[Applause] [Music] he okay welcome to another episode of the funky marketing show I'm thrilled to have today with me uh one of the Legends and the pioneers of the marketing Mr Rory suland himself uh I usually don't present uh you know guests right at the front but I will uh do it today because uh Mr Rory is vice chair at UK where he also co-founded a Behavioral Science practice within the agency and before that he was a copywriter creative director in ogil for over 20 years having joined as a graduated traine in 1988 it's interesting to me because I'm born in 1984 so even uh you know four years after I'm born he already started as as a trainy uh he did lots of stuff he was a president for the IPA chair of the judge for the direct jury at Khan also spoking in t Global he's a writer speaker and an inspiration uh and what was interesting to me uh Rory you uh you wrote on LinkedIn that you live in the former h of Napoleon thei you are also the trustee of the Benjamin Franklin house in London and a patron of Rochester Cathedral that's right yeah absolutely um it's uh it's it's been a fantastic ride actually people always say well you've only worked at one Agency for 30 CRA 33 years getting on yeah it'll be 33 years this month but on the other hand I've done about seven different jobs within the same place so I can't really complain about lack of variety that is one advantage um of a large agency that you can actually um migrate within it rather than having to leave in order to get fresh and new experience indeed there there an interesting perspective because usually you know people just when they feel that they out grow their role they just leave the agency or the company and OG OG's always had a a long tradition of kind of relatively uh you know relative longevity in terms of people staff it tends to promote from within uh rather than always hiring from outside and so it's an interesting um uh it's an interesting outli I think among agencies in that respect to some degree there are a few other agencies that are similar yeah I mean that's that's uh why they have you have actually the longevity right because it's easier to promote the people that people that are already there know the culture know the the how the agency is working then to get the new ones right from the start and I increasingly actually David Ogie was one of the first people to write and speak about the idea of company culture as an enduring source of competitive advantage and I increasingly come to realize that it's true partly because actually for more reasons than I think David ogal realized that if you have a fairly consistent culture it allows you to accommodate a far greater range of brain types within the same organization while still functioning I was terrified recently because I met someone who is quite interested in getting into advertising and he's got an Oxford degree in philosophy and uh philosophy and theology he's actually got a first class degree in philosophy and theology which is a pretty serious achievement but he couldn't really get a job or even an interview with any of the mainstream consulting firms because they're basically looking for engineers and my argument this is an extraordinarily dangerous um State of Affairs where so much business advice is being given by people of a very particular mental typology that's not to say the engineering mentality isn't valuable in in problem solving it's it's um uh it's in many cases essential but you can't only have Engineers I always think that you know China is marked by the fact that I think all but one of the poit bureau effectively has a degree in some kind of engineering so you see that partly in the Chinese obsession with infrastructure projects now don't get me wrong I think it's you know for a stage I think that kind of infrastructure development is important but um you might argue I mean actually it's worth noting that the Chinese high high speed rail network uh doesn't make any money at all it's a massive drain on the economy in fact um now you might argue that in that stage of Economic Development heavy investment in engineering projects is not a bad place to start but ultimately you'll need other skills um and the the the bias tendency of you know to a man with a hammer everything looks like a nail and to a man with an engineering degree everything looks like an engineering opportunity or problem and um so one great thing about having a company culture is it allows you to accommodate and embrace people of different personality types and different skill sets more widely but I think I think D I mean it's worth noting that the ogal culture is polarizing um it's it's what we call in Britain Marmite you either love it or you hate it and people who like it tend to stay and actually quite quite often when they leave they tend to come back again um it's a you know it's a recognizable cultural type some people love it some people don't if you don't like it or you don't Thrive with it freely admit get out because one of the things you always notice in advertising is Jeremy bulmore wrote about this true in marketing in general you know you get people who are huge High Flyers in one agency they move to another agency and kind of disappear from a site you equally get the opposite effect where people who are considered and also ran at jwol Thompson will move to say uh you know bbdo and suddenly enjoy a glittering career the cultural fit is much much more important than I think anybody acknowledges we like to pretend we achieve uh everything we do through our own efforts and talents but in truth it's the ability to find uh people with similar values I think around you very very good um psychologist who worked for a very high-end head hunter in London said this to me he said um you can compromise you want diversity in everything except values you know fundamentally you need to have people who share the same values and you know i' find it very difficult to work in a place I appreciate those places but those kind of places where you're expected to meet your miss your child's nativity play in order to show your commitment to work um I I find it very difficult to work in that kind of culture you know I think an acknowledgment of kind of work life balance is um uh something where OG I don't think I don't think it gets it right but at least it makes the right noises in that direction it doesn't have a culture of complete corporate masochism or anything like that yeah well said thanks for this from the culture I think it's one of the most important things now as we are moving to talking more about B2B like culture and values are some things that you know that just now started companies are just now starting to embrace them uh like fully it will it was up to to some degrees for now but today I think things are things are changing and it started a little bit before before Co and now it's moving on so my idea was to talk more about you know behavior science in B2B because I see they are far I'm gonna start off by making one very simple point which is particularly in B2B the role of Zoom as a technology and video conferencing as technology even though it's received a lot of column inches about you know proper working patterns I think it's much much more important economically than we've acknowledged and we should be discussing it more so I've just written a piece in The Spectator where I've made a very I think quite significant point which is um there's the question of whether your employees are more productive if you give them some or all remote and flexible working but we shouldn't actually disregard the question of whether customers become more valuable when they're working remotely because apart from the else they will have more at least in the short to medium term they'll have more discretionary income and this is equivalent to a tax cut within the economy but also I think B2B in in B2B terms it's very interesting because B2B relations always suffered from this slightly false dichotomy between it's either a phone call or an email or you meet face to face I mean ordinary consumer relations I think arguably did this and just a very interesting case now this is a b Toc example but it's it's not irrelevant you know I chose my new financial advisor partly on his Zoom setup the guy had plugged in a kind of mirrorless SLR camera into his laptop and had bought a professional level microphone because it was clear to him as a financial advisor that a lot of his business was going to take place over video so he is Dam well going to do it properly and I saw his investment in that as a kind of proxy for his approach to business now with a financial advisor the relationship I want is someone who will appear on the screen and Bully me into filling in a form okay I don't necessarily want him to outperform the market spectacularly what I do want him to do is to bully me into being in the market in the first place okay and um one of the things I noticed I don't I don't want a phone call I don't want an email I don't want someone sending me a load of electronic forms that I have to spend an hour filling in but at the same time I don't want a guy who says you have to be home at 7 o'clock so your wife and I can both meet you that's too much of an imposition and this halfway house between um awareness and giving up half a day to explore a potential business relationship the fact that there's now a stepping stone between the two seems to me and there's a stepping stone between going to a conference for three days and actually watching a talk I mean the whole conference and exhibition industry is going to be completely reinvented you know if there's any business to be in it's the um uh it's the conference and event streaming business at this moment and it's it's extraordinarily important I think to the conduct of any business in this space and we're not spending enough time talking about the potential opportunities you a very very simple level uh during lockdown that you know I I lead a very International existence to begin with but during lockdown interestingly the number of conversations I've had with mainstream Continental Europe hasn't really changed at all Frankfurt Paris that sort of stuff the number of conversations I've had with with both funnny enough the bulkan and Scandinavia has gone up inordinately the number of conversations I have with Australia New Zealand Canada has gone up by a factor of 10 the United States particularly us outside New York has gone up by a factor of 20 okay and then there are a lot of countries like actually Botswana Namibia and um Kenya where it's literally gone up infinitely you know it was very unlikely I'd visit those places more than twice in my life you know and during those visits i' probably meet eight people well now it's possible in fact it's no different um arranging a meeting with Kenya or Namibia uh than arranging a meeting with someone in elsewhere in London that's a really big deal and nobody's talking about it I mean not nearly enough I mean we should re as ogal we should reinvent our business from being a handshaking business to a broadcasting business to a largic stand agreed you think that that Co definitely uh showed us that we need to embrace openly like technology and all that's coming with it it was a classic case which is very common with Network Technologies which is Network Technologies don't cost anymore in fact they tend to fall in price over time but they don't deliver their benefits fully until they reach a certain critical mass I mean you know to take an absurd example there's no value to having the world's only fax machine if only 10 people in the world have a fax machine you don't know of them again your fax machine is more or less useless okay it was only when covid forced video conferencing to reach two things I think critical mass of adoption and comprehension combined with actually a fundamental uh reframing of the nature of video within business so the way I phrase that is first of all you could reasonably email someone and say are you on for a video conference and know that they will be able to log into Zoom without cocking it up and that you know basically they would make their sound work and the first 20 minutes of the call wouldn't be spent with them farting around on headphones so there was a basic explosion in confidence and in competence sorry but there was also a huge explosion in confidence in other words if I hold a video conferencing meeting it'll probably kind of work you know in fact um but thirdly there was just a change in a social norm and the way I phrase this I always use the same phrase is before the pandemic meeting people in person was coke and video conferencing was Dr Pepper and now video conferencing is Coke and meeting people is Dr Pepper you know it's the default it's the default Behavior you if you think about it one of the huge advantages enjoyed by Coke is that you can recommend it ask for it you know order it anywhere in the world um one you assume they'll have it okay uh because if you don't stock Diet Coke and Coke then you know you're failing as a Hospitality business business so their distribution is remarkable but also you can ask for it without it seeming weird in almost any social context you know you don't go into a cafe and ask for champagne you don't go into a michan St restaurant and ask for you know Fanta Forest fruits flavor okay but you can ask for Coke in any of those settings yeah well well explained so they are you know to use Byron Sharp's language it's a mixture of mental and physical distribution yeah so uh if we connect to all those changes that we have been gone through I think they are in in the in the middle of you know B2B adopting more of b2c behaviors and decision making uh behaviors specifically so like I think we we as as consumers are not going you know going to Google to find things right away or to compare uh products right away we go to the social media we go to the small community is because we have far more people at Outreach uh right now than we had like two years ago and I think those are the things that are changing actually the way B2B companies now have to think about the consumers customers and also this is what is changing their behaviors so I just wanted to get your point on that yeah so one one thing I'll say is that B2B has probably made the mistake of creating a false dichotomy it's believed there are a few people who are its customers and clients and there are many people who are entirely irrelevant and actually I think the benefits of wider Fame in B2B need to be restated that apart from anything else as LinkedIn and the LinkedIn B2B Institute have pointed out yes you kind of know who's responsible for buying uh Heating and Energy Services for ogbe now but as to who their successor is you have literally no idea okay so there's Futurity but there's also just there's also just the wider value of being famous as a brat which actually brings its influence to bear on lots and lots of decisions where you're never measuring the effect of marketing okay lots of behaviors so the example I always give I don't know why I do this but you know if you're a Famous Brand when your chief executive Rings somebody up they always return the call you know the chief executive of Rolls-Royce AO engines or the chief executive of um uh you know a large uh you know a large PLC can bring pretty much anybody in the business universe and get the call return the same day if you work for Zog limited that privilege simply doesn't exist now that is a product of Fame but no one really attributes it to any specific marketing communication so it gets undervalued and ignored and I always argue there's also the purpose of Simply luck which is maximizing Serendipity yes you can plan your business up to an extent but a large part of your business's success will be always down to forces beyond your control and future elements and future developments which you can never predict in advance um and even if you could predict them the long-term effects they'll have on you are impossible to actually uh predict adequately okay and so there's simply a value to Fame in exposing yourself increasing your surface area exposure to possible upside opportunity of a kind that you don't yet know and I think when business becomes too deterministic rather than probabilistic about its approach to the future I think we actually gain in efficiency but we lose INE Effectiveness in that we can make everything look wonderfully efficient and waste-free because everything has a purpose but unfortunately we're not catering for anything that we didn't account for in the first place so if you only optimize those things which you can pre- rationalize you ultimately don't end up as a very successful business in fact but because over time you need to accept that there's a tradeoff between exploit what you know and explore what you don't and an efficiency mindset driven in large part I think by consulting firms and these Engineers I mentioned earlier tends to overweight the explore exploit trade-off is known in in for example in AI which is how much time should I spend actually uh evaluating a decision versus actually making it and there's a trade-off because if you make it slightly better decision but it takes years actually you're better off not doing that but equally if you don't explore enough and I would argue creatively and imaginatively as well as logically uh you end up making the best decision from a ridiculously narrow uh solution set and so this is one of the great values of Behavioral Science if you admit psychological factors into your model then the possible creative solution set simply becomes much bigger and your problem definition set becomes much much broader as well not everything turns into a kind of engineering problem yeah and examples I give of that obviously okay in B in B Toc that would be um you know the Uber map we don't need the cabs to turn up faster we need to give people a higher degree of certainty that's a site over when their cabs going to arrive and that's a psychological solution to a problem which if you'd given it purely to Engineers would have ended up with some predictive model where the cabs try you know you try and send your cabs places where they're more likely to pick up customers well that's not a bad idea in itself but actually it's expensive to do it may backfire and in any case it won't solve the principal problem which is that people hate uncertainty more than they hate an extra four minutes of wait yeah that's well that's well said uh what one thing that stood out for me uh listening to some of your previous um podcast uh is you said that uh you know there's a connection with why B2B buyers make their decisions to avoid blame and it has something to do with defensive decision making and I think that was an interesting uh an interesting overview of the things so so let's look at let's look at two bits of research which come not really from Behavioral Science but they come from evolutionary science the social brain hypothesis that humans evolve big brains not to to understand the world but to understand each other I was talking to um uh I think it might have been um uh Robin Dunbar where he said um if you're a monkey okay what is the most complicated thing I you can introduce to my environment uh which you know uh and the answer is actually it's not a tree it's not a lion it's not a tiger you know you know what the tiger is trying to do that's relatively easy to figure out what a tiger's up to and the fact that you should avoid it the thing that makes things really complicated is Another Monkey okay so there's the social brain hypothesis uh which is that we essentially naturally think in Social terms rather than conventionally rational terms we have something you might call ecological rationality and the second thing is the argumentative hypothesis which comes from Mercier and Hugo Mercier and Dan spur to French um anthropology essentially or psychologists who argue that in many cases we evolve The Faculty of reason not to actually make decisions but to argue for a course of action to defend our decisions or to assess and quality check the arguments of others and so in this case one of the things they notice which would be undoubtedly an outcome if the theory is true is that people would C choose a course of action which was easier to defend rather than a course of action which was actually better that in other words we may choose behaviors on their defensibility not on their optimality and that takes you into the field of defensive decision making and my little oversimplification I acknowledge it's an oversimplification but it's a useful point to make I think nonetheless is that in consumer decision making we try and minimize the risk of regret and in Collective or institutional decision making government politics the public sector whatever we try to minimize the risk of blame and therefore we are much much more inclined to do those things which either don't look like a decision at all which seem uncontroversial or which seem hyper rational in other words a lot of the Quest for data is the old lamp poost problem it's for support not illumination and that a large part of comp behavior is probably ass covering disguised as rigor that actually the reason those people are doing it is not to protect their company but to protect their career within the company and once you understand the asymmetry of incentives that exist within companies it's hardly surprising that people behave this way because outside of you know a city trading floor or a very large Bank okay the downside risk you lose your job your promotion prospects get destroyed is immense in an organization whereas the upside opportunity is actually relatively small okay you know uh you know there you know there is no likelihood that wpp will ever voluntarily regardless of anything I do give me quarter of a million pounds but there is very you know there are a thousand different things I could do tomorrow which would get me fired within an instant and so once you look at the fact that you know consumers generally have a reasonably balanced calibration of upside opportunity and downside risk and understanding how different consumers are calibrated that way and reassuring them that you know this is a low regret decision is good Marketing in B2 B you have to convince them of two things probably that it's a good decision but more important perhaps is that it's a decision which regardless of the consequences it will be easy to defend the part you played in making it and so I think this leads to all kinds of extraordinary biases I mean one of one of the examples of defensive decision making we always noticed was what we called in in the Behavioral Science practice the heath row effect people you know whenever you asked for flights people would always give you a list of flights from Heath to JFK you go well hold on our office is closer than nework New York is arguably a better airport in New York you know I live much closer to Gatwick or London City I do to Heath thr why are you only giving me Heath throw to JFK effects uh flights options and I'd have to go back and say please can you give me some flights from New York I couldn't understand what was going on then I realized of course he throw JFK as the default if anything goes wrong on that route I won't blame my PA I won't blame my company travel agent I'll blame British Airways or I'll blame striking American air traffic controllers I'll blame some external entity if you book me spontaneously from Newark or from London City if anything goes wrong I might blame you because you've now taken a non-standard decision and I can ring you up and say if you hadn't booked me from this soling toytown airport I would have been in New York by now okay now one of the things I think we need to understand is that quite often we incentivize people individually in a very uneven way in other words there are far more ways they can be fired than there are ways in which they can be rewarded and therefore the gains to Eccentric decision making or creative exploration are smaller in business to the individual than they should be but also we tend to Silo businesses so the individual is given a very very specific narrow function which prevents him from having the autonomy to create value or the incentive to create value by doing things that he isn't specifically tasked or she obviously isn't specifically tasked to do okay so if you give people very narrow metrics of success they will start actually first of all to pursue those metrics to the exclusion of any other possibly to the detriment of other metrics why should they care okay I'm simply tasked to do this and we know from systems thinking that you don't optimize an overall system by optimizing its parts individually this is a case for synthesis not analysis people will also then pursue those gains to an extent which Maybe counterproductive you know uh getting people off the phone in a call center okay you know probably might be rewarded even though it leads to widespread customer dissatisfaction somewhere else in the organization but also people will start to gain the system but their opportunity to be creative has also been curtailed because nothing that improves the organization which doesn't fall into their direct area of responsibility will gain them any credit whatsoever so they effectively become heavily compartmentalized and this is actually you know very very upsetting State of Affairs which I think uh grotesquely distorts the energies of large organizations yeah I I can recognize everything that you said now looking at the companies that you know that I'm talking with especially those focusing on mql models where marketing is here just to get the leads because you measure them on leads you expect them to keep growing the number of leads they are delivering and so it will cause also the reaction of the marketing you know what we can do we will do webinars we can get tons of leads that's it we filled in our goal and and then it causes you know all kind of different behaviors in the organization like sales is not satisfied because not getting the right leads well I I'll give you a lovely example of Catch 22 which exists in the car industry but also exists in B2B if you only get in touch with someone when they're very uh if you only go into a car dealership when you're very close to buying a car okay everybody on that dealership will oversell you okay they'll give you a really hard sell because they can't face the prospect of you walking out without at least test driving a car that creates the problem that nobody goes into a car dealership to browse because they know they're going to be pestered to hell so as a result even more the people going into dealerships are only people who are very close to the point of purchase and so a whole value of a car dealership as a place of consideration is completely destroyed and so the same thing can happen which is I won't get in touch with these people because if I'm oversold um you know and one of the things you know one of the things I occasionally you know have um disagreements with with you know OG's new business team is they say you know you need to be plugging our work more when you give a talk and I say no no I'm not in that stage that's your job okay when they come to us and say we've got some business okay then you can start selling a bit harder and talking about the sunroof and the Bloody alloy wheels okay and the fact you know okay my job is to get them interested in the first place so that we're at least in their consideration set and it's a different process now the problem with car buying and this is probably true of a lot of B2B things is we don't have enough because everybody is incentivized on transactions they're not incentivized on interest because you can measure transactions but you can't measure awareness or interest the amount of time that's spent effectively hard selling Hot Prospects in relation to softer sales to or or to simple warmup activities among cooler prospects almost certainly gets distorted so again it's the exploit explore tradeoff yeah and thinking about it do you have uh like any idea or suggestion how can we actually uh influence uh you know like Senior Management to focus more of uh you know understanding the psychology of the business so I think well one of the problem one of the problems you have is it's only the chief executive uh and maybe you know a couple of other SE sweet people who have a responsibility for the organization as a system rather than being given responsibility for an individ idual component and so there's a famous story about Daniel caraman speaking to the board of directors of a large US company and he goes around the heads of the different divisions and he you know they're sort of 10 of them okay and he says I can offer you an option now you can make a decision where there's a 50% chance that your revenue and profits go up by 50% next year but there's a 20% chance that your revenue and profits 30% chance your revenue and profits go down by 20% next year let's make it 30% to make it easy okay right 50% chance of a 50% increase in profits 30% chance of a 30% Fallen profits would you take that option of the 50% risk with the 30% downside and all but two of them said no said because three times out of 10 I'd lose my job and if I do that three years in a row right I've definitely lost my job because one of the three things is probably going to fail right and the chief executive sits at the end of the table of gust and said but I want all of you to take that option because net net across the 10 divisions we're going to end up significantly rure every year and so once you actually start divvying up risk and opportunity and the risk reward tradeoff you start creating defensive decision making where people don't do essentially you it all boils down to nobody ever got fired for buying IBM you know that's what it boils down to you go with the default option you go with a big four accountancy firm you go with a big consulting firm because if everything goes wrong there's a very significant form of escape velocity in a B2B brand okay if you become very very famous okay let's say your price waterhous or your McKenzie okay if you appoint Mackenzie and everything goes wrong all your colleagues blame McKenzie if you appoint a small boutique accounting firm or a small boutique consultancy okay they blame you for not appointing McKenzie for not appointing price Waterhouse and that's you know you know that's why I think you know um uh it's very very difficult to start a small boutique Airline by the way because no travel agent feels comfortable putting someone on an airline where the reaction will be what the hell were you thinking why did you put me on this [ __ ] weird Airline my flight was terrible it's your fault okay whereas if you put someone on British Airways or virgin or EasyJet they go oh the EasyJet flight was [ __ ] but they don't blame you okay they blame EasyJet and so if you look at a large part of B2B decision making as being blame avoidance there is a kind of Stratosphere you can enjoy as a B2B brand and I think to be honest OG probably profits from sitting in this space to a degree if I'm being completely objective which is you're reputable enough for the decision decision to appoint you not to be the focus of blame in the event that things don't work out whereas if you appoint six creative guys in a weird Attic in Bratislava okay to do your advertising if it all goes wrong that's not their fault it's it's it's it's your fault for not appointing a proper agency great example it reminds me of so many so many things that I've been through and uh thanks for coming up with with those examples like I mean the other problem with B2B the other problem with B2B is the price value equation in bet SE is ultimately when all said and done will I derive enough utility enjoyment status whatever it may be from this purchase to justify the purchase price and will you know is there a very low chance that I'll end up regretting doing it okay because I think that secondary one gets ignored by marketers marketers spend too much time on the magnification of positives rather than the minimization of negatives because I think you know actually people take decisions using a calculus which also involves not just how good will it be on average but what's the worst that can happen it's what I call the McDonald's effect you know and to some extent you know McKenzie is the McDonald's of management consulting okay if I'm going to spend a stack of money on this the point about McDonald's is it's not very very very good but it's incredibly good at not being terrible and um once you understand that calculus one more marketing attention needs to be placed on fear removal and reduction okay and secondly um uh you know and slightly less attention on the continual magnification of the positives which I think is just an important way of looking at it but in B2B you also get the absurdity of course which is the price value equation is terrible because you're forced to pay for just to take my own example advertising by the hour but the value created by an ad agency Bears almost no relation to ours spent okay so so you know I mean you know it's rather like saying I don't know an example I mean you could make the example that you know maybe we should lease cars rather than buying them or maybe we should have a car where you guarantee 6,000 miles a year and you pay by the mile you know maybe we should rethink car purchase entirely but you know I'm not I'm not suggesting this doesn't apply in B Toc how you pay for something affects how you think about its value okay not just the amount you pay but in in B2B it is utterly absurd when you think about it I'm paying for people by the hour is is a nonsense and so you have this fundamental Problem by the way which is the whole discussion around procurement uh almost certainly becomes completely misplaced where it becomes a discussion about the the Blended hourly rate or some such nonsense and that you know that really isn't where the conversation should be focused at all you know I mean I would argue that as an ad agency with a reasonably large client you should be able to bring them you know 10 gamechanging million dollar when I say million dollar I'm talking about a PLC or a very large company okay you know if it's a smaller entity maybe it's a $50,000 idea or $100,000 idea but you should be able to take them whether they take them up or not as up to them but you should be able to bring them those unasked for ideas as part of the relationship ship and yet it's never factored in at all because the procurement discussion is all about the efficiency an agency delivers when it's doing what it's told okay but the value of an agency predominantly comes when it's doing what it hasn't been asked for okay you've probably never thought of doing this but have you ever considered doing this thing okay and um that's that's probably the greater source of value um which an agency can deliver is doing things it was never asked to do in the first place do do you consider marketing uh also going in that direction like right now when we look at B2B like marketing doesn't have that you know uh that role of creating the awareness educating the audience but it's here just to know do I would call it D digitalized sales mostly as this this is again problem the quantification problem which is that you're um the first lesson of statistics and this is Roger L Martin who I recommend highly to anybody as a writer the first lesson of Statistics is that if your sample is unrepresentative you need to tread carefully almost all marketing data is hugely unrepresentative because it tells you about transactions which are a very very distorted part of the overall picture because transactions are recorded as a byproduct of the Billings process and it assumes that the value of every transaction is more or less equivalent but of course as I argue if you're the Double Tree and I think the Double Tree is part of the Hilton group I hope I've got this right okay if you if you're busy persuading people to stay at the Double Tree not the Hilton then your value to the overall organization is fairly trivial because you would have got the money anyway if you persuade someone who would have stayed you know with a friend to stay at a hotel and that hotel is the Double Tree that's a very valuable piece of persuasion because it's actually creating incremental money rather than shifting it elsewhere but you're probably not making that distinction you're not making the distinction of the value of advertising that isn't accounted for simply because the data is grotesquely unrepresentative and so it's very easy to justify your job description and your salary as a Salesman it's very hard to justify your your your job as a warmer upera okay and so when you optimize around an um an unrepresentative sample of data and it's bear in mind it's unrepresentative not only because we don't collect what's important we collect what's to hand that's the first point but the second point is all data is all big data is unrepresentative because it comes from the past okay there's nothing in the data that suggested that Red Bull or espresso or Starbucks would be successful entities there wasn't any data that said there's a large growing market for cups of coffee coffee at $4 uh you know there wasn't any data that suggested there was a market for a 70 Cent cup of coffee you made yourself at home okay uh there wasn't any data that suggested that people wanted a weird tasting drink in a tiny can that cost cost a fortune okay no data okay and if you only rely on what you've seen in the past to optimize what you do in the future you're be you're optimizing on the past and the future is much more fat tailed than past because the past was only one variant of a number of what were one's potential Futures and therefore you're not you're trying to be too logical and the short term by the way it pays because the short-term future is quite accurately described by the past the long-term future is not described by the past at all okay I mean in the case of weather okay you canot predict the weather more than maybe 15 days in advance okay I'll give you an example of this in complex okay so if you want to model mathematically the effect of one billiad ball hitting another okay you can do that to an extraordinary level of accuracy when you get down to the fourth Collision the extent to which tiny variation in the initial stimulus will lead to totally different outcomes if they're four collisions it's like the three body problem okay you actually need to account for the gravitational pull of the players standing around the table in order to accurately predict what will happen you need to get down to that level of data uh detail in order to predict um uh accurately where the ball will be after four collisions okay if all the balls are bouncing around the table now the interesting thing there is that in the short term you could predict the weather fairly well in fact if you're ever locked in a Cellar and the serial killer who's captured you says if you can tell me what the weather's like outside you're locked in the cellar remember okay uh I'll let you go but if you get it wrong I'll kill you okay the safest answer if you're forced to answer that question is to say the same as yesterday because about a 60% chance you'll be right okay if the serial killer says what will the weather be like in 10 days time okay same as yesterday is totally useless really okay I you know it's little guess what and so once time progresses the extent to which Things become predictable diminishes and yet what we're trying to do is we're trying to predict the future from basically projecting extrapolating from the past now the tragedy of that is actually that it works quite well in the short term but when it doesn't work is it doesn't work in the medium term it doesn't work in the long term and it doesn't work if you have a major impetus or event like covid which fundamentally shakes up all the balls on the table anyway you know you know the best that you know your best physics model of a billion table doesn't work very well when there's an earthquake okay and the extent to which datadriven decisions are easy to defend leads to them becoming too popular within business decision making and we're back to the spur Mercier point now in their original paper right in the synopsis in the um uh in the in the abstract at the top it says if this theory is correct we would expect to see people making decisions on the grounds of their defensibility not on the grounds of their suitability and I think the business world is a living exercise in people doing just that I mean you know one of the things you see is HR I'll give you example it okay if you're an it if you have a security breach okay if you have a security breach uh you might lose your job okay if you make life easier for employees you don't get any of the credit you know if you if you introduce software you probably don't get any credit at all okay now as a result what you see happening in corporate it is your password changes about every three weeks right so what actually happens people react to the frequency of change of password by simply adding a number to their existing password okay which actually makes the system less safe arguably that actually if you made them change their password once six months okay and they had to choose something totally different but here's the problem the the the IT person has covered their ass by regular password changes so they're not really interested in the extent to which this is an optimal solution to the problem okay I mean what happens okay I'll give you an example from my own experience we were forced to use Outlook okay and and one drive okay now one drive for a period they've got a bit better since to give them credit but one drive was absolutely terrible if you wanted to send large files outside the company okay so everybody starts using bloody Dropbox they start using we transfer and everything else now that's less secure than the old system when we were using Google okay it's less secure than us actually you know than introducing a please send this outside the company option to um uh to one drive but the IT person is more interested in defending his own uh job from blame and defending his own career than he is in the overall efficiency and effectiveness of the ogal organization so that's a classic case where you do the thing that gives you defensibility of decision not quality of decision and that's spur bur Mercier right at the top paragraph that's what we'd expect to see do we see it we see it we see it in medicine okay you know people basically go I can be sued for doing nothing I can't be sued for sending him to exploratory surgery so they send people to have some you know evasive tests done even though it may not be the best thing to do um I think in the NHS actually I think you should be able to sue away uh in the British National Health Service one way in which people could be generous to the National Health Services they could voluntarily sign a thing saying they won't they won't Sue except for deliberate malpractice that was uh extend iive and well explained uh so I think we're getting uh close to the end but is there something that we are missing something that that uh we didn't say and it's on top of your mind no except say that B2B marketing particularly with the zoom explosion is now potentially much much more interesting Than People realize it was always treated as the poor relation simply because ad agencies were engaged in the business of of essentially selling media space rather than solving problems if you adopt you know the approach that the most interesting bit of marketing is you know bought Communications then you know stick with B Toc I would argue the most interesting thing about marketing and being in an agency is creative problem solving and since you see more anomalies and biases in decision making in B2B uh than you do in B Toc the potential for inventive problem solving in B2B and the potential for Value creation is is actually greater I agreed I mean looking looking at you know when I I entered the B2B like 19 month months ago something like that working in b2c all those time before because it was all like foggy Mystic no Humanity no emotions and every every company was talking about themselves about the features about the product not in a way that they are solving the problem with their product but only about the product and uh you know I think there's a so many that in BC I mean I actually went to a kitchen firm okay and uh we said well presumably you take away our old kitchen when you sell us a new kitchen no you have to arrange that yourself okay I'm got to go to a separate company to remove my kitchen before at these people total idiots right it's ridiculous okay understand where the problem lies with the person and understand their situation don't Focus yourself around what you think you do Focus yourself around where the consumer is or where the customer is and the extent to which never mind B Tob I mean that the failure is probably worse um but extent to which the extent to which actually the the optimization of what a company thinks it does not around consumer needs and human needs and unmet needs but optimizing around what you think the official performance of some predetermined action might be is a cast catastrophic misdirection of effort and it leads to things I call Classic form of business weight which is not unmet needs it's met un needs in other words the company getting more and more focused on doing things that consumers aren't really very bothered about in order to pursue some Metric or other while completely ignoring what it is I mean you 1800 mattress okay you know that consumer company in the U in the US but I mean they partly they achieved something like 80% of the New York and Manhattan mattress Market because part of their value proposition was we take away your old mattress for free what's the biggest problem replacing a mattress if you live in New York City well it might be money but assuming you got the money to buy a new mattress you've got the desire to buy the new mattress the biggest hurdle is what the hell do I do with an old mattress in the middle of Manhattan right yeah exactly and secondly if I get rid of my old mattress and then I discover my new mattress takes three weeks to [ __ ] arrive I'm sleeping on the godamn floor right you know I mean look at it from the lens of lived experience not through the lens of mathematical optimization it isn't really difficult but most organizations don't do it because most people in the organization have job descriptions which are defined with OB jectives and terms that are essentially orthogonal to the customer interest or the client interest yeah and and it's basically Back to Basics for most of the things the way I see it and we are just tend to over complicating things over and over again well I mean we have to acknowledge the fact that a large part of the value created by marketing will never be measurable and will never be predictable in advance it's there to some extent to to increase your opportunity for being lucky and to minimize your opportunities to being you know uh to being what we might call fragile you know becoming over dependent on certain particular components and so marketing is a probabilistic game it's not a deterministic game and as a result um it tends to get discounted when people design metrics and rewards and systems which tend to be rewarded around what's deterministic not what's probabilistic yeah so tell me tell the people actually where they can find you I guess Twitter is the best the best way if they want to continue the conversation give keep it going yeah absolutely right at Rory Southerland if you're interested guys I recommend you do that uh Rory is very active and responsive to uh to talk about all these things related to marketing behavior science and all those other things Rory thank you for uh for joining me here on the funky marketing so it's been a huge pleasure best wishes to everybody in Bel you're in Belgrade are you uh in novisad but it's close to Belgrade I know it yeah yeah I've never been and I've always wanted to go so one day I'll be there in person yeah yeah you you know I had a plan of coming to to see you speak live at Montenegro in spark me conference few years AG the end it was it was canceled wasn't it in the end I think yeah yeah yeah the last one yeah well okay I I think that may be happening next year but I'll it's April isn't it yeah somewhere around April May something like that keep your eyes peeled that'll be fantastic thanks s so much byebye byebye [Music]