hi I'm Nick ha and welcome to the world's greatest business thinkers [Applause] podcast today's guest is one of the most influential men in marketing a globally acclaimed keynote speaker a TED Talk Superstar with over six and a half million views and described as one of the most unlikely Tik Tok sensations of the day Rory Sutherland is the vice chairman of Ogie and a charismatic promoter of psychology in Behavioral Science being the founder of ogleby change Behavioral Science practice within the agency he's held prestigious positions over the years as the president of the IPA and chair of the judges for the direct jury at can he's also written three books including the best selling book Alchemy in 2021 he founded mad Masters which is a a hybrid learning program that helps marketers entrepreneurs and Commercial leaders use Behavioral Science and creativity to solve business challenges so much to talk about today and as always if you like what you hear today then please do like follow And subscribe on YouTube or wherever you listen as it really does make a difference to the work we're doing with this podcast welcome to the world's Grace's business thinkers podcast R I don't know if I quite warrant uh inclusion in that uh list but I'll do my best uh well you definitely do uh and delighted to have you on the show um well starting off I mean you joined o ogl uh or ogl and mother as it was back in the day as a a graduate trainee planner in the late 8s and I was actually graduate training I was supposed to be an account executive and I was pretty terrible at it I very quickly then became a planner and then about I suppose about six months later became a a copywriter which I think is what I'd wanted to do all along to be absolutely honest right okay well I because I read something about you being inspired by by the advertising industry and and by growing up in the 80s and and I too grew up in that decade and remember fondly the adverts like I don't know Levis Nick Cayman laundre advert or the Kor advert I bet he drinks Carling Black Label I can still still recall these adverts um yes I mean there was one I saw at the cinema the first ad BBH did for Levis uh which was all about I think uh someone effectively exchanging a briefcase of currency for a pair of Levis behind the iron curve to I think the background track was The Great Gate of Kev by someone like mski and it was I can remember that uh for I have no idea what the film was it preceded I I have no memory of the film it preceded but I can remember that ad as a kind of epiphany when I saw it but actually my love affair goes back earlier than that to the 70s which was the Golden Age of the color supplement the Sunday Times color supplement yes and you got to remember that C magazines weren't as by any means as kind of you know ubiquitous then as they might be now but the ads particularly those done by colet Dickenson Pierce some of them I think by ogal v um uh the sort of double page my brother and I my brother's 18 months older than me we used to fight to get the Sunday time color supplement first predominantly to read the ads not the content the content was very good generally and of course the quality of Photography back then uh was actually vastly Superior to now when pretty much everything seems to be stock photography rather depressingly um but we fought basically to read the ads because they were funny you know witty intelligent um I think that was probably dominated by the colet Dickinson Pierce of the 1970s but I mean that that was something which was a ma you know it was a significant part of your um cultural life particularly if you live somewhere a bit provincial like me and was therefore starved of other forms of stimulus um and so yeah it was probably CDP press ads which first uh wakeen my love of advertising but then as you as you quite rightly say there was this golden age of the kind of I suppose them it really the mid to late 80s uh early 90s uh it never quite recovered after it never quite got its mojo back after about 92 as an industry but it had a period I think uh where it was universally acknowledged by large businesses that great advertising uh was the single greatest uh unfair competitive Advantage you could enjoy that by the way is still broadly speaking true but the focus of business has shifted so much to kind of financialization and operational efficiency that the kind of HPA that used to be put into salesmanship uh is not it's not completely absent but it's much much rarer than it was you know just absolutely heroic acts of brand building yeah and how do you think adverts compared to today's adverts to to those of that Golden Era um that's a very interesting question I mean I think there are you know there are very very good marketing ideas and by the way I think not all of that is bad because one of the things that I always fight against is the idea that creativity in business should be confined to the comms function or the marcoms function and I hope people reading my book grasp that there's an opportunity to be creative right across the five PS of of marketing okay you can be really creative with pricing Amazon Prime is a genius billion dooll idea for example you could be really creative with um all aspects of business decision making yeah um and so in some ways when I go to can now I'm I'm happy because you see these extraordinary kind of multimedia ideas or crossplatform ideas uh which in some cases by the way slightly contrived in other cases are actually really effective but the idea that creativity works on a broader canvas is one I generally welcome but at the same time the best of the best of TV advertising is for whatever reason it's still there it's still you know the heart's still beating but um partly the fragmentation of media partly the kind of over preoccupation with nerdery and the bottom of the funnel and kind of transactional uh short-term advertising over long-term brand building yeah it's taken quite a serious hit yeah every now and then you know the Super Bowl Christmas ads for um uh British retailers it you know there's a kind of resurgence in specific situations but the Christmas ad mentality for John Lewis was for a time you know all advertising felt a bit like that yeah yeah no I agree I agree I I can still remember you know two a bit of us maybe we're old fonts right you know and you know it's all you know films were much better in my day well I'm sure people said that in the 1970s which was a tremendous period for film 60s not so much was it the ' 50s glorious you know 40s and 50s fantastic 60s bit of a Hiatus 1970s mojo back well my two sons would definitely say that I'm I'm old and past it and so our music taste Etc but um and and at the same time you know if you can solve a marketing problem with an app or with a piece of choice architecture without giving millions and millions of pounds to Media owners well that's exactly what you should be doing okay and you could argue that the opportunities to solve problems in those ways I mean I now run a Behavioral Science practice and one of the first things we do is effectively go what's the smallest thing we could change that would make a really big difference yeah and sometimes that's nothing to do with brand or marcoms I mean for one client we massively increase the propensity of people to pre-book food at Cinemas just by you a ux changed to the uh in other words the choice order of the website changed and uh you know there's you can then achieve a change in Behavior which is greater than that you could achieve with conss yeah so you know there's a bit of me which get which says okay a lot of this is kind of healthy greater biodiversity and I hope uh you know a greater and broader canvas for creative ideas I mean Dave tro would actually be entirely I think um in support of this that you know the the job of a he said you know there are people who call themselves creative who are merely stylists and the point is sometimes the way you you reinvent something or you re change the game isn't a brand comm's problem and because historically at agencies which made money on commission made all their money from the brand comm's budget they were in D well they still are I think In Perpetual danger of to a man with a hammer everything looks like a name uh right how do we Define this problem in terms of uh brand and Communications in order that we can solve it in terms of brand Communications and that's that is not a healthy um solution neutral approach you should say look I mean this this would be something I very reluctantly say because as a good marketer dropping the price is probably the last thing you should try but maybe maybe there are cases where yeah there probably are where actually your honest advice to a client would be to be absolutely honest I'd make it a bit cheaper yeah yeah well you just mentioned there or you you know the Behavioral Science practice within Ogie Ogie change um and it's around you know using behavioral economics so I think you know again as a good starting point for the rest of our questions could you give our listeners just a a bit of an overview of of what behavioral economics are and and helps us understand why people do what they do I started in Ogie in direct marketing which I still love and I still consider myself a direct marketer by temperament if you like I believe in testing uh very very heavily believe in testing and I believe in experimentation but one of the things we already knew in direct marketing before there was such a thing as behavioral economics was that the way in which humans responded to information stimula and context uh was very poorly aligned with theoretical views of how people responded why people did the things they do and the sort of traditional two crutches on which business rests when it comes to understanding consumer Behavior would be economic theory you know if you reduce the price more people will buy it okay which is sometimes true okay um but it's not nearly as true as people think it is and the other crutch is Market re sech which is if you ask people what they want they will tell you and if you ask people why they did something they will give an accurate narrative that explains their decisionmaking process uh post hog and so the neither of those things is totally useless by way and very inspired market research is actually a form of Behavioral Science and economic theory is not always wrong by the way okay I'm just just want to make that point but we would argue that there's a fundamental need for what a Buddhist might call a third eye which is another way of looking at consumer behavior and motivation through the lens of what they're trying to do which they may not even be aware they're trying to do okay so effectively it's the effect of unconscious processes unconsciously perceived cues in the environment uh heuristics instincts um intuitions um and and indeed urges which consumers are deeply affected by without necessarily being conscious of that effect okay and I mean a very useful shorthand which I I always use as a kind of checklist is there's a neuroscientist called David Rock who's I think based in New York he's a kiwi who has this thing called the scarf model and humans deeply care about status certainty autonomy relatedness or reciprocation and fairness for example and if you violate any of those you've made a big business mistake often without realizing it yeah um that those would be the interesting thing about scarf I don't think it's an exhaustive list I think there are other things humans deeply care about but what's quite interesting is they all tend to be things that we feel more strongly than we think if you like you know in other words if if something I mean I've long campaigned with rail companies okay okay that if you buy an advanced ticket and you miss your train okay they make you buy a full Fair ticket but they don't count the value of the ticket you didn't use against the full Fair ticket now I understand from a purely logical economic point of view that makes sense I think nearly all consumers perceive that as not only have you made me pay full fair you've made me pay twice yeah absolutely okay and and so I would argue that that even though it may make perfect economic logic if you're designing a yield Management program I'd argue that it's actually very very bad marketing because it leaves your customers feeling you've ripped them off which is not a good feeling to inculcate uh in people generally that would be an example of f fairness status would be an interesting one you know how people uh how you know it's not just what people think of Brands it's also what they think Brands think of them that's a very interesting reversal you know and in service industries of course in you know experience businesses hospitality and so forth that kind of thing is you know is is well understood as being hugely important yeah well I think that's good background for where we'll go with the rest of the conversation Rory and um well you've set up a couple of uh couple of new companies and I often get messages from from listeners who are would be entrepreneurs about whether they should set up a new business but also more this worry that that they're how to get noticed in today's modern manic world with limited marketing budget do you have any tips on how to cut through the noise and really get notice with your your Marketing in today's Busy World when you know you might have limited marketing dollars I do think that I mean I'll be ABS candid with you I only got famous on social media by luck not intention in that someone started taking clips of me during lockdown and they produced I think it started with the tiktock ising sort of 30 seconds of podcast Ted Talks there's an awful lot of content of me floating around on YouTube which you can find quite easily if you look and um the first I knew about it was when I started getting mobbed by school kids and an occasionally my children would go Dad what the hell are you doing on Tik Tok and I go I have absolutely no idea okay um however I think uh the need now in the internet age for a more personal face to businesses people want to see the person not just the corporate video I think I think that is a fundamental um Trend there's a very very good post on Scott Galloway's blog called Prof G um not written by Scott actually but written by his assistant on the idea that you know personalities and people uh in some ways Trump Brands you know in other words Joe Rogan beats CNN in a funny kind of way because one of them one of them is a kind of logo and a brand and the other one's actually you know a fully formed human being and by the way I don't I don't think that's an absolute rule I'd never cite that but I think as a trend that's worth acknowledging um I I always find it interesting I've always wondered about that which is whether things like trusted Trader are making a mistake by not including 60 seconds of video okay one of the reasons by the way I love Behavioral Science is that the same Insight can be valuable to a Nestle or a proor and gamble but can also be valuable to someone running a cafe or running a window cleaning business so in other words there this isn't the laws of physics okay but it Behavioral Science does Rhyme you get recurring patterns uh and you go okay well if that works in this particular setting it's at the very least worth testing in this slightly different setting and all usually go around cafes and say things like you know you must leave your leave your seats outside on the pavement even if it's raining uh the reason is that people can see them from 400 yards away and they immediately know there's a cafe over there and it's open because the seats are out on the pavement okay if the seats are folded away people go oh the Cafe is closed you got to be very very careful about how people um what what Behavior there's a wonderful phrase I think invented by the really the S father of proper psychology William James uh where he says um he uses the word canote what something canotes right what it conveys yes and there are awful lot of behaviors by the way which we can be completely unaware of what they convey to customers and so uh you know one of the things I'd say is if you're a cafe people will tend to assume particularly if you're a teum which have really weird opening hours you they tend to like close at 3 and stop serving food at 1:30 you know people will take any any clue to infer that you're actually closed or unavailable or you've stopped serving unless you're really explicit about the opposite yeah yeah and so so I'm you know I'm really interested partly in this and I think partly this is the reason it's popular on Tik Tok is because it's not just applicable to the Nestle marketing department which I hope it is but it's also applicable to someone running a window cleaning business or someone you know because and I'm really really sympathetic by the way small businesses because okay the problem is and my father ran a small business among them he was a property developer but he also ran uh pleasure boats water water buses taking parties on the Breen and ameni Canal and that was part of his business and every now and then we do an ad and put it in the local paper and the ad really worked really well and I always look back why didn't we do more advertising because every time we advertised it worked it made us money there was no you know absolutely no I saw your ad in the paper I'm quite interested booking this thing and it suddenly occurred to me that if you're running a small business okay marketing is the thing you can always postpone till tomorrow right so running a small business you always have some present crises you always have the current job to be done you always have all that stuff yeah okay and then you have the marketing task and the marketing task is valuable and it's important and it deserves quite a lot of thought it can always be done tomorrow and that was by the way that that would be exactly me if I ran my own small business even having spent 35 years in marketing I think what I do is I get down in the weeds replying to emails and you know you know oh God's customers just come in and oh my goodness we've run out of Diet Coke and then it would come to about 7 o'clock in the evening I really should do some marketing oh S I can't do that tomorrow and so we we need to be really conscious of this because the importance of marketing in terms of occasionally having disproportionate effect on the success and survival of businesses can't really be overstated yeah um you know modern business Theory tends to think business is all about operational efficiency and I think that's an unfortunate byproduct of the shareholder value movement um and I I do a whole separate podcast on how catastrophic it's been which is that the general mentality of most Boards of directors of companies think they compete on the GRS of operational efficiency in other words they think the cop that competition is something that happens in the factory when in reality 95% of competition actually gets decided on the Shelf in the sa room yeah yeah and the extraordinary thing I don't know if you've ever attended a a board meeting of a reasonably large company I have well I used to yeah I used to present market research findings to many and if you sat in you probably had to the extraordinarily small proportion of every board meeting which is actually given to things like growth opportunity Revenue yeah versus costs overheads okay the the extent to which the conversation in a board meeting is almost about everything except the customer is completely bizarre I mean in my view well I and I I I do know where you're coming from there Rory I mean being a uh you know customer experience is is one of my you know Special by the way that that I think is the CX ux all those disciplines which have funny little acronyms I would argue there's a very good case that in many cases you're your people doing that should if they're good be the best paid people in the business because they're the people who can make a transformative difference no absolutely and I'll be honest here you know I we we both miss that golden age of advertising but there an awful lot of extraordinary businesses that and brands that that have been created really through very very good CX and ux or breakthrough discoveries I mean you know me with the Uber map you know yeah you know I I I hate to I won't repeat it but that was weirdly that transformed the emotional experience of you know waiting for a taxi the other example I give is the London overground which basically took some vastly Mor abundant underused rail tracks and got them used to the same extent as the Elizabeth line which cost 20 billion pounds by basically the marketing Ploy of pretending railway lines were tube lines and adding them to the tube map yeah yeah when I say look you created 20 billion dollars worth of or 20 billion pounds worth of infrastructure not with engineering and tunneling and rails and track and trains okay they they spent 100 million improving it I'm not disputing I'm not saying the engineers played no role but the greater part of that value was created with Incan pixels yeah suddenly londoners could see how the overground fitted in with the rest of their TR their Journey it was now an integral part of their Journey planning whereas previously it was an alternative to Journey planning you know unless you were a total rail nut who hated the tube which is actually kind of me actually okay you know you never I use silverlink Metro do you remember that that's what it used to be called I do so there was a whole rail network around London that was called silverlink Metro and literally people who lived 300 yards from a silverlink metro station didn't know it was there or didn't know where the trains went I I mean I know that from anecdotal stuff you there was somebody who could have improved their journey to work every single day for 10 years if they'd known that they could go from Clapham High Street to under water but they didn't know yeah [Music] yeah BB Frameworks is a curated collection of proven business Frameworks to develop your strategic thinking skills solve your biggest business problems and lock your next promotion our mission is to help you achieve these goals we want to create the next generation of successful business leaders by providing the tools and Frameworks needed to create effective strategies that Drive business [Music] growth each framework comes with a downloadable set of instructions with large colorful diagrams and editable templates to guide you through the process step by step and prompt you to consider the problem from every possible angle along with audio guides and Educational Tools our extensive Content Library is full of real world examples and case studies of strategic thinking in action so why learn with B2B Frameworks we've carefully curated only the most effective proven business and marketing Frameworks our downloadable materials and audio guides will help you easily apply each framework and the insights and advice you'll find across the site are based on 30 years of Consulting experience from one of the world's leading business strategy experts PA ha B2B Frameworks is a small investment to advance your career or grow your business start your journey to become a successful business Leader by joining B2B Frameworks today no well and and to your point you know it's marketing it's it's putting it at the center of every organization making sure you're focused on the customer in fact I think if I think back I set up U my agency in 98 and I remember I spent a whole week typing up into Excel uh the research buyers guide to uh you know it was over 1,000 research buyers in there to Target them and then you know we just sent out direct mail and and we were religious with that uh every month we'd send you know emails as well as direct mail and we did other marketing ples but I mean I think one point was that really hit home to me was when myself and one of my American colleagues we work walked into a meeting with the marketing director of MasterCard in Purchase New York and he he held up his hands he said isn't that brilliant by the way that MasterCard is based in the town of purchase yeah I mean who who who could have made that up yeah but we walked into the meeting and he said you you You' got me you've got my attention we hadn't done work with them before and he held an array of different direct mail that we targeted with him over the years and uh he said you know it it worked and it it works work then it works now as well by the way Direct Mail is still in the words of one client of mine who's responsible for sort of digital business uh she described Direct Mail as annoyingly effective and it's a very interesting thing because there's a there's a kind of deep seated belief that your job now in digital if you're a digital business is to dematerialize and automate everything because the principal function of marketers has unfortunately shifted from efficiency to Effectiveness sorry from Effectiveness to efficiency okay and the assumption is that something that's more efficient is also more effective now that is sort of true in some engineering problems an electric motor that's more efficient is almost certainly a better electric motor unfortunately an ad that is more efficient may be less effective in other words it may reach the same number of people in the same in the same quantity with the same frequency at a lower cost and say exactly the same thing but it's a worse ad yeah partly because it's just less expensive and one of the things I would argue by the way is that there's a kind of law of commensurability which is the extent to which I am spending money with you okay needs to be matched in some way with the effort you put into selling me the effort expense and so forth you put into actually selling me um it's simply that if I'm buying a car okay I kind of want a brochure and if I'm signing up to the American Express card I kind of want a bit of paper and card okay do you see what I mean because I'm making a relatively big commitment it's a relatively big decision and consequently it's rather like in an expensive hotel not this is not always the case part of the reason it's not that I want people to make a fuss of me it's just that I need a a degree of fuss made that's commensurate with the amount I'm spending and I I think there's some sort of mental symmetry in there in the human brain where you know as I always say nobody invites anybody to their wedding by email they send out a card yeah and it it's just and in some ways sort of the expense of of direct mail may be just a kind of significance marker yeah we acknowledge this is a big decision which is why we're you know putting a little bit of extra effort into communicating it to you yeah yeah um well I think in fact I yeah and my kids by the way get really excited by Direct Mail because they've never lived in an era where there was too much of it well I in fact in the post just last week I I've still got it in my tray here but it came through in a blue envelope it was so it stood out from the rest of the bills but it was uh something to do with social media profit Revolution conference in London uh and you know I don't get any direct mail anymore so I just happen to keep that but it shows it's it works that business by the way that you have to actively throw it away that you you know words it might sit around in your toast rack and also because it's scarce in other words when we see digital ads we kind of expect to see them again okay right when we get emails about a sale we expect to get another one but because Direct Mail is expensive and this is the only one it kind of answers the question I always think when you're selling something you've got to answer a lot of marketers focus on the why why you should buy this but I think there's a second question which people are asking particularly now in an age where we have vastly more discretionary expenditure than we did it's not just about why it's about why now and I think ads that say why now is a great time to and I think Direct Mail because it's a kind of okay it because you kind of don't expect to find receive six more it still has a kind of scarcity value to it yes I think it does put you in the well if I'm going to do this at all I'd better do it now yeah um I I'd love to I'd love to explore this more because logically uh well no actually that's not true I suppose I suppose an email is only an effect as effective as a handwritten letter if you have an unbelievably simplistic idea about the human processing of information that in other words it purely looks at the text on the page and makes no reference to uh other contextual um things like the quality of the paper or the effort that's been put into writing it and I think humans automatically effectively are hu I mean there's a lot of big research which canar has done with I think wav maker um and um the side business school which shows that all media are not equal the idea of it just being about eyeballs is a nonsense because the signif you know what we infer from seeing an ad on a poster versus seeing it on a Banner versus seeing in press thing is very very different and there are some jobs that only some media can do or that some media have a compar have where some media have a huge comparative advantage now this is what worries me okay if you're a bit of a Byron Sharpie kind of guy which I kind of am you know um one of the lessons of Byron sharp is that if you're a big successful established brand you should try and sell to as many people as you possibly can profitably sell sell to it right because large numbers of Fairly infrequent buyers who aren't necessarily loyal but for whom you form part of their repertoire constitute quite a large part of your profits okay and the old way we used to do marketing was um who is our target audience in other words who can afford to buy this and is you know and and is reasonably likely to benefit from the purchase okay that's the definition of your target audience and then we would set out to reach and convert those people obviously by lowcost means if possible so American Express love these things called take ones well you you'll remember this from the 1980s and 90s you went into a curry house and there was a list of anx application forms on the counter okay and you know you go to a blingy five star hotel and there' be a list of American Express Gold Card application forms on the counter or you couldn't apply for the Platinum Card back then that was Invitation Only okay but um they obviously like those but they also recognize that you could you could basically have take ones in every single godamn shop in the world and you'd only capture about 5 to 10% of your maybe 15 20% of your potential target audience so they did Direct Mail which was more expensive than take ones but it brought in profitably people who take ones wouldn't have brought in right okay I'm using this as a very simple analogy but now what's happened in digital is instead of saying who are our target audience and what media do we need to reach them and Will some people only respond to this will some people need this and are there people who until they've seen a press ad for this won't take it seriously instead of asking those bigger questions okay they just go um we will Define our target audience they're not doing this intentionally but this is what they're doing by optimizing for efficiency not for Effectiveness they're defining their target audience as those people who are happy to interact with Us in lowcost channels and that's a bit like American Express going well because tape ones are cheaper than Direct Mail we're going to Define our target audience as those people who wander into a shop or hotel and spontaneously pick up a bit of paper and fill it in yeah yeah now if American Express had done that American Express would no longer exist okay it might have been a very very efficient company for a few short years with very very low acquisition costs but you're optimizing there for ask covering in the marketing department you're not optimizing for the effectiveness of the overall business you talk about Effectiveness actually and there's your book on the shelves there Alchemy and the the long and the short of it Les Benet was H was my last guest on the podcast uh and in fact um he he I I posed a question to him to say what would you like to ask Rory and he said I've asked Rory once before but uh you know I'd like you he never got a straight answer from me what is the question yeah yeah so he said I as i' I'd like to pose it to him that uh and he said that he's asked you this uh so yeah let's see if you can remember the the answer but although behavioral economics is very interesting he said he feels it's a bit anecdotal telling you about the quirks of human behaviors and is there an underlying Theory or general principles that explains these biases and patterns and behavior about um people rational okay first of all I'm going to defend and try and rehabilitate the word anecdotal because interesting significant and often counterintuitive information emerges first not in data but in anecdotal form okay and it's vitally important to keep alert to uh what's surprising because that's where a really valuable differentiating Insight comes from generally insights come from the edges not from the Aggregates okay so big data can actually be incredibly dangerous because you think your typical customer is BAS an amalgam of all your customers yeah okay and also all big data comes from the past as well so it's worth noting that with big data you are disproportionately looking in the rear viw mirror and optimizing on the past rather than optimizing on what may be a very different future yeah um so I would argue okay there are a few reasons why Behavioral Science is really important one of which is it's really important to spend a lot of time thinking and talking about this stuff why do people do this stuff because it is I admit a somewhat nebulous and sometimes Fantastical conversation but it's a period that needs to be had and the analogy I use there is detective work okay there are two phases to detective work there's the exploratory investigative phase followed by the evidential phase finding out who did it and then proving they did it right and it is wrong to demand that all information used in the investigative phase is must be evidential by the way I thought they went wrong with covid on that people started referring to something called the science there is no such [ __ ] thing as the science because science particularly when dealing with a novel virus is a process of inquiry it's not a process of saying we will we will make decisions based on only those things for which we have evidence because you didn't have enough evidence right okay and so what you shouldn't been doing I I remember doing a little bit of investigative work myself so we started out in covid swabbing down our parcels and my friend who was a nephologist a doctor would leave any packages in their garage for three days before opening them and then after a few weeks of this I said have we noticed that lots of Postman have been getting ill no okay so that probably isn't a problem right okay um because you know postmen or people in postal sorting offices had the thing been spread by fites would have been expected to get disproportionately ill and they didn't okay and that's what I call investigative okay it's not saying we have evidence it's we should keep an eye on this to see what happens and so a lot of cops would start if you had a murder the first question they do they go around the neighbors they would they would say did you notice anything unusual on the night of the 17th of March now that's completely open-ended question right and the answer might be a funny man drove past in a van for white we saw as a white van isn't it you know um a funny man drove past in a white van four times now that has no evidential value you can't bang someone up for life for driving in a funny way but it tells you where to look next and the vital thing there is that you go well okay well let's look at some CCV see if we can pick up this van and if you then discover that the guy who's um you know driving the van is a well-known pervert or weirdo well you'd upweight the investigation still further wouldn't you because although you've proved nothing thing you in basian terms you know you need to reweight your you know your probabilities right okay now I think what's happening is we we're creating a cult of business decision- making which is if you no I I I partly value Behavioral Science because it sews doubt and uncertainty it makes people go well this might be the right answer but maybe we should consider the opposite or both maybe the solution to the consumer is actually two extremes non average um the other reason is that it for whatever reason marketing is [ __ ] doomed if it doesn't get out of its ghetto now the real problem for ad agencies isn't that the marketing director doesn't like them it's that the board doesn't respect the marketing directive I'm being really blunt about this and in a lot of organizations the marketing guy isn't on the board he's treated to be honest as a supplier okay because ad agencies all started in the days when it when okay even when you and I started marketing about 70% of AD spend was packaged Goods it was unil PNG you know diio uh reckit Ben Kaiser it was stuff you bought off a shelf in a shop that was 70% of AD spend and in those organizations the CEO has done a stint in marketing marketing is represented at board level it's a very very big uh cost so it's taken very seriously indeed that 70% is now down to about 20 % and our agencies are now working with marketing directors who aren't on the board who are basically desperately having to justify their own existence because they're seen as a as a cost not as a source of Revenue and growth mistakenly in my opinion okay and one of the things we can do and one of the things some of our clients have done really effectively is use Behavioral Science and behavioral economics in particular to talk marketing to the board because you can't go to a board and talk about brand iconography you can't go to a board and talk about you know in fact if they hear the word brand they go oo too fluffy for me switch off not my problem leave that to the marketing people it's all fluffy and weird and I don't really like it whereas if you can go and say we have a theory that people behave this way because of this and we'd like to test it you can have a really good board level conversation and I think I think our job should be to find a way of discussing marketing with a you know a reasonable degree of peer-reviewed literature which is respected and which earns the odd Nobel Prize but also with a vocabulary and also let's face it an objective behavioral change okay which is much more likely to secure the attention of people who hold the pur strings than something weird about like unprompted awareness which is a proxy measure yeah yeah and so I could go on I could go on to this the the fact that we haven't come up with um a law of a theory of everything okay the fact that there's a replication crisis that's not a bug that's a feature because the fact that these things don't replicate is exactly why a business can't comfortably make assumptions about their customer psychology based on simply copying a finding from somewhere else because context has such a huge effect on how people think deci side and act that the same person faced with the same choice in a different context will make a completely different decision yeah yeah well and I think you know a lot of that is fundamental to uh you know the nuggets the the gold nuggets that are in your book Alchemy uh and and in fact on the shelf on the shelf and I love the section where you you talk about the opposite of a good idea can be a good idea uh you know let me explain a great example of this so I meet at a meeting someone who's like the UK's walking s and because they're there to promote walking in the populace they campaign for foot paths and rights of way and uh you know uh you know you know better Pavements and all that sort of stuff and I said that's good I said but you're missing the opposite and they said what's the opposite he said you also need to campaign for more seating more benches because people on the margin elderly people the reason they don't walk isn't because they have a shortage of horizontal surf surfes it's because once they're 300 M three sorry 300 400 yards from home and they get a bite of sciatica or they get a bit tired they got nowhere to sit down now if you go to a Seaside right where there are benches because of memorial benches there are too many benches at the British Seaside I mean literally it's insane okay but one beneficial upside of this now a lot of the reason they're walking is cuz it's by the Sea and it's nice walking by the Sea and but anybody knows if they walk along the sea front front that if they get a bit puffed out they can have a sit down anybody I mean I had this when I had a b of satica it was a bit of a wonderful sort of Revelation because it's a bit like a premonition of what it's like to be 20 years older and I suddenly realized you leave chering cross you go Ching across to Soho it's easy I'll walk it and then if your stica kicked in halfway there literally you were forced to buy a cup of coffee in order to find somewhere to sit down there's nowhere and okay that's part you know because vagrants sleep on benches and if you put benches there you'll get tramps but come on I mean I think we need to think about every you know you know I I I don't think you should make old people incapable of walking through London just as a sort of a rather unkind means of [ __ ] avoidance and I said you know half of your job is actually to make it easier for people to walking to stop walking so quite often I think you know the solution to something isn't the middle which is a compromise and a tradeoff it's actually to offer people both extremes you I often say the perfect Hotel check-in is either they make a massive fuss of you and they take you up to your room and they as happened once I think in the Mandarin Oriental in Hong Kong they actually don't check in at the check-in desk they take you up to your room and they sit you down in a massive desk and they give you the paperwork and they make you a cup of tea while you're actually signing the signing into the the hotel that's a great way to check into a hotel I remember that years later but another great way is you just check in on your mobile phone and go straight up to the rub and people who are really frequent guests in a hotel would probably prefer the latter even though it's cheaper to provide yeah yeah the best thing I often quote this the best thing I ever learned from a futurologist is that there aren't Trends there are vectors that generally there's usually a counter Trend and so consequently you know this is one of the reasons why strategy is so interesting because uh quite often a very rational strategy will put you right in the middle with all your competitors and the direction of travel is centrifugal Dyson classic example okay a logical person developing a vacuum cleaner would say well let's look at the vacuum cleaner Market you got Meer at the top you got things like the Henry and some cheap models at the bottom you got to you know uh okay the sweet spots round about the1 pound Mark for vacuum cleaners and then Dyson does something completely Bonkers based on the Assumption which to be honest I I would have assumed was totally insane and and under most circumstances would that people will pay 600 Quid for a vacuum cleaner but it turns out they will in huge numbers yeah I mean behavioral economics I've been interested in I've been in the research world but I've been interested ever since Daniel I know why Les is such a skeptic because actually it can partly explain the long and the short of it as well is the the long and the short of it patently depends on some model which you know I'm not I'm not yet confident but the distinction between what you might call the why and the why now for example you know the short of it the long of it might be answering the question why you should buy this thing and you've heard of it and lots of people have it and we do a lot of advertising so it must be quite a big popular thing so you can feel reasonably confident in buying it and the short of it might be the I'm happy to buy that thing but why now oh look it's 20% off okay yeah or I get a you know I get a free hat right yeah you know I that that's a totally crude model and Les I'm totally free for Les who's a far greater person than I am to say Rory that's full of [ __ ] but I mean that is at least something with explanatory power uh even though I've sort of invented it you know it and it it may or may not be true and we can test that yeah well I think a round table discussion is is there for one where we should take this um I lots of people I think applied for the American Express gold card because they the American Express gold card was extremely desired thing still is I would argue okay and they desired one but they were never going to get R to apply and then they got a letter and thought well this is my chance they actually want me to apply for the gold card this is my chance I might not get this chance again so I better reply for the gold card now yeah yeah I don't know I'll chat with lesz about this because i' I'd like to discuss it a bit more yeah no absolutely um what just sticking on that topic though and and particular to uh behavioral economics you know Daniel carman's book uh Thinking Fast and Slow you know got me interested in it back in you know well 15 years ago nearly now um and you know I was always I was never aware of a course that I could uh you know particularly sign up to to to learn about this subject until until now Rory because you well you founded your mad Master's course in 21 um and uh do you want to give us some background is this course is is the way I was described is look not telling you how to do your job okay 90% of the time do your job to your best of your ability do the logical thing I I'm I'm absolutely uh there's a wonderful phrase I think it's by a an Whitehead who said sort of bursts of thought or rationality and not to be deployed all the time they to be deployed rather like Cavalry Charges in battle at judicious decisive moments and I'd say the same about Behavioral Science and I'd say the same about um uh what you might call creativity as well by the way okay you know I mean if we if I tried to be creative about absolutely everything all the time i' go insane you can't rethink everything some things got to be driven by habit tics best practice Etc but and this is I suppose the way I end my book and very much the way I end the course as well we have to make space for this you what if the opposite were true you know uh you know what if actually all this effort we've done to reduce the price of our product is having no effect on sales and the best way to have an effect on sales is something psychological rather than something technological or something you know to do with the price or um formulation or functionality of the product and in many cases by the way you know you I mean I I write in the book in alchemy about the fact that adding that it was the brilliant guy I think AKA Marita who vetoed the addition of a record function to the Sony walk right and if you think about it sort of Steve Jobs copied that with the iPod it would have been incredibly easy to add a microphone to the iPod but he didn't right and that's because sometimes we can do something totally logical which is adding functionality to a product but weirdly it actually reduces the appeal of the product now that is completely counterintuitive to an economist who'd say high utility uh higher value yeah but now deciding whether you want the product and making a decision as to what the product is for okay is now more difficult because instead of answering one question do I want to be able to do this thing I've now got what about the other thing that might be you know am I paying for something I don't really use you know what I mean and you know who is this dictaphone you know would have been the question with the Sony Walkman you know um and um so there's a really interesting there's a really interesting point which is that every now and then you've got to literally go okay let's I mean let's keep aware of the wider context in which we're operating and are we for example optimizing something through a narrow focus on a single component which is our job description and that actually by optimizing we're assuming that by optimizing the part the whole becomes more optimal yeah and that isn't true so this is also a gateway drug to complexity Theory right which is that the um there's a great phrase from W Edwards uh Demming I think his name is which is to optimize the hole you have to sub optimize the parts and that what most businesses do is they optimize all the component parts of Everything But at the level of the hole this may be counterproductive it may be not just wasted effort it may be actually counterproductive it may be destructive effort yeah Rory I could I could speak for hours with you and you know we we've not covered half the questions but that's fine because we've covered so much more um to conclude I'm just going to ask you some quick fire questions and just one from the listeners today from from Christian malol in Copenhagen he asks what's widely accepted marketing principle that you believe is actually wrong or at least massively overrated that's a great question I think there are some marketing principles which are very poorly understood outside marketing which we need to trumpet that's that's the that's the opposite to his question so it's what what thing a marketer is right about which other people are wrong about one of which is cannibalization by selling through different channels by the way I think that purchase is very context sensitive and generally when you when you add a new sales Channel a large part of the sales from that new channel are incremental okay uh people are wrong sometimes about the Primacy of brand preference okay so it doesn't make sense it makes enormous sense in many uh Choice settings to um emphasize brand preference a lot a lot of decisions in supermarkets are made at the level of the shelf and therefore you are choosing then between different brands to you know and prices and so forth will you PIR premium for a brand yeah there are also cases where and the reason that always happens is because most budgets are brand Commerce budgets okay but I was just having someone a conversation with someone today from the cinema industry and I said actually the cinema industry is I want to go to the cinema first what's on okay that's on at these two Cinemas which of the two do I prefer now there's a brand component there's obviously a geographic to that I'm not driving to Edinburgh to see a film uh my dad famously did drive to Cambridge from London to go and see the wild one the Wild Bunch was it um when when that was not that was not shown in London but was shown in Cambridge the wild one I think it was with um but but okay mostly okay there's going to be there's going to be geography is going to play a part past experien is going to play a part the brand is going to P A Part okay undoubtedly price is going to play a part but the way to grow a c the cinema chain is is not really to strengthen your brand versus other people's brands that will have an effect but a far better use of your money would be to encourage more people to think about going to the cinema okay right and that the best use of your money would be to pull your money with other Cinema operators and do a category campaign that says electric cars would be another case in point okay most of the budget sits with the brand and the brands all talk about how much range have which means that the net effect of the electric car market is all talking about range which is about the only negative of owning an electric car yeah okay there is a case where somebody needs to pull a load of money from electric car manufacturers I don't know how you do this because it administered organizational Nightmare and do an ad campaign that just says here are 15 reasons why electric cars are better than petrol cars because they are right and by talking about oh our range is slightly better than Audi's range what you're actually doing is you're taking the whole market and focusing it on what is arguably the only negative I would say actually okay I mean range and time taken to charge and possibly infrastructure availability is De in the UK is less and less of an issue in the US where you have huge distances it's it you know range anxiety is still a relevant thing but nobody's talking about the fact that okay so a lot of people said electric cars are expensive and I said well compareed to what and I said I admit I said an electric scoda is more expensive than a petrol scoda but in terms of the driving experience and performance the electric scoda is closer to a petrol Audi than it is to and quietness and comfort and you know a lot of other things is closer to a petrol Audi than is to a petrol scoda so is it then expensive if you consider the fact that the driving Dynamics and goodness know what else and and indeed the cost of running it in many cas cases okay is so much lower maybe not okay and so you know we're actually comparing the wrong thing and so that's one of the one of the reasons I think one of the things I think marketers get wrong is they always go and Dave Trot says this as well by the way they always go okay the answers brand now what's the question okay that entirely depends on what where brand sits in the decision making hierarchy okay and some in some cases is absolutely primary I completely agree but in many cases you know it doesn't matter how great individual Cinema brands are relative to other people if I never get around to thinking I ought to go to the cinema which I really like when I do it by the way I just don't do it nearly enough I never go to the [ __ ] theater right you what theaters need to do is not worry about the relative you know the relative status of different theater brands in the UK they just need more people going I feel like going to the theater now what's on yeah okay yeah no that's good what uh that would be by the way that's a branch of Behavioral Science which is really called decision science and decision science is really uh you know one of the there are a lot of adjacencies to Behavioral Science there's complexity Theory there's evolutionary psychology okay uh and you know and to be honest you know you know if I start a ogl v evolutionary psychology department it'll be a lot harder to get Revenue than if you call it a behavioral economics or Behavioral Science Department but there are lot of comp you know there are a lot of adjacencies and decision science is emphatically one of them you know where where do you sit on the decisionmaking tree and one of the one of the really important things about that is if you look at AI the big way and this is the big problem okay if you want to disrupt a category you don't sell the same thing in the same place to the same people right as the existing established kind of dominant play what you do is you find a different context a different way to sell and then you dominate a new so the Argos catalog okay EasyJet putting 0800 on the signs of planes so people don't go to a travel agent anymore to book a flight they phone up easy jet right okay people don't necessarily go to a shop to decide what toaster to buy because they've already decided what toasted to buy while sitting on the toilet okay you've changed the context in which the decision takes place and once you do that the usual brand hierarchies can sometimes disappear yeah yeah Rory you've been a fabulous guest today um who would you like to me to reach out to invite to to come on the podcast in the future who would you like to hear Dave Trot perfect I uh I haven't had Dave on so I will I will reach out to him yeah only because he's a brilliant writer he doesn't do many podcasts and I would um I'd AB love I'd love to see him I'd love to see a bit of Dave Trot live might need you to persuade him on that one then but dude just copy me in and finally my next guest is is Greg Han CCO and co-founder of Mischief USA um what question would you like me to oh brilliant brilliant agency okay that's fantastic what what question would you pose to to gr is he a creative guy is he is he yes yeah Chief creative officer of course he is yes yes yes I know yeah yeah let me have a thing um do you find that Behavioral Science is a very useful part of legitimizing Mischief without it merely seeming like willful perversity fabulous question fabulous question Rory thanks again for for this I mean I think concluding my main takeaway today are that you know we as humans need just need to be curious we need to ask the right questions don't always slavishly follow the data no no no it's about being creative zigging when others are zagging uh and at the end of the day you know how we rethink marketing to deliver value that truly resonates with customers behavioral economics is certainly a a tool in the marketer tool if it doesn't if marketing doesn't get back into the boardroom it's not just that marketing is badly screwed business is badly screwed but because the focus on the shareholder as the as the primary um function in other words the primary focus of attention of the business is catastrophic in about five different ways okay it makes businesses less adaptive it makes them less inventive uh it makes them less responsive to changing conditions okay and less agile it also makes working for the business fundamentally depressing because the people who manage the business have a focus and motivation which is entirely misaligned with most of the people who are in the business to do what the business actually does which is to serve customers okay and one of the reasons why working business is so depressing nowadays is because most people are pretty happy looking after clients because it's a natural human instinct to actually be useful to people whom you meet or who pay you money okay right you know that is not that doesn't require any you know providing good customer service is something which I think humans derive great pleasure of doing no one gets out of bed to kind of enrich the you know state of Wisconsin DMV pension fund right okay and so it creates this complete disconnect okay where you don't have volunteers any you don't have a volunteer army in in in a company anymore you have mercenaries who are basically rewarded hugely on shareholder metrics okay and those people then because they don't trust the other people in the organization because the other people are not motivated by shelder value creation then impose a command and control model on the organization which completely demoralizes everybody else because they feel that the people at the top aren't interested in what they're really doing okay and so you have instead of a business of a volunteer army you have a mixture of mercenaries and you have conscripts yeah and it's had terrible effects I think on Corporation to a point where you talk to people who are like cardiac surgeons who basically say I got out of this business because I'm a cardiac surgeon and I'm sick of being bostan by the finance department or administrators or whatever yeah we need to we need to win back uh our respect and and and take the Reigns again in absolutely right so Rory you're everywhere so people won't have a problem finding you uh if they're interested in in getting in touch the Mad Masters course uh that's. C UK I think okay and um and you can Google it anyway um and um obviously you know um I have a new book coming out but there's the old book if you haven't Reddit that's probably the best kind of summation thing and YouTube there's a lot of Me on YouTube or if you can't be bothered there's Tik Tok because it's mercifully brief well thanks again Rory and yes you I'm sure your head will be popping up on Tik Tok for for many others for uh for the coming year but thank you who knows thanks ever so much it's been a real pleasure thank you this podcast has been brought to you in partnership with Awards International Awards International is dedicated to running successful business Awards programs and conferences founded in 2008 by Don hailes and Neil skial the company's core Mission centers on honoring and celebrating exceptional achievements in customer and employee experience but also in overall business Excellence across diverse sectors in addition their aim is to Showcase best practices Innovations and achievements that contribute positive positively to these areas ultimately inspiring other organizations to improve their own customer experience Employee Engagement strategies and overall business success to find out more about Awards International and how to register your interest in their Awards programs check their website www. 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