Transcription
[Music] What really excites me, actually, particularly about this industry, is the interplay between technology and psychology. Because quite often, we get stuck in a mental rut. And when we dig a little bit deeper, we realize that the only reason for that assumption, that mental model, that frame of the world, is that in 1890, technology didn't allow you to do anything else.
So, for example, the season ticket, the rail season ticket, is a product really of 19th-century ticketing technology. It doesn't make any sense anymore. What we should be investigating is a kind of Amazon Prime system where you can still make a commitment, but actually, you pay as you go to some degree. And there are loads and loads of opportunities, I think, in this industry for us to do something quite exciting.
Because I always joke that the sad but inescapable truth about, not so much the travel industry and truth, but transportation, is that it's effectively a business of engineers who are desperately trying to pretend they're not in the entertainment industry. And I remember talking to the board of British Airways once, and I said, "If I didn't work in advertising, I think I'd work for an airline." And they said, "Why?" And I said, "Because what I absolutely love about airlines is the mixture of absolutely hardcore logistics. How do you get a replacement fan blade, uh, you know, delivered from Dubai to Kuala Lumpur by three o'clock in the morning, combined with the fact that you're dealing with a bunch of completely irrational passengers who, regardless of the extraordinary genius you've put into actually putting them into the air in a pressurized metal tube at 35,000 feet, go, 'I don't think I'll fly with that airline. Last, last time I went, the nuts weren't very nice.'" And I said, "That's what really appeals to me about working for an airline." And they said, "Oh, really? They said, "That's what we hate about it. That's the thing that drives us crazy."
But it's a little similar. This is a brilliant observation from Kamal Galhatra, who's the head of Ford in North America. That car making is a hundred thousand rational decisions in search of one emotional decision. And of course, all the mental energy, all the sort of selectivity, gets focused on the rational decisions, designing the drivetrain, etc., etc. But ultimately, then, if you're American, you then choose a car on the number of cup holders. I think that's right, isn't it? You know, that's what I've always noticed.
Funnily enough, Volkswagen, despite the fact they got fined many billions of dollars, uh, Volkswagen only had about 0.5 market share in North America. And the reason was that German engineers refused for years to put cup holders in the cars. And if anybody has ever worked in the fast food industry, you can't make drive-through work in Germany because something like 60% of Germans will not allow food or drinking in a car under any circumstances. Because your car is a temple, and the idea of defiling it with a bargain bucket is just unthinkable.
And so, a lot of things which look like technology or look like engineering, ultimately boil down to psychology. And of course, psychology, not unreasonably, is deeply discomforting to an engineer because they're used to a world where you can quantify everything that matters. You know, the thing that distinguishes engineering or logistics problems is there is a single right answer, and you have numbers for all the things that count. As soon as you introduce psychology into the mix, you, you enter effectively a different world.
And I ended up accidentally becoming famous on the TED Talk circuit, really, because what was partly a joke, which was, I merely said, you know, "If you looked at problems psychologically rather than technologically, you might come up with different answers." And at the time, this is, God, 2007, I think it was, 2009. We'd just spent £6 billion reducing the journey time of the Eurostar from London to Paris from about three hours 20 to two hours 40, something like that. And it cost £6 billion. But it involved building completely new track between London and Folkestone.
And I said, "To be honest, why don't we stop looking at the quantity of time and start looking at the quality of time? Because even though it took longer to get to Paris by train before they'd spent this money, people were still deserting airlines in droves and traveling by train, even though it took three hours and 20 minutes." And the reason was nothing to do with the quality, the quantity of time. It was to do with the fact that on a train, you plant your ass in your seat, you have three hours to read, watch your film, or get on with some work, and then you arrive in central Paris. The plane is faster, but it basically has an hour of around at the beginning and an hour of around at the end. Okay?
And I said, "You know, rather than spending £6 billion making it faster, if you want to compete with the airlines, why don't you just spend £50 million putting Wi-Fi on the trains?" It was another 10 years after they'd spent £6 billion on tracks. It was another 10 years before they added Wi-Fi to the trains, which to me was the bigger comparative advantage over flying, uh, than actually time. And then I just added a little whimsical joke at the end. I said, "If you really want to spend more money than that, you can always spend a billion pounds, hire all of the world's top male and female supermodels, get them to walk up and down the train handing out free Château Pétrus to all the passengers. You'll have saved yourself five billion pounds, and people will ask for the trains to be slowed down."
If you think about it, make a journey enjoyable enough, and nobody's that bothered about how long it lasts. Nobody boasts about how fast their cruise ships are, do they? Okay? And actually, to a great extent, the perception of time, as measured by engineers, is measured in seconds. In humans, it's kind of measured in pain or boredom or irritation. It's not measured in seconds. You can tell that from the English language. We have phrases like "time flies while you're having fun" or "it was the longest 10 minutes of my life." Okay? And our experience of time is fundamentally different.
But the reason this bothered me a bit is I said, "If we only try and optimize travel and transportation using objective numerical criteria, SI-derived units like distance and speed and capacity, we'll miss out on a lot of things." This, you may some of you may recognize if you're Brits. This is the Heathrow pod parking system of driverless autonomous vehicles which run on kind of virtual tracks. And if you ever go to business parking at Heathrow, it's about two miles. It's about a mile, actually, from Terminal 5, to be honest. If you're ever stuck landside, uh, in Terminal 5 for four hours between planes, just amuse yourself on these.
Now, I realize in, I'm in Dubai, where they probably had them in 1978. Okay? The extraordinary thing about these is, you, the the price for parking at the pod parking, which is about a mile from the airport, often exceeds the price you have to pay for parking in the short-stay car park. Now, no one will actually admit this, but it's because they want to ride on the pod. I have colleagues, business colleagues, who are serious people in their 60s, otherwise highly intelligent adult people, making, you know, mold-breaking, worldwide decisions. And occasionally, they turn up for the pod parking and they're told, "I'm terribly sorry, the pod parkings are actually full today." So we've upgraded you for free to short-stay parking, which is right next to the airport. That's basically, you know, you know, traditionally, in a normal world, you'd pay sort of £20 more per day for that. And they admit to me secretly, they say, "I always go away, go, 'Oh, I was looking forward to riding on the pod.'"
Now, the problem with that is, you probably can't justify that as a mode of transport using conventional metrics. Because a bus would be just as effective. A bus might be quicker, but a bus doesn't feel the same. But the problem is, we don't have numerical metrics. Well, maybe we do. Mr. Zach will possibly show us this afternoon. But we don't yet have adequate numerical metrics for how people feel that match the ones that we use to measure the physical world. Now, that wouldn't matter if people perceived the world objectively. They really, really don't.
And so, the trick is actually, ask more better questions. Okay? We need to explore more. David Ogilvy never actually said this, but it's often attributed to him, which is, "The trouble with market research is that people don't think what they feel. They don't say what they think. And they don't do what they say." Understanding what people feel is difficult. We are starting to be able to measure it. But until we can do, not rely on people to tell you what they want, because they don't completely know. Because the parts of the brain that do the feeling aren't really connected to the parts that do the talking.
A very large amount of, uh, effectively of psychology assumes an awful lot of business activity assumes that we have, kind of, mental access to our unconscious motivations and desires. When in truth, they're what's known as opaque to introspection. You can't find it out. And the other thing we have to do more is simply experiment. Don't experiment with everything, by the way. Often when creative people come up, they go, "We need to experiment more. We need to test. We need to throw away established wisdom." No, no, no. You don't need to do that. Because established wisdom is mostly established for a pretty good reason. But you've got to have a ring-fenced area of 10 to 20% where you're allowed to fail.
Now, if you don't believe me, have a look at bees. Okay? They've been around for 20 million years. And interestingly, much to the astonishment of bee experts, um, they noticed that whereas bees have evolved this extraordinary system called the waggle dance, where they can communicate to other bees a good direction and distance to set out to find a reliable source of pollen and nectar. What horrified bee scientists is that it varies, but about 20% of bees ignore the waggle dance. They go off at random. They said, "This doesn't make any sense." Because in the short term, if you want to maximize the efficiency of pollen collection, you'd want 100%, you know, obedience to the waggle dance. Why haven't bee compliance officers evolved, you know, to demand 100% adherence to the waggle dance to bring our nectar collection, uh, in line with our forecast for quarter three? You know, this doesn't make sense.
And then they modeled it as a complex system and they realized it's what's known in AI, by the way, is the explore-exploit trade-off. It exists in animal foraging, and it also exists in artificial intelligence. And all dynamic systems need a trade-off between exploiting what you already know, in other words, that you know a load of flowers over the hill which we've been successfully getting pollen from for the last two weeks. But you've got to devote a certain amount of money or investment to the things you don't yet know. Either because the future is different from the past, or because you simply haven't discovered it yet.
And so, bees, interestingly, have this indulgent class of dilettante bees who are allowed to make mistakes. Now, I imagine the obedient bees hate the random bees, don't they? They go, "Look at them. Most of their journeys complete waste of time. Bloody dilettantes, just buzzing around the place at random, ignoring the waggle dance." If you don't have a certain degree of this variation built in, you become over-optimized on the past, and the hive starves to death.
The other thing that happens, by the way, if you're over-optimized on what you already know, you never get lucky either. You, you don't have a system that allows you to exploit lucky discoveries, or even lucky mistakes. And I think that's an important thing we've got to recognize here, which is that we're trying. And this is a great book, by the way, by Roger L. Martin. Anybody know him? He's Canadian, a wonderful business writer. It's, he isn't out yet, but he gave me an advanced copy. "A New Way to Think." He argues that we're trying too hard to innovate simply based on what we already know, rather than by exploring what we don't yet know. And he thinks we need to have, what we're effectively trying to do is to use data to make every single decision an act of logical induction or deduction. And his argument is, you simply can't do that. The really significant innovations never come about that way. They come about through a leap of the imagination, or not from the question, "What is?" but the question, "What if?"
And if you look back, okay, now I'm old enough. One great thing about being 56 is you can remember a time before all these things existed. Okay? And one of the interesting things is, if you imagine yourself back to a world before Dyson, the world before Red Bull, a world before Uber. Okay? None of those things really, well, before Nespresso. None of those things really made sense in advance. Before Red Bull existed, no one was walking around going, "What I don't get is why does nobody make an overpriced drink in a tiny can that tastes really disgusting?" Okay? Nobody was asking for that. Before Starbucks existed, no one was going, "What I really want to do is spend nearly five dollars on a cup of coffee and then wander around carrying it in the streets." Okay? Nobody's asking that.
If James Dyson had come to me, uh, in the 1990s, and said, "Look, I think there's a great market for an $800 vacuum cleaner," I would have said, "James, mate, let's look at the market. Right? Peaks out at about $400. That's a mile. There's no evidence in the marketplace whatsoever that anybody will pay $800 for a vacuum cleaner. It's a distressed purchase. You only buy a vacuum cleaner when your parents force you to move out, you move out of rented accommodation, or your old vacuum cleaner breaks." Right? I've never heard a couple go, "Hey, I'm bored this weekend. Let's go vacuum cleaner shopping." Right? For the lols. Okay? And I would have said, "Besides, anybody who could afford an $800 vacuum cleaner probably pays someone else to clean their house, so they're really not that bothered about it." Now, all of those are perfectly good logical objections. Okay? And I would have used them. I would have felt smug and gone, "Well, glad Jim's out of the building." And if Jim had come back and said, "But wait, you haven't heard about my $400 hair dryer?" I would have had him escorted out of the building as an obvious lunatic.
Nespresso. Most of these things are an act of psychological arbitrage. They're the discovery by somebody of psychological value in a place where nobody else realized it existed. You know, if you look at Nespresso. Okay? Piece of genius. Right? If you had to buy an espresso coffee in a jar, like Nescafé or Maxwell House or Folgers, for the equivalent amount of caffeination, it would cost about $30 for a jar. Or $35. And you look at it, you go, "That's insane. There's no way I'm paying that." Right? It doesn't come in a jar. It comes in a pod. Okay? Now, unless you work in procurement, you don't actually know what a single cup of Maxwell House costs. Okay? So when you put that 40-cent an espresso pod into your machine, your frame of reference isn't, isn't, um, Nescafé. It isn't Maxwell House. It's Starbucks. And you think, "Well, you know, 40, 40 cents. That would cost me $2.80 at Starbucks." This machine is practically making me money.
Rolls-Royce and Maserati stopped exhibiting their cars at car shows because they looked really expensive. You know, a $400,000 car at a car show looks like a monstrous extravagance. They went and started showing them at plane and yacht shows instead. Because if you've been looking at Learjets all afternoon, okay, a $400,000 car is like an impulse buy. It's like putting the candy next to the till. "I didn't buy a plane today, so I'll have a couple of those." Right?
A huge number of those businesses, Zoom made no sense at all. You're up against Facebook, you're up against Microsoft, you're up against Apple, you're up against all of the big tech companies. It made no sense. Zoom won, I think, because it has superior psychology. Uber, as I'll explain later, had superior psychology. And this is how you can play the psychology game with time. It's not the quantity of time, it's the quality.
Anybody here operate a call center? Okay? One of the great mysteries of call centers is that live chat online takes about three times longer than the phone call. And yet, for some reason, people love it. The customer satisfaction levels are through the roof. Not because it's shorter, because it feels different. Okay?
This is brilliant because the, the time you spend waiting for your meal to be prepared is more enjoyable than the time you spend waiting to tell people what you want. If you go to a fast food outlet, the time when you're just standing there going, "I want to order a bargain bucket," and you're having to queue to wait for that, is purely negative. Once you've said, "I want a bargain bucket," you reframe the remaining time as time devoted to the quality preparation of my bargain bucket. And so, time spent while your food's being prepared is inordinately more enjoyable than time spent before you've placed your order. Okay? And as a result, what these screens do effectively is they don't change the duration of the wait. They change the experience of the wait.
Uber. Okay? Now, a logical person would have said, "We need to, I don't like waiting for a taxi." That's true. People don't like waiting for taxis. New, two things you could do: a predictive algorithm, which means that there are taxis hovering around anticipating demand and reduced waiting time. Maybe Uber do that a bit. The real feat of genius was the map. Because what the human brain hates in that situation isn't duration, it's uncertainty. The guy had the idea for the map watching Goldfinger, by the way. I don't know if you remember Goldfinger, but Bond has to follow, alright, Goldfinger through the Swiss Alps while remaining unobtrusive. And obviously, if you want to follow someone unobtrusively, you choose an Aston Martin DB5, don't you? Because it blends in completely with your surroundings. But nonetheless, he, he attaches a tracker to Eric Goldfinger's car, and he can follow him at a distance and see on a scrolling map on the dashboard where Goldfinger's car is. And one of the founders of Uber said, "That's what should happen when a car arrives." Because waiting for a taxi under conditions of uncertainty is agony for the human brain. We hate uncertainty. With the map, the duration of the wait may be the same, but you go, "Oh, look, he's stuck at those traffic lights. I'll have another pint." Okay? Completely different nature of time.
There's also an element of status with Uber. I don't know if anybody does this. Is it just me? Where you time your departure from the building to coincide exactly with the car drawing up? Because it makes you feel like Kaiser Soze at the end of "The Usual Suspects." Right? I mean, if you think about it, walking out of a building as a car draws up makes you feel like Louis XIV. Standing around in the rain going, "I wonder if that's my car over there." Low status behavior. You know, you don't get many rappers doing that, generally, right? And so, understanding these things is really, really vital.
Dallas-Fort Worth. Bit of genius there. There's a woman there called Courtney Moore, who's the head of behavioral science at DFW. Fantastic airport. I think most people agree. One of the things they're looking at is that the whole experience of waiting to board a plane is messed up by the eight people who insist in forming a queue too early. Right? So instead of just sitting there having a cup of coffee and reading a book, once the queue forms, you feel you have to join the queue for fear of missing out. Which means that the last 25 minutes aren't spent in comfort and convenience, but they're spent standing there like, you know, like a fool to prevent anybody getting in front of you. Their plan in DFW is to make it really ambiguous where the plane actually boards, so no one can form a queue in advance. So people will actually spend the time waiting doing something enjoyable, which I guess is going to Chick-fil-A, isn't it, in Dallas, right? Um, but they'll spend their time doing something enjoyable rather than just standing mindlessly in a queue. Again, it's not changing the duration, it's changing the quality of time.
So, I know, I know this guy founded one of your competitors. But you need a 20-bob. If you look at Bob Crandall, the founder of the, the, the American Airlines CEO, he's still alive, I think, isn't he? But he's one of my heroes. Now, to be honest, some of his ideas were absolutely nuts. And the idea of selling unlimited lifetime first-class travel on American Airlines for a quarter of a million dollars, which he did try. They're a bit short of cash, and they spent basically the next eight years trying to identify the people who'd bought these tickets and find a legal loophole to get rid of them. Because they were turning up, basically, American, American Airlines first-class lounges, having a five-course meal, and then going back to Chicago again. They were, you know, they were taking their friends to London for lunch and back again. Okay? Mad idea. But he didn't invent the loyalty program. He invented SABRE. He invented about five absolutely killer ideas. And again, they kind of didn't really arise. They didn't really arise out of deductive logic. They were a feat of the imagination.
Very quick thing. You've got Paul Zach this afternoon, so I don't need to go into huge depth on this. Two huge forces in human behavior: habits, basically, and social copying. Evolutionarily, we've defaulted when in doubt, do what I've done before. And when that doesn't work, do what everybody else does. Because it's not necessarily perfect, but it's a non-catastrophic heuristic for decision-making. If you do what everybody else does, it might not be perfect, but it's unlikely to be a disaster. You know, if everyone, if I've eaten the purple berries before and I've never got ill, it's safe to eat the purple berries again. If I don't know which berry to eat, and everybody around seems to be eating the purple berries but ignoring the red ones, I should probably do what they're doing too. Perfectly logical evolutionary adaptation.
Social norms are the other big thing. And that, by the way, has changed a lot. Because video conferencing has been normalized. That isn't going to go away. Okay? In 2019, when I had a two-hour meeting in Frankfurt, the Coca-Cola answer was to fly to Frankfurt for the day. And video conferencing was Dr Pepper. You know, it was an outlier. You had to explain why you were having it. You know, now I apologize for any Texans in the room, because I understand that in Texas and New Mexico, Dr Pepper is basically the default drink. So this doesn't apply to any Texans. But you see what I mean? It was like, you know, now, now, to some extent, if you've got a two-hour meeting in Frankfurt, now video conferencing is going to be Coke, and flying over is going to be Dr Pepper. In terms of the social normalization of the behavior, they've kind of reversed.
We see some changes, by the way, in business travel. EY in the UK has vetoed flying for any trip of one night or less. Google, interestingly, has instigated two weeks of work from anywhere. So with your line manager's permission, in addition to your two weeks of meager vacation, which Americans are given, um, you also, with line manager's permission, can go somewhere else, like stay with your parents or go to Hawaii. And provided you do your work, it doesn't matter that you're somewhere else. So there will be some lasting changes. Not everything will revert.
But as I said, and as this book says very well, um, actually, what we tend to do is we get stuck with a mental model. And it's the Vladimir Putin approach to life. You get stuck with a mental model, and when it doesn't work, you basically dig in deeper. Okay? And quite often, what, what we should be doing is, instead of asking the same question and continually trying to come up with answers to the same question, we need to ask a new question from time to time.
Now, this book, actually, Roger Martin's book, he was the dean of the Rotman Business School in Toronto, makes exactly this point. So this is the standard question: "Should your employees be able to work flexibly?" It's a wrong question. This is a much more interesting question: "Do you want your customers to be able to work flexibly?" Because I would argue that if you look at most of our staff in London, after we've paid them, and after they've paid tax, 50% of their after-tax income disappears in transportation, commuting, and accommodation costs. If you give you employ, if America as a whole had a greater degree of autonomy around working patterns, it would be a huge injection of cash into the discretionary economy, which benefits you guys.
If you really want to get serious, if I were in the travel industry in the United States, I'd spend 90% of my lobbying budget, um, basically lobbying for four weeks of guaranteed paid vacation. I don't understand why you don't do that. Okay? Truly. Okay? Bernie Sanders was the only person. They thought he was mad. I don't think it's mad. I think America would be wealthier. Because if you have, the reason only 40% of Americans have a passport isn't because they're uninterested in traveling, it's they haven't got time to go anywhere. Do you actually campaign for four weeks? I know it sounds communist, doesn't it, to the Americans? Seriously, in Europe, I've never met somebody so right-wing who thought we should have less vacation. Genuinely. Okay? It's just normalized. Four weeks, perfectly standard. You wouldn't take less. You wouldn't work for anybody who offered you less. Given that money spent in leisure time is actually more labor-intensive than money spent on goods, it would probably benefit the American economy if people had more time to spend it. You think I'm mad? Okay.
Okay, this is the well-known commie who really came up with the idea: Henry Ford. Who very largely created the two-day weekend for his workers. Not entirely out of his own beneficence, but because he felt that if that spread, if the two-day weekend spread across American workers, what happens when you've got a two-day weekend? It's worth buying a car. Okay? So Henry Ford asked a different question, which was not, "How can I get my workers to work as hard as possible?" He asked a question which is, "Is it possible to create more leisure in wider society so that it's actually worth owning a car in the first place?" And I think we often, we need to ask more interesting questions. Because, and we also need to experiment more.
And I think this is why I think there are just more good ideas that we can post-rationalize. Now, good ideas, we can pre-rationalize. I'll give you a couple of creative examples. One of them, travel-related. Okay? These are things which are obvious in retrospect. I spent years traveling around the world with about 15 plug adapters. Okay? And literally years and years. I had the one for South Africa, the one for Australia, the one for the United States. And I had several of each because I needed to charge two mobile phones and a laptop and everything else. It took me 10 years before I realized if you just have one plug adapter and you buy one of those three-gang extension cables, you're catered for absolutely everywhere. One universal adapter, one of those, and you don't have to unplug the table lamp or the television in order to charge your laptop. It took me years.
Now, if I suggest, if anybody's getting their kitchen done here, here's a suggestion: Get two dishwashers. And you're looking at me again. This guy's nuts. He's in the pay of Bosch or Indesit or something, right? Generally, is everybody thinking, "Why the hell would you get two dishwashers?" If you have two dishwashers, you don't have to unload the dishwasher. You have a clean one, which you use as a cupboard, and then you use the stuff and you put it in the other one, and that's the dirty dishwasher. Right? And then when the dirty dishwasher is full, you turn it on, and that's your clean dishwasher. So you never have to unload the dishwasher. You just move things from one side to the other. Okay? But it's only obvious in retrospect. And when you first said, everybody thought I was mad. Right? Why on earth would you do that? It's only in retrospect that so many things become obvious. And I think the world's just full of these things.
And I think quite often, you know, the opposite of a good idea is another good idea. Don't engineers tend to think there's a single optimal answer, and everything that isn't that answer is wrong? Because in engineering, that's true. In mathematics, it's true. Psychology, in many cases, the opposite of a good idea is another good idea. They're two great ways to check into a hotel: fully automated or really high-touch, high-service. It's the middle that's boring. In many cases, it's the average of two things that isn't the solution. I always thought the open-plan office was a mistake because it sold for the average, didn't it? The open-plan office is neither sociable nor is it solitude. So you can't get your head down and write, and you can't really have a proper chat. The future of the office, I think, is half library, half pub, to be absolutely honest. Um, but what often happens is people go, "In between the two is the right place to be." No, no. When you've got a contradiction, either embrace both extremes or resolve it creatively with a third idea which solves the problem overall. The average is generally not as good as it looks. It always seems logical, but it really isn't that great.
Now, in engineering, one plus one equals two. And three times one is the same as one times three. And psychology, these rules don't apply. Really important to understand. We need a kind of psycho-maths, if you like, to make things work. Let me give you an example. Okay? Um, nearly all travel planning, transport planning, including High Speed 2 in the UK, assumes that 10 people saving 40 minutes, 10, let's say, let's make it better, okay? 100 people saving 40 minutes, 10 times a year, is the same as 10 people saving 40 minutes, 100 times a year. Okay? Because the aggregate time saving is the same. If you think about it psychologically, they're totally different. Right? Cutting time for a journey that the same people make very frequently is a life-changing event. They can now live somewhere they couldn't live before. A place becomes commutable that wasn't commutable before. If you spend money, for example, on High Speed 2 between London and Manchester, what you're doing is you're giving maybe a few million people a mild convenience five times a year. That's not the same as giving a million people a massive change in potential life, 100 times a year. And yet, most, most models assume commutability.
One of the reasons the Concorde didn't really work well. If you'd had psychologists, they would have closed down the Concorde. One, because it doesn't work flying west to east at all. Because the best way to fly west to east is when you're asleep. Okay? It's not taking up a whole day in the air where, weirdly, you'd have to leave New York at nine o'clock in the morning, which makes no sense to anybody. Okay? But the second problem of the Concorde is nobody flew between London and New York frequently enough for it to really change their life. You know, even the man who flew on the Concorde most, he was on the first flight, he was on the last ever flight, he was the heaviest user of Concorde by a factor of about four. And I worked out that it saved him about five minutes a day for every day of his working life. So rather than having a supersonic airliner, he could have just moved a bit closer to the office, to be honest. Okay?
Understanding that. The other thing is that one plus one doesn't always equal two in psychology. Really, really small things can have huge effects. The Uber map. Okay? Costs almost nothing, but it has absolutely monumental effects. One of the best things we ever did for British Airways was simply to change the layout of their pricing. Nobody, as a consumer, can buy premium ticketing, unless you can see what the economy price is. There are a few really, really important things. Because if you look at, if you look at every single airline website, it's designed for the business traveler. Okay? It says, "Where are you going? When are you going? And what class of travel do you want?" Now, for a business traveler, that's fine. Because they know when they have to go, and they know where they're going. Because my boss very rarely says to me, "I'd like you to go somewhere sunny, sometime, vaguely in late August." Right? I have a place to go, and I have a time I have to get there. Okay? And the class of travel is determined by my employer. So those are all questions I can answer. To a consumer, all of those questions are, "It depends." Search for a consumer is an iterative process. Whether I go premium economy or business or economy depends on what the price of the other available tickets is. Ah, okay. You can't decide to go premium economy until you know what the economy price was. Secondly, whether you go in July or August depends on the ticket price. And where you go might depend on the ticket price. So I don't think we've even yet designed a really, really good interface for consumer travel selection. Read Eric Johnson's book on the recent book on choice. He's at Columbia, I think, for more about this.
What also choice does is it feels completely rational. But we never, it's dating sites are rather terrifying like this, because we never see what we just missed. You know, as he made the point, as someone who is five foot seven, who only looked at partners on Tinder who were five inches taller than them, would automatically eradicate George Clooney from the search, uh, from their, from their search. But we need somehow a much, much better way of looking for travel, which acknowledges the messiness of human decision-making as opposed to the neatness of business decision-making.
And one of the things I'd love to talk about, if anybody's interested and if Travelport has the technology to make this possible, you know, I mentioned that three times one isn't the same as one times three. Okay? All yield management and revenue management seems to use the price mechanism to encourage people to change their behavior. It always says, "Save £30 now." Let's think about this a bit. If you're a hotel, any hoteliers here? There must be a few. Okay? A family of five, when they stay at a hotel, are probably paying for three rooms out of one income. A dual-income couple with no kids are paying for one room out of two incomes. That means it's actually more expensive for a family of five, typically, to stay at a Travelodge than it is for a dual-income couple to stay at a five-star hotel. Why are all the offers always about the price of the room? Why isn't it, "Second room half price"? Why aren't airline offers, why is it always, "We will drop the price of every single seat"? Instead of, "Kids go half price," discount to the people who are most price-sensitive.
Price discrimination is great. Don't always use the individual ticket price as a way of changing passenger behavior. Use your loyalty programs. About a fifth of the people who belong to an airline loyalty program would crawl over broken glass to get an extra five tier points. So why are you discounting the price of a ticket to get them to fly at 12 o'clock rather than 9 in the morning, when you could be using your loyalty program, or you could be using information about 20% of people would be motivated to go on a later flight if all you put on the website was, "This is the least crowded flight of the day"? Because what's the best airline in the world, in many ways, is the one that isn't crowded. Okay? A flight that's 70% full will almost always be nicer than the flight that's 100% full, especially if you're in the seat with a broken TV. Because you can go and sit somewhere else. And I think economics and logic and numbers has taken over yield and revenue management to far too great an extent. There are loads and loads of ways you can change people's behavior before you have to resort to bribing them. And I think yield and revenue management at the moment simply use the price mechanism as if there's no other motivation. I think it's a really expensive way of doing it. Don't tell me it does work, but my god, there must be cheaper ways of doing this.
So, I end with a little recap. You've got Paul in the afternoon, so you don't need much of this. Here are five things we don't currently have metrics for, which humans really, really care about: status, certainty, autonomy, relatedness, and fairness. All five of them, interestingly, crop up in the travel industry. Or, you know, certainty. We're happier waiting for a train if there's a display saying, "Next train: 10 minutes." We'd rather wait for a train for 10 minutes if we knew it was coming in 10 minutes, than wait five minutes for a train in a state of event, not knowing. Relatedness. A large part of loyalty programs is you like to know that the airline knows that you fly with them a lot, because you trust the airline more if you know that they value you disproportionately as a passenger. Okay? Fairness. There's a whole lot of work to be done, I think, on pricing and ticket refunds and rebates and travel, which could better understand fairness. Autonomy. We love the freedom, effectively, to, you know, make last-minute decisions, not to get trapped in things. And status. You know, all about. But those are five things which, deep in the human brain, they're heavily, heavily embedded. They don't generally come out in market research. We don't have numbers for them. And economists don't understand these things at all. They don't feature in economic models. And yet, they're nearly always there. So it's a wonderful checklist to use.
And I'll finally end on this. Okay? Marketing and innovation are basically the same thing. Now, let me explain. Okay? There are two ways you can create value in the marketplace. You can either find out what people want and work out a really clever way to make it. Or you can work out what you can make and find a really clever way to make people want it. And the money you make is indistinguishable, regardless of the direction of travel of that process. So it isn't necessary to introduce a new product to perform R&D. One other way of doing R&D is taking an existing product and presenting it, or pricing it, or positioning it, or framing it in a completely different way. Psychological arbitrage is where quite a lot of money is made today.
There are psychological solutions out there that could save a fortune. If you want people to get an electric car, we currently subsidize electric cars very heavily. We also have a subsidy if you install a home charging point. But in order to install the home charging point, you've got to prove you've got an electric car, which is kind of the wrong way around. And I said to the government, "No, just subsidize these." I said, "If you can get people to pay £100 to install one of these on the wall, okay, don't bother about subsidizing the electric car. They're going to get an electric car anyway. Because if you put that on your wall, you'd feel a bit of a mug going and getting a diesel, wouldn't you?" Right? Just get the order right. Don't worry about the incentives. Get the order right. So there are tons and tons of psychological solutions out there.
If you want to hold, digest them, I've co-written this book, "Transport for Humans," with my former colleague Pete Dyson, who now works for the Department of Transport in the UK as the head of behavioral science. That's my old book. But I'll also be around right till the end of the day, I hope. So any questions, please come and ask me. I'd love it. Thank you very much.
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