The one on the right is the one who gets grapes. The one who gets cucumber, note that the first piece of cucumber is perfectly fine. The first piece, she eats. Then sees the other one getting grape. And you will see what happens. So she gives a rock to us. That's the task. And we give her a piece of cucumber, and she eats it. The other one needs to give a rock to us, and that's what she does, and she gets a grape. And each of the other one sees that she gives a rock to us now gets again cucumber. [Laughter] She tests her rock now against the wall. She needs to give it to us, and she gets cucumber again. So this is basically the Wall Street protest that you see here.
So, I'll be very quick now because I'm running out of time and I must be fast. But status, certainty, autonomy, relatedness, fairness. Innovation often depends on boosting one of those. If you think about it, videoconferencing was the low-status version of British Airways. They put you in a basement room, okay, with a concrete wall, with no windows, okay? If you'd made it really, really expensive and insisted the equipment could only be installed in the chief executive's office, people would have been gagging to videoconference. That's how they marketed Post-it notes. I haven't got time to tell you the full story, unfortunately.
If you look at really interesting ideas, Uber is a brilliant masterpiece of generating certainty. Before you book a cab, it manages your expectation by telling you how long you might expect to wait. So you don't even commit to booking before you have some expectation of whether it's a five-minute wait or a 20-minute wait. Then, when the cab is approaching, okay, best thing London Underground did to improve passenger satisfaction wasn't faster, more frequent trains. It was dot matrix displays on the platform. We'd rather wait nine minutes for a train knowing it's coming in nine minutes than wait five minutes not knowing. And there are tons and tons of ways you can do this. I did an innovation with this with a home visit service. So I said, "Don't give them one-hour deliveries. Give them a morning delivery, but say you'll text an hour before you arrive." And you'll achieve 90% of the emotional gains at 1% of the cost. And in this case, you can watch the car approaching. So instead of going, "Oh my god, is that it around the corner? Maybe he's already there." You can sit in the pub enjoying your pint and go, "Oh, look, he's stuck at those traffic lights." It also boosts status. Does anybody else do this where you time your arrival on the pavement to coincide with the car drawing up? Because it makes you feel like Keyser Söze at the end of The Usual Suspects, okay? It makes you feel like Louis XIV. Whereas standing around in the rain going, "Maybe that's my car over there," that's a low-status activity. The relationship is also boosted by the fact that you know paper changes hands, so it feels like a service, not a transaction. When you pay contactless, by the way, things feel about 15% cheaper than when you pay conventionally. So don't drop your prices, just accept different modes of payment. Heavens above, right?
The other thing you've got to realize here, who isn't you X? Not enough people. Only one person. What, what the hell are the rest of you doing? Right? The environment affects our behavior. Don't assume when you look at consumer behavior online that it's a product of preference. It can also be a product of the way you design choice. Restaurants want you to drink wine because you can markup wine like a bastard, right? You can't charge 30 quid for a glass of Johnnie Walker Red because people know what it costs in the shops. But you can buy a, you know, a case of five euro Chateau de Mur, you know, 2015, knock it up to 50 euros, and everything is marvelous, into black currants, that unmistakable Syrah, etc., right? How do the restaurants get you to drink wine? You arrive there, already wine glasses on the table. They give you a choice which is not called the drinks list, it's called the wine list. The choice architecture of the wine list, it's a bit like toilet paper. It's basically 95% wine with three pages of a ridiculous variety of wine, and then like a small, crappy page at the back for the perverts and deviants who actually want to drink beer or spirits. And then the final bit of genius, they only hand out one wine list. Now, there's only one alcoholic drink you can share, right? Plot some tequila slammers, okay? I'm very skeptical about one. I think wine is basically just alcoholics trying to pretend to be connoisseurs because, you know, if you know, if you go out to lunch, you have a couple of bottles of wine, everybody thinks that's fine. If you go out to lunch and have tequila slammers all afternoon, you get reported to HR, okay? Now, the final thing is they hand out this one wine list. So the guy with the wine list has to turn to the table and go, "Red or white?" At which point, it's game over for the gin drinkers. And it's really, really easy to think that what people are doing online is a guide to what they want to be doing, rather than the product of your choice architecture and choice design.
I made this discovery in pizza recently. I said, "Every single person two orders of pizzas are practically demands it in 30 minutes or less." So is that because everybody is that impatient, or is it because actually you're made to feel like a weirdo if you don't? Every time you phone up a pizza company, they assume you want it immediately. When you go to an app, it says "ASAP" is the default. Go to the webpage, 30 minutes. In the father's test two things, because if you can create a norm around 45 minutes or an hour, you can get more than one pizza on one bike, which saves you a fortune. I'm talking to a business audience here, so I say, "saves you a fortune." If I was talking to an academic audience, I'd say, "helps cut carbon emissions," okay? But it's the same thing, right? Now, they tried it. They tried it all so with time of day rather than duration of wait. They found you can make the default one hour without losing any sales. The number of people who are happy taking a longer wait meant you could actually get in two or three deliveries on one bike rather than one time, just-in-time delivery. And don't ask me to explain this. Customer satisfaction went up 50%, okay? But test weird things. Test unintuitive things because your competitors won't. A huge amount of choice architecture says much more about the person who designs the UX than it says about the actual audience. If you know his Google Navigation assumes that you're American. If you're American, you either have a car. The only reason you're using public transport in the mind of an American is because you don't have a car. And so you ask to make some journey on Google Navigation, and if you ask for a public transport option to get from Kent into central London, if you ask about the train, it'll assume you're using the bus to get to the train station. When in fact, what everybody does, you drive to a train station and you catch a train. But Google does not allow you to search for a mixed car-train journey because it's designed by septic tanks, okay? And they assume, well, the only reason you'd possibly use a bus is because you're like, really poor or something, okay?
Um, travel is destroying itself because it makes it too easy to choose on price and too difficult to choose on anything else. Because at the time you're making the choice, the price factor is too salient. You need to have yield management that shows other things like free Wi-Fi on the flight. You need to do clever offers like "Kids go half-price" so you reduce the price for leisure travelers but not for business travelers. But instead, it's dominated by economic thinking. Rail travel is dominated by the idea that the only human motivation is to get there as quickly as possible. I had to get to Bath on the 31st of August. And what I found is weirdly, there are trains from Waterloo that go direct to Bath that cost about a quarter first class that it cost second class to go from Paddington. You couldn't find them because the algorithm assumed that you really cared about 20 minutes on your journey. So I must finish very quickly here, okay? Test weird things. Test the opposite of what you think it's logical. If something isn't selling, try putting the price up. Next thing, watch the valley voice. And this is my last point, so I can reassure you on this. The valley voice. Most people who work in tech are highly introverted, and they see their task as the removal of human intervention in anything where it's found, and its replacement by algorithms. And they do this naughty thing where they go, "We'll take a human job. We'll define its function very narrowly, and we'll replace it with an automated alternative." So hotel doorman, this is a sort of specious example. His job is to open the door. We'll replace him with infrared or automatic door opener. Job done. Forgetting the fact that actually the role of the hotel doorman is only peripherally. It's about recognition, it's about status, it's about security, it's about opening taxi doors, it's about doing loads and loads of things that aren't just opening the door. And there's a huge tendency of tech to take one part of a complex system, optimize it, reimpose the optimized alternative on the whole system, and assume you've improved the system as a whole.
Now, in advertising, this is particularly potent. There are two kinds of messaging. There's messaging, and then there's signaling. Messaging, when you have complete trust, is how do I get that information from one place to another place as cheaply and as well-targetedly as possible? That's all that matters in messaging. In signaling, where you don't necessarily trust the sender, there's a whole load of other stuff going on. Opening the door, as it were, okay? So in signaling, the cost of a message is evidence of your sincerity and the faith in your product, because it wouldn't pay you to advertise a product upfront expensively unless you believed it was going to be repeatedly popular. Now, a peacock's tail is an example of signaling. The female peahen goes, "The fact that he can carry that thing around in his back entirely for decorative purposes, at great expense to him, and yet still function as a bird, means he's got some pretty good genes." A lot of consumer luxury goods expenditure is proof that you can do so. You can afford to do something impractical. It's actually proof that you have resources to spare. Now, very, very quickly, if we just click on the word trust. Indiscriminate advertising is more trustworthy than targeted advertising. Here's a model done by my friend Don Marty. The green lines are honest signals. The red lines are lying signals. Dotted amongst the customers and Norman forces, people who actually will punish the messenger if they're lied to. If you think about it, if you advertise in a magazine, you may not know much about, for example, practical woodworking. And so advertisers could lie to you very successfully because you don't know enough to know. But what you do know is the people reading practical woodworking includes some of the most expert people in that field. And if you lie to them, they'll call you out. What you see and Barrowman, this model runs fresh every time. The honest signalers tend to do long-range communication, non-targeted. The dishonest signalers, to avoid Norman forces, tend to do highly targeted advertising. And that happens every time you run that model. Tom Murphy at Mozilla is the person who's contributed this model to me. We haven't yet worked out how to do high-trust communication in a highly targeted, inexpensive medium. The very fact that it's inexpensive makes it less trustworthy. The very fact that it's targeted makes it less trustworthy. And I can end here very quickly. If you go into the next slide, when we get married, we make our vows in front of everybody we know simultaneously. We don't go door to door making our vows. We do it in front of a huge crowd where one person could call us out. Secondly, we do something really expensive upfront as proof of long-term commitment. You can only afford to advertise if you believe you have repeat customers, because it won't pay if you only sell to everybody once. As a result, consumers instinctively infer that expensive advertising is therefore more of a mark of seller quality, seller confidence, and seller quality than inexpensive advertising is. Yet, by taking that doorman voice, the valley voice, everybody is busy trying to make advertising more targeted and more efficient. And the price they're paying is they're making it less trustworthy and creating a haven for dishonest advertisers. So that's basically me, except you say one more thing, and I'm driving you. That's right. It is a convenient lie, spread with the connivance of media agencies and Facebook and Google, that modern advertising is all about the targeting. Modern advertising is still mostly about the creative. The biggest effects you'll have will be with a big creative idea, presenting something in a different way, saying, "The bus will take you all the way to passport control." Those are the things which are game-changers. After a time, the quest for targeting gains is incrementalism. And it's a convenient lie which I think involves the mutually beneficial connivance of both media agencies and digital media owners to pretend that advertising is no longer a creative game. It's all about nerdish algorithms. And it's no more true now than it was 50 years ago. And yet, the reason these algorithms are so important is because many people, if you want to keep your job, improving something by 3% every year with the help of some bots where necessary, will keep your job much longer than doing something which has bigger gains but with a degree of uncertainty attached.
And telling the dolphin was a wonderful experiment where they trained a dolphin to recover rubbish in the bottom of the pool. And every time she brought up a bit of rubbish from the pool, she was given some fish. And after about 10 or 15 goes at this, she discovered a huge bit of rubbish. What'd she do? She hid the huge bit of rubbish under a rock at the bottom of the pool. And whenever she wanted some fish, she bit off a little bit of the rubbish and took it out back in exchange for some fish. That's what people are doing essentially in much digital advertising. They're deliberately practicing small-scale, slow incrementalism, partly because, of course, it's what gets you a nice clap on your next earnings call. They're throwing away the far larger gains that are lying in wait from psychology and from creative ideas, and they're playing an incrementalist game like telling the dolphin because it keeps their jobs and generally makes them look impressive. It's pissing away enormous amounts of economic value. And this is, and should, by the way, most online ads are not written by a copywriter. The media agencies get some supplier to write them as a favor. This is the bit that's why partly people hate online advertising so much, because nobody who really cares about it has actually produced it. So that's me. I think I need to end out because you're nuts. Except with one final point. This choice architecture stuff is much bigger than we think. If you want diversity in your company, change the choice architecture of recruitment. Don't set quotas, don't set rules. Hire people in groups. The human brain instinctively goes for variety. When you choose people in groups, it goes for conformity. When you choose people one at a time. The insights from this field can be taken elsewhere. There are always fantastic opportunities for funding something out in this field which can be applied somewhere parallel where we've never even noticed it. Thank you very much indeed. Thank you.
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