Alchemy in action: Tips for rejuvenating a brand - Rory Sutherland

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Here's the thing, everyone. I never really intended this Tik Tok fame. There was a young guy who was an aspiring film student who during lockdown, uh, started just taking clips from my podcasts, my various talks and tiptoising them. Which largely means you make them portraits and you put captions on because then the kids can watch them at school with the volume turned down.

And I didn't know this was happening until, first of all, my own kid said, "Dad, you're a fat 59-year-old man. What the hell are you doing on Tik Toks?" Shortly afterwards, I was then mobbed by school kids, which I, I wasn't really expecting.

Um, the interesting thing about the nature of fame, by the way, is twofold. One of which is its compounding. Okay, I think the way to think about brand investment, and I think this short-term, bottom-of-the-funnel measurement of the value of brand investment is fundamentally specious. I think the, the burden of proof is far too high. I think the demands for precise attribution are completely unrealistic. We should never have gone along with this. Okay. The point is that marketing is probabilistic. It's not deterministic. Okay. And all entrepreneurs understand this.

And the interesting thing is, so first of all, I think investment in fame is a bit like your pension. For the first four years you had a pension, you go, "This is a bit of a waste of time. I'm putting all this money in every month and nothing seems to be happening." And then by the time you get to about 55, you go, "Shit, where did all this money come from?" And that's what the miracle of compound interest. And I think that effectively fame works the same way.

The second thing I've noticed about accidentally becoming famous is it doesn't benefit you in the ways you intended. By which I mean, it doesn't really help you do the things you intended to do. The real value of fame is that you get exposed to opportunities which you never even envisioned. Okay. And I think that's an important point about fame. It isn't just about achieving the ends that you've defined in advance. It's that suddenly, having written this book, I get approached by people with business problems whose businesses I was completely unaware of. Okay.

At a very basic level, in advertising, by the way, you can't buy a product if you don't know it exists. Okay. Very simple. You know, absolutely path-dependent question we shouldn't ignore that. But I think the point about fame, Nim Taleb, who I know quite well, would say that the value of fame is that it increases your surface area exposure to positive upside optionality. In other words, it's not that you achieve more things, it's that you suddenly end up with more things you can choose from. And it's certainly, by the way, I also don't think it's possible to measure the value of fame. I don't think I think these attempts to measure brand value in its entirety are nonsensical because they're designed for a kind of reductionist financial model. Okay.

This question, by the way, about is business deterministic or is it probabilistic is really vital. Some of you, and this doesn't always happen, would have noticed the death knell in a business when the CFO becomes the CEO. Okay. It's not, don't get me wrong, it's not an absolute condemnation to death, but there's a bit of a death rattle to it because you have someone who has a massively deterministic mindset, who wants everything to be predictable and within measurable bounds, suddenly going to a job which requires the opposite, which effectively requires a probabilistic mindset. Okay.

And so I think this point is really important. If you're famous, okay, as a brand, well, obviously it will affect how people buy from you. But it will also affect things that you can't really measure the value of. The number of people who apply to work for you, how long they stay, how much you have to pay them. When your chief executive rings someone up, do they return the call? Okay? You know, if you're the chief executive of a famous and well-known brand, people call you back. What's the value of that? At some level, it's impossible to attribute this. And therefore, we should stop trying to go super granular on all this stuff and demanding an absurd burden of proof for every single piece of activity and simply ask the question, if you do more of this stuff in the aggregate, do you end up better off than if you do less of it? Without getting absolutely anally retentive about every precise thing that you do.

So, the way I describe marketing, I've been in it for 35 years. Let's be honest, it's a casino, okay? Uh, but it's a casino with pretty good odds, okay? It's an unusual casino in that, by and large, when you go into that casino, unlike a real casino, you tend to come out richer than you were when you went in. And my argument is that's good enough. Okay. What we've done is a lot of people from tech have wanted to turn this into a thing. Okay. It goes back to in physics, they've been making this mistake for years. Laplace's demon. The idea that if you know absolutely everything about every atom, the world becomes completely predictable. Physics abandoned this about 80, 100 years ago as basically impossible. Okay. Well, you'll see a few more examples of this coming up.

But here's one of the reasons why people pretend business is deterministic rather than probabilistic. And it's because the annoying thing about business, particularly nowadays, by the way, is there anybody in the room who can make a decision at work anymore without deciding without consulting somebody else? Usually HR, compliance, legal, okay? Finance or these other vast waves of what I call white-collar welfare, which seem to be basically eating up whole organizations. Okay? Right? You can't. Nobody can actually make a decision. Okay? You used to be able to. I think the only decision I can make without consultation is something to do with my dry cleaning when I take when I take business travel. So now when I go on a business trip, I take my curtains along 'cause it's the last shred of autonomy I have left, right?

But the problem with business, you've got to win an argument. When a consumer buys something, they don't have to do a a nine-page PowerPoint deck to their partner and their family explaining why they bought these trousers and the fact that they'd asked for competing quotes from seven other trouser manufacturers. Okay? And they'd also beaten the store down by 15%. You didn't have, you don't have to do that. So, you're allowed to use a lot of information, some of which is incommensurable, some of which isn't available in numerical form. Okay? You can acknowledge it's a complex decision and make it emotionally with the right hemisphere of the brain.

Who are the Ian McEwan fans in D? Yes, absolutely. Okay. You can use decision-making capabilities which we've evolved which enable us to make as consumers do pretty good, reliably non-catastrophic decisions a lot of the time. But in business, you've got to win an argument before you can do anything. Okay? So, as a consequence, you've got to pretend the problem is much simpler than it really is. And so the way you achieve that simplicity is you strip out all the data that doesn't fit and you're left with this very, very narrow conception of how the world works. But you have to do that to win an argument.

Book by John Ralston Saul, who's a Canadian philosopher. Not often you hear those two words together, I admit. Um, but Voltz Boston's absolutely brilliant book where he basically thinks that in particular in the West, we have given reason, the faculty of reason, a completely exaggerated supremacy over other evolved human decision-making capabilities like intuition or creativity or even actually, I would argue, humor to a very large extent. Humor is actually a problem-solving mechanism that humans have. Anybody with kids, the weirdest thing you notice about your kids is how quickly their sense of humor develops. Okay? Not saying it's massively sophisticated when they're two. Okay? You know, um, but you know, you can actually make a small child laugh before they can speak. Okay? There's something going on there in evolutionary terms which we ought to investigate more. Um, and what we like to do, I think I think most people are actually pretty happy because we're not a rational animal. We're a rationalizing animal. We basically make decisions based on emotional instinct and then we hastily reverse-engineer a, a post-rationalized justification for why we did what we did. Not for its accuracy or its accurate description of, uh, our motivation, but simply as a way of explaining our action to other people. Okay.

So, effectively, the conscious brain isn't really, okay. It's not the White House. It's not the Oval Office, which is not a good analogy at the moment. Okay. Okay. But it's not the Oval Office, it's the press office, right? You, you've got a press office. What do they do? They hastily cobble together, um, explanations for decisions taken somewhere else for reasons they don't fully understand. And that's pretty much what human conscious. I'm actually talking about posted by a research company here, so I have to be a bit careful. But an awful lot of what we say, okay, is is a confabulation. It's a hastily constructed post-rationalization. It's not the real reason. Okay? So, you've got to be very careful about listening to what your consumers say because what you've got to do is work out what your consumers feel.

But people are actually pretty happy. Once we've come up with that kind of first plausible explanation for anything, we stop looking. It's like, "Nothing to see here. Move on." And so you, some of you who would know about Plato, his analogy about human perception is that people, other than philosophers of course, are basically chained to a, a wall and they are allowed to see a sort of shadow of what's going on in the real world. Okay. Um, and, um, uh, it's only through philosophy that you can actually see reality as it truly is. That most people function with, you know, pretty limited, um, uh, psychophysics or or whatever you want to do or phenomenology, I think is the technical term for this. The way we actually perceive the world.

My hunch is that in the corporate world, I don't think you need the chains. I think people choose to see the world that way because it's a lot easier to win an argument if you can pretend everything's black and white. Okay? And I think, you know, an awful lot of stuff, you know, if you look at, I'm probably one of the reasons I'm famous is that gag about the Eurostar, okay? Which is why are we spending £6 billion making it faster when with a budget of only about £300 or £400 million, you could make the journey massively more enjoyable? Right? HS2 wasn't a bad idea, they just gave the brief to the wrong people. Okay? They gave it to engineers who immediately wanted it to be very fast. Should have given the brief to Disney. Right? And Disney would have said, "This is boring. No one's that excited. No one cares whether it takes 65 minutes to go to Birmingham or whether it takes 87." Right. Okay. The, the proper brief for High Speed 2 should have been, "How do we make the train journey between London and Manchester so enjoyable that people feel stupid going by car?" That that's the human-centered brief, not an engineering-centered brief. Okay.

I mean, there's a great phrase, by the way, which is really useful, which is, "If you have a company run by engineers, it never makes any money. And if you have a company run by finance, it never makes anything at all." Okay. It's worth knowing. Okay. Um, anyway, okay.

I call marketing the science of knowing what economists are wrong about because economists have these very simple, reductionist, Newtonian models of human motivation and how we think, decide, and act. And I think anything you can read, whether it's behavioral science, behavioral economics, or whatever, which points out where these things are wrong, okay? Um, I think is therefore a valuable source of marketing insight. Okay?

Now, actually, I'll put it very simply. The standard saying in behavioral economics is that there's no such thing as an econ, homo economicus, which is the imaginary human that's a utility maximizer possessed of perfect information and perfect trust, which wanders around in a series of utility-maximizing transactions. Okay. And the great point about behavioral economics is just prove that homo economicus doesn't exist. I actually think it's a bit more complicated than that. I think homo economicus does exist. I think about 15 to 20% of people are a bit like that. But you don't want them as your customers. Okay? And therefore, since you don't want those people who are your customers, they'll defect within three seconds if someone comes along who's 3p cheaper. Customer, right? So the worst thing you can do is model your business around the customers who are the last people you actually want. Okay?

You know, I'm fascinated. By the way, it's very interesting. I thought the Suzuki presentation was brilliant, and I thought their approach to customer experience was really fantastic. I really love, uh, you know, the "good different" idea, and I'll come on to a few ideas about that, uh, later. But a very interesting story, actually. America's most successful car salesman was once asked, um, what was the secret to his success? And he said, "Very simple. He said, "Everybody who's in car sales tries to sell a car. When I try and sell a car, I'm asking myself a different question, which is, 'How can I be sure they come to me for their next car?'"

Now, interestingly, and this is quite interesting for the Suzuki people here, one of the ways you can do that is actually, in the short term, it's bad. If you down-sell people a bit and say, "Actually, you don't need this. To be honest, I'd buy this slightly cheaper one because it's nearly as good and it's £1,000 cheaper." Anything like that, by the way, establishes enormous trust and affection and a feeling of mutuality. Great, great scene on Jay Leno's Garage where he completely trusted the McLaren company. He won't buy a Ferrari, Jay, because you have to engage in all sorts of weird, like strange, you've got to buy nine really boring ones before they'll sell you a rare one. And he doesn't want to play those games. But the McLaren guy said, he said, "I quite like the, I think it's the ceramic brake discs." And the guy at McLaren said, "Um, are you going to track race this car? You just going to drive it around the streets?" He says, "I'm just going to drive it around LA. I might take it on the track once." He goes, "Let me save you $20,000 straight off the bat. You don't want the ceramic disc brakes. They take ages to warm up. You'll end up driving into the car in front. Instant trust."

Now, it occurs to me that what makes you a great car salesman in the long term, if you're only using short-term, bottom-of-the-funnel measures, which are highly attributable and highly quantifiable, you won't do that. In fact, the best car salesman in America probably looked like a mildly unsuccessful car salesman for the first three years of his existence. Okay.

So, short-term, effectively, okay, in business, an awful lot of information. We're looking at information as if we've got this sort of wonderfully impartial, uh, you know, in other, in other words, we have all the information we need. There's nothing lacking. We know everything we need to know. Now let's make a decision. Okay.

Interesting question. I've got to do this essentially. How many people think Lucy Letts' conviction was unsafe? Come on. More than that. Okay. Okay. My view is the jury made the right decision, but they weren't shown all the information. Okay. So therefore, I'm not saying she's innocent, by the way, but I don't think the conviction's safe. If you, if you start off with, for example, the presumption that crimes were committed at all. Read up on it. It's very interesting. So we tend to assume it's called by Daniel Kahneman, WYSIATI, what you see is all there is, and that it's a human tendency to take the data you have to form an impression from it without asking the question, "What else do we need to know?" Eg, were there any suspicious deaths when Lucy wasn't present which were mysteriously left out of the evidence? Okay. I was interviewing a bunch of researchers. I was hoping for a bit more dissent here. Okay. Never mind. All right. Okay.

But what's so weird? Okay, this is the whole deterministic thing versus probabilistic. Management consultancy is a way of spending an enormous amount of money on loads and loads of people coming around doing something which will ultimately end up with some fairly boring incremental improvements, and people love it, right? Whereas if you look at human insight, human insight is a way where in an afternoon, you can have an insight into human psychology which makes you millions of pounds without needing 400 Oxbridge graduates off all your colleagues for a period of nine months. But for some reason, this isn't. And I suddenly realized the reason it's not popular is precisely because it's unpredictable. It's not because it's not valuable. It's because in business, the incentives are such that small incremental improvements over time are massively rewarded, and you get to keep your job. Whereas three massive discoveries and one mild failure get you into trouble. There's something fundamentally wrong with the way in which business incentivizes people because if you do something eccentric and it succeeds, you get a pat on the back. If you do something boring and it succeeds, you're made Chief Financial Officer. Um, that if you do something interesting and it fails, it's career suicide. So there's a fundamental incentive to people to effectively do boring things. Okay? Because experimentation, if you're doing experimentation right, you're going to fail occasionally. Okay? You know, it's the old phrase, "If you've never missed a plane, you've spent too much of your life at airports." Right? Okay. Right? You, you're going to fail occasionally if you're doing experimentation. Right? But business has created such a risk-averse idea of what success looks like.

I mean, we literally, when we first started the behavioral science practice, we got up about our third client in and we said, "Actually, there's something bad about your design of your website." So they gave us £25,000. They spent £25,000 redesigning the choice architecture of their website. As a consequence, that year and every subsequent year, they made £10 million in incremental higher margin revenue. Okay? And I just sat back and said, "Right, this is it. We got it made, mate." You know, this is fantastic. They never came back. Okay. And I genuinely think, by the way, I, I don't think it's impossible in that organization that they said, "We don't want to make too much money in one year because then what will we do next year?" I'm not making that up. I think one of the reasons people like incremental improvement is it keeps your job safe for a long time. I had a friend who worked in procurement. He was told basically, "Not the suppliers down by 3% every time you visit." Comes back with one supplier, said, "Managed to get them down 10%." And his boss said, "Oh." He said, "I thought that was good." He said, "No, what are we going to do next year?" Right? I genuinely think that there's a whole incentive in white-collar welfare and the kind of people who are just hunting information around the place to do things really slow, that are really boring, but are kind of either predictable or at least you can you can put a really plausible narrative around, like, you know, economies of scale, which don't really exist in market anyway. Okay?

Anyway, but we know one of the things that people like averages. Okay. In like, incremental, deterministic world, people love talking about averages. I think averages are a bloody disaster in marketing. Okay? I think they're a disaster in science. By the way, if you look at nearly all scientific discoveries, they happen because a well-prepared mind, capable of spotting the significance of something, notices something unusual. Okay. Viagra, penicillin, gravity, Garwin. Okay. It all starts with observation, and it all starts with the observation of something that you didn't expect. And the thing I always noticed that I find really fascinating is that entrepreneurs are really fascinated by anecdotes. If you say, "This weird thing happens." Okay, the bureaucrat goes, "I don't want to know about that because it messes with my internal pre-existing model of the world." And the entrepreneur hears the anecdote and goes, "Cha-ching." Right? I think that's a fundamental psychological difference. I, I want to rehabilitate the word anecdote because I think that most really significant information emerges first, first in anecdotal form. Okay? That's why humans love anecdotes because actually, information about what's unusual or strange is vastly more important to you than information that's basically mainstream. And cops understand this.

I think what we've done in marketing is we've said, we've done this stupid thing which is, "You can only do something if you can prove it in advance." Right? And that's setting the bar for proof, the burden of proof, far, far too high for any business to grow or explore or make meaningful discoveries. It's simply, it, it's a kind of, you can understand why finance people go, "No, I need to see the ROI." Okay.

So, I went to a large bank and I said, "You know Amazon does this thing. Anybody use the Amazon call me back button? Right? Your package hasn't arrived. You go in, you click on the package that's arrived. You've already logged in, so they know who you are and they know what your problem is. And you click this button that says, 'Call me back.'" Three seconds later, your phone rings. They go, "Hello, Mr. Southern. I understand your hat hasn't arrived." Okay. Right. Now, I think that's absolutely brilliant. Okay? It's extraordinary. So, I said to another organization, "Why, why has nobody else ever done that?" And he said, "We couldn't make the business case work." I said, "Here's your business case. Amazon does it. Amazon tests everything, right? Okay. Secondly, Amazon is a fast feedback business where you can tell if your customer experience investment pays off really quickly. Same is true of McDonald's. Okay. Same is true of KFC, right? There are certain businesses like cafes and restaurants where you get feedback on your CX investment really fast. There are other businesses like banking where it might take you nine years to prove that an investment in an improved customer experience has an effect on retention because it's just massively slow. By the way, people never actually leave their bank anyway. They just become inert and don't buy anything from them. Okay.

So what I'm saying is that if you have a world where slow feedback businesses can't copy from fast feedback businesses because you impose this absurd burden of proof where they'd have to wait nine years to make the business case to their finance person for doing something, you've created a world where basically customer service is often astoundingly bad. And I think that explains why it is.

Now, cops are interesting. Okay? Because cops are totally happy with anecdotal information to begin with. At the start of an investigation. Someone's murdered. What do the police do? By the way, I, I give talks. I was giving a talk to the Surrey police, which was absolutely fascinating because I started talking about an interesting serial killer. Okay. Got to admit it. Who are the serial killer documentary? Mostly female. Do you know serial killer documentary viewing leans heavily female? Who would have guessed? Anyway, um, but it turned out that the cop, the cop who was hosting me was actually involved in the investigation. So that was like just total, like I was totally sort of piggybacking on that. Anyway, um, but they'll ask you a question. They'll go door to door. Someone's murdered. They'll go door to door and say, "Do you notice anything unusual last night?" Really open-ended question. And someone might say, "Well, a funny white van drove past six times." Okay? Now, that has no evidential value. You can't put that in court, but you can't arrest someone and imprison someone for 30 years for driving a white van in a funny way, right? But what it does tell you is what to investigate next. So now you look at CCTV and you see if the white van might be identifiable somewhere else and whether the driver has any known convictions or whatever. Okay? And that's the proper way to do marketing. But we've had this weird world where what you're supposed to do is start only with things that have evidential value to begin with. Okay? And then you're allowed to act on those things. But, but the police don't do that. Nor do good scientists. Okay? Scientists follow things that are complete hunches to begin with. You know, something that's unusual is noticed and they set out to investigate. That's the correct way to do it. If you have this absurd burden of proof, which is, "Unless you can prove down to the penny what your return will be on this investment," in other words, deterministic rather than probabilistic, you can't do anything interesting and you're trapped in this kind of incrementalist death spiral.

I mean, famously, by the way, Peter Sutcliffe, the Yorkshire Ripper, was caught because he parked his car in a funny way. Okay? Now again, you can't imprison someone for life for parking in the Bradford Red Light District in a funny way, but it was significant enough that it warranted further investig. Just, just so you know, the etiquette in the Bradford Red Light District is apparently useful to know. I mean, if you, you know, as you, you park with your windscreen facing the wall so no one can see what's going on in the back seat. And Sutcliffe had parked with his windscreen facing outwards, as if he was planning to make a quick escape. Now, interestingly, cops noticed this because they're all trained to park facing outwards because obviously, in a police station, you look pretty stupid. You know, if there was a big emergency, everybody go, "Hold on, you're blocking me in." Right? Okay. They wouldn't, you know, but anyway, cops notice this kind of thing.

Now, this is, I think, a fundamental rule in life which we ought to look at and understand, particularly as marketers. So, in bees, bees have a thing called a waggle dance, which is, uh, they tell other bees in which direction and at what distance there's a high-quality supply of pollen or nectar or, I think, there's something else they collect, resin. Okay. And the other bees absorb this information and set off in the requisite direction for the required distance and therefore reliably collect the pollen that's or the nectar that's already been discovered. But then bee scientists looked at this and they discover that it varies a lot. 20% of bees, let's say, ignore the waggle dance and basically piss off at random. Okay. And they said, "That's really weird because they've been around for 20 million years, bees. And you would have expected in that time, kind of, be compliance officers to have evolved who go, 'In order to meet our quarterly forecast for nectar collection, we need 100% compliance with the waggle dance.'" So how is evolution tolerated this weird inefficiency?

And then they modeled this as a complex system and they worked out that without the random bees, the hive gets trapped in a local maximum and it starves to death. Okay? Because it never discovers anything new. It can't get lucky. It doesn't know where to go if its existing sources of nectar, let's say some cows break into a field and eat all the flowers, right? Okay. So it has no capacity for adaptation, no capacity for getting lucky, no capacity for getting, uh, for for growth, and no capacity for resilience or adaptation. Okay? And this is known. And it, it occurs in algorithm design. It occurs in animal foraging. It obviously occurs in this case. It's known technically and by mathematicians, by the way, not just bee experts, as the explore-exploit tradeoff. Okay.

Now, this is what you might call it. I, I stole this slide from someone. I do owe someone a credit and apologies to them. But actually, it's not a tradeoff. We call it a tradeoff because in our Western mindset, we tend to think of either/or as being a tradeoff. If you have a more Eastern mindset, familiar with yin and yang and the union of opposites, if you think about it, they're two complementary activities, right? You need, you need to have exploitation of what you've already discovered to fund exploration, but you need exploration to inform what you exploit. Okay. So provided the scout bees, very important, if when they discover, 99% of their journeys might be a total waste of time, right? But one time in a hundred, they come back with something more valuable than nectar, which is information, which is three miles to the southeast, there's this huge field full of flowers that we never even knew about. Now, provided they then share that information with the exploit bees, okay, the explore bees have actually done. But the way you measure their productivity needs to be different. Okay? The explore bees have to be understood probabilistically. On the other hand, the exploit bees, it's pretty much a kind of double-entry bookkeeping exercise, you know, which is, you know, a cost of collection, uh, versus or energy expended in collection, uh, should be less than the energy recovered, uh, for the hive. But the two things aren't a tradeoff. They're entirely complimentary. I would argue that marketing and innovation both sit very heavily, okay, not 100% by any means, you'd be an absolutely daft marketer if when you discovered something really great, you didn't repeat it. But marketing and innovation need to be judged slightly differently from other forms of business activity because it's not about operational efficiency, it's about opportunity maximization.

I don't think we've ever. I think what we did is when when all this digital data stuff came in, is we, we basically went to people who are like finance people. And we got Stockholm syndrome as marketers. You know, we started to take on the characteristics of our own abusers. Okay. We can be just as quantifiable as the people in logistics. Okay. Look, look, we can measure the efficacy of every pound we spend. No, you can't. Right. Actually, we need some sort of license to do what's on the right hand, sorry, the left hand side of that chart. And entrepreneurs obviously, within this, you know, within the wider business context, entrepreneurs are kind of the scout bees of capitalism, if you like. But also demanding complete logic before you try anything is absolutely stupid. Because I think they're just more good ideas we can post-rationalize are good ideas we can pre-rationalize. I think a lot of great ideas, uh, Scott Galloway famously said, "All the businesses I've invested in have been stupid until they weren't." Okay. I mean, several investors, there's a very, very good investor in Silicon Valley who says, "If I, if someone comes to me with a proposal for a business that makes perfect sense, I go, 'Well, that's logical. Someone's probably tried that before and therefore it probably doesn't work.'" If someone comes to him with an element that's slightly stupid, think about Tony's Chocolonely. Actually, they succeeded partly because they didn't know what they were doing, or because they were intended to do something entirely different from selling chocolate. That's one point I make. There are far more good ideas we can post-rationalize than there are good ideas we can pre-rationalize. That's why you need to test stupid things. And when you test something, also test the opposite. Because another piece of Sutcliffe. So, sorry, that's an earlier story. I don't, I don't just, it's not an experiment. It's subliminal advertising. I've not got random serial killer, uh, hands. So, so fundamentally, we have to test random silly things.

Ricardo's Dream is a brilliant book about how economics went wrong by basically getting physics envy. They saw Newtonian physics and thought, "We can have exactly the same basic, you know, predictability." But the laws of psychology are much more malleable than the laws of physics. Um, I better skip that story.

This is another really important thing. What also makes humans different from atoms is not only the laws of psychology are different, it's the fact that the way we perceive the world is not remotely objective. This is a book, The Experience Machine: How Our Minds Predict and Shape Reality. Andy's thesis here is that most of what we actually see is actually a prediction. And we use the limited bandwidth in our optic nerves and our ears to correct for prediction error, not to actually form an image of the world. Now, if that sounds weird, that's exactly the same approach that that screen uses. The reason your TV or your camera uses JPEGs is JPEGs use much less data because most pixels have an expectation setting and the data that describes your f your photographs is not green, green, which would use a lot of data. It's green, same as you expect, same as you expect, same as you expect. Oh, it's different. Okay? That's how basically a JPEG works. The view is that basically that the human brain evolved exactly the same data architecture as Samsung televisions did, albeit over a longer time period, for the simple reason that our optic nerve doesn't carry that much bandwidth. Okay? We genuinely haven't got enough bandwidth in our optic nerve to form a consistent view of everybody I'm seeing now. Okay? So most of the time I'm seeing an internal construction of the room as I expect it to be. If someone starts running around naked, it'll probably attract my attention. Okay? I'm not encouraging that. Okay?

Now, that that basically says that things that surprise us interact with our brain in a different way. I'm not saying better or worse, but in a different way. Things we weren't expecting affect our brains in a different way to things we are expecting. Okay. And the second thing I think is he writes quite extensively about the way in which we actually predict the world is hugely, and, and what we, what we're alert to is hugely context-dependent. And that's probably the biggest lesson of all behavioral science is that there are people and there's context. Okay. Okay. So people are different, and so the same different people will respond in a different way to the same context. The same person will respond in a different way to to the same stimulus if it's in a different context. Okay.

I'll come on to that in a little second. But this is another great book. How many people have read this? Will Guidara, ran the, uh, best hotel in, sorry, the best restaurant in the world, uh, which was 11 Madison Park in New York. Now, he did something which I think everybody can do, right? Any, who are the Roger L. Martin fans here? There must be a few. No one. Canadian business guru. Absolutely fantastic. Read everything he writes. He's fabulous. Okay. Roger Martin goes onto this massive rant about benchmarking because consultants love benchmarking. Benchmarking means comparing yourself to your competitors and making yourself even more similar to them. Right. Right. Now, particularly if you, if you backfill that with the ideas about human perception that we don't really notice things that we, we were expecting anyway. Yeah. I, you must have done this. You go and stay in a swanky hotel occasionally, and there's this thing on the board saying, "Thanks to our wonderful, uh, renovation program, we've spent half a million dollars on every room." I go, "Making it look like every other hotel room I've ever stayed in." Right.

And now what Will Guidara did, and I'm going to name this 'cause he, he did it, but I'm going to name it, is what I call reverse benchmarking. So at the time he was running the 50th best, inverted commas, restaurant in the world according to some restaurant awards, 11 Madison, and he wanted to run the best restaurant. So he took his team out to dinner, presumably sort of slightly in disguise, at what was then the world's best restaurant. And unsurprisingly, it was very, very good. And everybody kept pointing out the things that were good. And Will said, "There's no point in benchmarking ourselves against those because they're already good. What I want to know is, what are the two things they did that were bad? And then we're going to massively overinvest in those." And so they looked at this restaurant, which the meal they'd had at the best restaurant in the world, and they had two basic gripes, which was the coffee experience was, in other words, you know, it was basically just standard cappuccino. You can't get a flat white in America, can you? Come to think of it. Like cappuccino, latte, whatever. Okay? You know, no choice of beans, nothing weird like that. And they also said that the people among them who wanted to drink beer, the wine drinkers were treated to this incredible wine list, you know, wonderful cellar, da da da. The beer drinkers were basically like, "Yes, we got Coors Light." There's nothing wrong with Coors Light. But what I'm saying is, he said the wine drink, the beer drinkers were treated like second-class citizens.

So he goes back to his own restaurant, which is now number 50 in the world. He finds one guy in the kitchen who's a coffee nut. He says, "You're now the coffee sommelier, and your job is to make this restaurant's coffee experience better than anywhere else. You know, recommend a mix of, you know, you could, you know, you know, given the food you've just had, can I recommend these single-origin Peruvian beans?" And someone in the kitchens who is a real craft beer nut, he said, "You're the beer sommelier from now on. Everybody in this restaurant who drinks beer, it's going to be a minority because it's a high-end restaurant, but they're going to get the best beer experience." So literally though, "Well, given your choice of food, may I recommend this craft IPA from, you know, a tiny microbrewery?" Of course, the craft brewers were so flattered that really a high-end restaurant was taking beer seriously. I think they got sent most of their beer for free. So it actually became pretty profitable as well. But that's what we call reverse benchmarking. And so much of business, you know, Mark Ritson says this, "The average is the enemy of the marketer." So much of what we're doing is getting up to average. And if it's important to be distinctive, that's a dumb place to be. Reverse benchmarking, as I call it, which I think Will Guidara instinctively invented, which is, go to your, go to your competitors. If you're a train company, okay, you're benchmarking yourself on punctuality. Now, the point about that is once trains are like reasonably punctual, no one gives a damn. And actually, funnily enough, it wasn't the unpunctuality of trains, I think, that really bothered people. It was the fact that you were left uninformed. Okay. Uber's genius was people don't mind waiting 15 minutes for a cab if they can see where it is on a map. Okay? If you put people in a state of uncertainty, they massively panic. There are psychological hacks to that. We can, you know, okay, actually, if you're a train company, go and go to your best competitor and say, "What are they doing worst?" And then massively overinvest in that. Okay? I think this idea of reverse benchmarking in customer experience could be absolutely huge. But it also creates this wonderfully diverse kind of brand ecosystem where everybody's trying to be brilliant at something different rather than everyone trying to be brilliant at something which is the same as all their competitors anyway. So nobody bloody notices it. Okay.

Anyway, optimize for perception, not reality. I always show. Can I overrun by five minutes? Is that okay? Because I feel a moral duty. Okay. I'm running over anyway. Two and a half. Okay, I'll try. Okay. I always show this for moral reasons. It's, and I seriously mean this, because I think if thousands of people see this, I'll save somebody's life. Okay. So, round the outside, that's a speedometer, miles per hour. That's how we show speed. It's a convention. That's just how we always show speed. Distance in a given time. Okay. That's how, um, all humans. Funny enough, miles per gallon is the opposite in Europe. They do liters per 100 kilometers. So fuel economy has done the other way around in Europe, but everybody in the world does speed this way. Two Cambridge, actually, the Israeli behavioral scientists created a thing called a paceometer, and that's minutes per 10 miles. So it's exactly the same, but it's expressed the other way around. Okay? So what that shows is instead of how far you go if you drove for an hour at that speed, it's how long it would take you to go 10 miles driving at that speed.

Now, the reason I think it'll save somebody's life, and by the way, anybody that had a paceometer would never have invested in High Speed 2, right? Or they would have, sorry, they would never have made it that fast because what that shows you is the faster you're going already, the less time you save by going 10 miles an hour faster. So, if you can go from 20, let's say you're going 10 miles, okay? If you go from 20 mph to 30 mph, you save 10 minutes. If you then accelerate to 60 mph, you save another 10 minutes. If you accelerate then to 90 miles an hour, you actually only save 3 minutes. If you accelerate from 90 to 100, you're only saving one minute. So if you're on the motorway and you think you're running late for a meeting and you're already going at about 70 mph, okay? If you accelerate to 90, basically you're a bit of an idiot, okay? Because it's hugely less energy efficient. It's vastly more dangerous. You're hugely more likely to injure or kill either yourself or somebody else. But more important, the amount of time you're saving by going 20 mph faster is basically totally trivial. Okay.

Now, what I mean about that is when I say optimize for perception, not reality, that's something completely objective. It's speed, right? A physicist would all agree 60 mph and 10 minutes to go 10 miles are exactly the same bloody velocity. Okay? But depending on how you present the information, people will respond in a completely different way.

So, I'm going to skip all this because I haven't got time and they're cross with me. Um, here we are. I, I'm going to skip this. Okay. Two brand points. Secondly, the opposite of a good idea can be another good idea. In psychology, in physics, the opposite of a good idea is wrong. Okay? In psychology, the opposite of a good idea can be another good idea. So, looking at your biggest competitor and doing the opposite of what they do. Well, let me give you, okay, retail, it's all, you know, all about self-service, efficiency, low prices, etc. You know, that's one trend. There aren't any trends. The opposite is farmers' markets, right? Now, farmers' markets defy all economic rationality because you're buying direct from the manufacturer, but you're paying more for everything. Okay? It's also massive. The way you develop a farmers' market is you take a Tesco Metro and you make it really, really good. Okay? And what happens? People love it. Okay? Right? Nearly everything, you know, most, I think most really successful entrepreneurial businesses actually start in this way. They discover the opposite space to which everybody else is traveling and they realize that actually everybody's thrown the baby out with the bathwater and what shopping is now lacking is actually a degree of personal connection. I mean, to be honest, in Sevenoaks, the, the, uh, the best way to understand the farmers' market is kind of street theater. It's performative. It's only peripherally connected with retail or the acquisition of goods and services. But that's one, one important one.

I'm going to skip that as well because I haven't got time. Um, but there's one final thing. Okay. We tend to think we've got to change people's minds. Now, you can change people's minds. It's very slow and very difficult. But the easy way to change people's minds, okay, is if you provide people with a different context, they behave differently anyway without you needing to change their mind. Okay?

Now, an example of that is a campaign we did in Ogilvy's behavioral science practice where they wanted us to get recycling rates up in London. Okay? And we said, "Actually, the problem is nothing to do with people's attitude to like polar bears and stuff. Okay? It's really simple. The campaign was called 'One Bin is Rubbish' because we said if people have two bins, they'll separate out their rubbish. If people have one bin, they won't." I mean, broadly speaking, yes, attitude plays a role in it. But if you put Jeremy Clarkson right in a house with two bins, he'll probably separate out the stuff. And also the recyclable stuff doesn't smell, so you don't need to take it out so often. So it kind of makes selfish sense to separate the rubbish. Equally, if you put Greta Thunberg in a house with only one bin, give it about 10 days. Oh, it. You know, right? Okay. So our argument is the context within which the decision is made has a much bigger effect on behavior than the attitudes of the people making the decision. And so that's my question, which is always, before we try and change a million minds, is there a way we can actually change one context? Um, and I haven't got time to explain all these examples, but a lot of businesses, a lot of entrepreneurial businesses owe their big break to the fact that the context in which people bought or chose became different. Argos, right? That's James Watt. I haven't got time to explain, but I will, we'll do later. Okay. Uh, Argos catalog. Everybody chooses which toaster to buy in a shop. Argos comes along, you choose your toaster on the toilet. Okay? Right? If you can

If you change the context in which decisions take place, or the medium, or the channel, people will make different decisions. That's why I think AI is potentially interesting because if the default mode for interacting with organizations goes from being screen to voice, for example, okay, then potentially it's a huge threat to Google and a huge opportunity to somebody else. It's when the actual, it's when the channel change often provides this huge opportunity because the normal rules of the game, the normal brand rules, the normal winner-takes-all effects, no longer happen when the context changes.

So I will skip all that. I will simply end on a simple thing. Um, whenever you have a problem, ask if you can solve it psychologically before you try and solve it technologically. And the very simple thing is, if you look at electric cars, okay, what's the big obstacle to? By the way, most people's objections to electric cars are post-rationalized bollocks. Okay, they're very similar. British people will all recognize this. About 20 years ago, British people were wildly opposed to automatic transmission, right? And they basically came up with things like, "You lose the sense of control." And they would hold to these beliefs right up to the point where they owned an automatic, at which point they'd go, "There's no going back to that, right?" Okay. That's basically how Britain changed to automatic cars, which was by driving them. Okay?

With electric cars, just take my word for it. They're just better cars. Okay? They're quieter, they're more economical, they're more environmentally friendly, the performance is better. But we come up with this range anxiety thing. Okay? Which is just like the Daily Mail for getting people frightened about something new, in my opinion. Okay?

Now, the point is range anxiety. Two components. Range anxiety, right? Well, billions and billions of pounds being spent on going, "How can we increase range by increasing the energy density of batteries?" It's much cheaper to reduce anxiety than it is to increase range. And there are probably six things you can do that cost you less than a few million quid. You know, Android Auto or Apple CarPlay could simply say when you're driving along, "There are nine available rapid charges within 15 miles." The part of the problem, by the way, with electric car charging is that petrol stations are massively ostentatious because they grew up before GPS. So they had to be hugely visible, right? Whereas when people install rapid car chargers, they go, "Oh, we'll put them around the back of an industrial estate, you know, in some weird exclave of the car park, and people will use their GPS to find them." Okay. So, make electric car chargers really visible. Okay. Remind people how many of them there are because they can't see them.

And finally, in your electric car, my electric car says, "Now I've got 82% battery." I don't need that level of granularity, mate. My petrol gauge never did that. It said full, half full, quarter full, eighth full. Oh, the lights come on. That was my petrol gauge. I don't need individual percentages when I get down to 19%. Okay. Above that, just say "20% plus," right? Your mobile phone does that. It makes you anxious by giving you completely unnecessary levels of decay between, if your phone goes down from 96 to 95%, you really shouldn't be informed of it. Okay. Right.

Anyway, but anyway, that's my point. Don't make trains faster, make them more appealing. Okay. There is nearly always a psychological solution to problems which engineers are spending billions on, which could be actually, uh, easily delivered effectively with 19. I'm going to skip this. I'll end with that last example. Greatest psychological and marketing innovation in the last 20 years. Uh, the Overground. Okay. The problem about the Overground is it's a railway. Uh, it always existed. It was called Silverlink Metro. Um, and the point is that the problem it had as a railway is it was in London, and people who live in London think the Tube map is a map of London. Okay. Right.

Now, this carries, it cost 200 million, whereas the Elizabeth Line cost 20 billion. This carries as many people in a day as the Elizabeth Line did, but it cost 1% of the amount. Okay. Now, the reason is it already existed. Now, they did put in a few new tracks. They improved the rolling stock. They improved the lighting a bit. But here's the genius, right? You know what they did? Transport for London, to get Londoners to use this, they pretended it was a Tube line, and they added it to the Tube map. And suddenly, literally on the first day they added it to the Tube map, usage went up 400%. And one of my colleagues' daughters said, "I want to live in Peckham, Dad, because he's really handy for Shoreditch." Really handy for Shoreditch. And we both laughed because we said, if you'd said that in 1989, you would have been committed. Okay?

But the point is, this was literally 20 billion pounds worth of transport infrastructure that was created with pixels and ink. Okay? Simply by presenting the information in a different way, by recontextualizing the information, what was a completely misunderstood and unknown railway went from being a major part of London's transport infrastructure. And that, I think, is the point at which. No, I think I'll end there. Yeah. Rather than trying to change the world, we can change how people see the world. When people see the world differently, they behave differently, and that then changes the world. Thank you very much indeed. [Music]