Rory Sutherland is, perhaps, the closest thing to industry royalty that we have in marketing. He’s Vice Chairman of Ogilvy UK, a best-selling author, owner of one of the best TED Talks you’ll ever see and the man behind MAD Fest a marketing.
Rory crashed straight into the top of the charts on the Strategy Sessions when he was on the first episode, so he came back for part 2.
In this episode we discuss:
- The father of behavioural economics
- What Columbo can tell us about strategy
- Why we should embrace accidents and post rationalisation
- Why the death of the creative process and insights is a problem for advertising
- The doorman fallacy
- Is performance marketing focusing on the wrong thing
- Start with the bottom of the funnel
- The importance of ‘commercial innovation’
- Premium economy and why it works
- Price v quality
- Rory’s view on cinema
- Why Britain gets trains wrong
- What parking at Heathrow tells us about customer behaviour
- Start with the consumer and work backwards
- Why the average is the enemy
Rory is the Vice Chairman of Ogilvy, an attractively vague job title which has allowed him to co-found a behavioral science practice within the agency.
He works with a consulting practice of psychology graduates who look for ‘unseen opportunities’ in consumer behaviour – these are the often small contextual changes which can have enormous effects on the decisions people make – for instance tripling the sales rate of a call centre by adding just a few sentences to the script. Put another way, lots of agencies will talk about “bought, owned and earned” media: we also look for “invented media” and “discovered media”: seeking out those unexpected (and inexpensive) contextual tweaks that transform the way that people think and act.
It is a hugely valuable activity – but, alas, not particularly lucrative. This is because clients generally do not have budgets for solving problems they did not know they had.
Before founding Ogilvy’s Behavioural Practice, Rory was a copywriter and creative director at Ogilvy for over 20 years, having joined as a graduate trainee in 1988. He has variously been President of the IPA, Chair of the Judges for the Direct Jury at Cannes, and has spoken at TED Global. He writes regular columns for the Spectator, Market Leader and Impact, and also occasional pieces for Wired. He is the author of three books: The Wiki Man, available on Amazon (at prices between £1.96 and £2,345.54, depending on whether the algorithm is having a bad day), and the best-selling Alchemy, The surprising Power of Ideas which don’t make Sense, published in the UK and US in May 2019, and, co-written with his former colleague Pete Dyson, the newly released Transport For Humans on the behavioural science of transport.
Rory is married to a vicar and has twin daughters. He lives in the former home of Napoleon III – unfortunately in the attic. He is a trustee of the Benjamin Franklin House in London and a Patron of Rochester Cathedral.
Rory’s Other Stuff
Strategy Sessions Host – Andi Jarvis
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This transcript has been done automagically using Happy Scribe and hasn’t been checked by a real person, so there may be some hilarious mistakes where the AI can’t work out our accents – I’m sure they’re trained on just the American accent.
[00:00:00.750] – Andi J
Eyup and welcome to the Strategy Sessions. My name is Andi Jarvis. I am the host of the show and probably the happiest man in marketing land at the minute. Why? Because I have Rory Sutherland back for episode number two. Six months ago, at the end of Series Three, Rory came on and broke all records for the strategy sessions. It’s now the most streamed and downloaded episode ever, the most watched on YouTube by a country mile. But that’s actually quite a low bar. This show doesn’t do a huge amount on YouTube, but you should watch some of the episodes. Why not? But yes, it did fantastic numbers and it was an amazing listen. Rory was just doing Rory things. The one thing we never actually got to talk about was, well, trains, of all things. Rory’s got some great views on why we’re terrible at doing trains in the UK. If you’ve ever been to the UK and tried to get the train, especially if you’ve come from somewhere like Germany, you probably just spend your whole time with your head and your hands thinking, How did these people get this so wrong? Rory’s got views.
[00:00:57.770] – Andi J
I said, Do you fancy coming back to talk about trains? He said, Yes, absolutely, I’d love to. We almost didn’t talk about trains. We got three quarters, maybe a little bit more through the episode. I was like, I’m going to have to ask Rory the train question. Strap yourself in. This is another episode of Rory just being Rory. Enjoy, really. It’s fantastic. Well, my view is fantastic. I hope your view is the same. I would really love to know what you think of the episode. Linkedin and Instagram are probably the best places to find me. Links to that are in the show notes. But thank you for subscribing. Thank you for downloading. It does make a huge difference. This is the last guest episode of 2023. It’s been quite a ride. There’s been some amazing things happening, and some feedback has been wonderful. I do love to hear it. So leave us a five-star review. Get in touch if you’ve got any thoughts or comments or suggestions. Subscribe wherever you are, all the usual podcast stuff. But it’s now time for me to shut up. It’s Tuesday the 12th of December, six months after his first appearance.
[00:01:56.820] – Andi J
Ladies and gentlemen, please welcome to the Strategy Sessions one more time, Rory Sutherland. Rory Sutherland, welcome back to the Strategy Sessions.
[00:02:08.400] – Rory Sutherland
It’s a pleasure to be back. Thank you very much. It was a joy last time, so always happy to come back.
[00:02:14.030] – Andi J
And the joy was all mine, Rory. Let me start with a question, slightly different to what I asked last time. What one thing do you wish you’d have known 10 years ago?
[00:02:24.740] – Rory Sutherland
The weird thing is, I don’t sound ridiculous to say this, but I’m not sure that much has happened in the last 10 years. There are a lot of things I wish I’d known 20 years ago. Let’s take that back to… I wish I’d discovered behavioural science early. I was quite early to discover it. Effectively, I would have really got immersed in the whole thing with the launch of Nudge, which I guess was about 2008, 2009, something like that. I wish I’d just known about it a few years earlier, but there we go. I knew about it by then of working in direct marketing, because if you work in direct marketing, whether you like it or not, you become to some extent a behavioural economist because you realise that what drives human behaviour is not the simple, very narrow idea of incentive versus cost. Actually, one of the things direct market has learnt very early is that almost butterfly-effect, small interventions that were seemingly irrelevant to the actual virtues of the product or service being promoted would nonetheless have an absolutely monumental effect on the extent to which you actually sold. And salesmen also knew this.
[00:03:46.760] – Rory Sutherland
Obviously, people in sales also knew they effectively… And Robert Cialdini, I suppose, was in many ways Richard Thaler gets the credit for being the godfather of behavioural economics. The real godfather of behavioural economics in my book is Aesop, who was 600 years BC but was effectively writing about things like the fox and the grapes, psychological quirks of human behaviour before Plato, I guess, when you think about it, if I’m writing my dates, it’s amazing. Also, there are lots of people who’ve always been a salesman. Adam Smith was a behavioural economist, by the way. Certainly, if you read both the books, he was… There is much a book about psychology and philosophy as they are about pure economics. Equally, of course, anybody in sales has always understood the importance of all these little… I was reading about one yesterday, which is a technique in sales, which is known as the Columbo clothes. The Columbo clothes comes from Columbo’s little thing, which apparently became his great catchphrase, but it was purely added by accident. They were slightly short on a recording and they needed to add a bit more time. They just got Peter Fork to say, Oh, and just one more thing.
[00:05:16.810] – Rory Sutherland
The Columbo clothes is that if you failed to sell, what you do is at the last minute you come back with what you might call is your best offer and you go, Oh, and just one more thing. So at the end of what seems to be a failed sale, you come in. And in a sense, because it’s towards the end of the meeting, there’s less time for the person to argue against it. I thought it was brilliant. But it’s wonderful because I don’t know about you. I was rewatching episodes of Columbo, and you realise how utterly brilliant it is, because, of course, it’s not a who done it. It’s what’s known as a how catch them. Because every single episode of Columbo started with film footage of the crime being committed, which you think violates all the rules of making a detective story, right? But I would start with footage. And the whole question of Columbo was how is Columbo going to catch this person? I was just fascinated by reading about the Columbo close, but I also was fascinated because one of the things I think is actually really good practise for both creativity and strategy is detective fiction.
[00:06:31.210] – Rory Sutherland
And the reason is it’s reasoning backwards. So if you ask me what’s the thing I wish I’d known 10 years ago as opposed to 20, and I think this has huge bearing in terms of strategy. Actually, to understand this, you also understand evolutionary biology, I think. One of the most interesting things you see is there’s a whole group of people who think quite alike. I was on Chris Williamson’s podcast just about a week ago. There’s a whole bunch of people, including comedians, by the way, whether it’s Ricky Gervais or you have Jimmy Carr. One of the things they all have in common is they’re all quite interested in evolutionary biology. Okay, so you can tell from their content. Chris Rock, there’s a wonderful blog post. Chris Rock is a brilliant evolutionary psychologist.
[00:07:25.400] – Andi J
I’m going to dig that out.
[00:07:26.140] – Rory Sutherland
What those people have is, in a way, the insight that things are the way they are because they got that way, the idea that to some extent you are where you are and you could only play the hand you’re dealt. So it’s a slightly conservative, small C conservative movement, I’d argue, because whereas what you might call extreme forms of political dogma, believe that your job is to effectively redesign society from the bottom up. These people, people who’ve actually had any immersion in evolutionary thinking would say, Actually, you simply can’t do that. Okay? You are where you are. It’s that famous old joke about someone asking directions and someone going, Well, if you want to go there, I wouldn’t start from here. Well, here’s where you are. Okay? There’s nothing you can do about that. What you need is actually a philosophy, not of how things should be, but a philosophy of how things can change. Okay. And so what I increasingly realised, by the way, and this is why I recommend reading detective fiction or watching Columbo and all those things, is it’s the process of reasoning backwards. It’s effectively saying, We’d like to get to this place from here.
[00:08:45.020] – Rory Sutherland
It’s not about designing nirvana. It’s about saying, What could be a bit better? Now, what would have to be true, to borrow Roger L. Martin’s phrase, what would have to be true in order for this to happen? What would have to change? Now, detective fiction is reasoning backwards in a slightly different way. I have a corpse. This murder, assuming it’s a murder, needs to be explained. Now what I have to do is use a mixture of data and imagination. And you can’t do it without imagination, by the way. This is an important point. Okay, I don’t think you can do… What would have had to be true in order for this person to end up on the floor with a knife in their bag? What were the pre-existing conditions and what were the prior events that would need to be necessary in order for this thing to have occurred? The reason it’s really important is the other point I make, by the way, is that one, in strategy as well as in creative, you need creativity. You need to make a hypothesis. You need to have a leap of the imagination. The second thing I think is that post-rationalisation is okay.
[00:09:59.400] – Rory Sutherland
[00:10:00.630] – Andi J
I don’t think- Which is good because we all.
[00:10:02.810] – Rory Sutherland
Do it. We all do it. Actually, I would argue that, by the way, accidents are okay, anecdotes are okay. If you look at detective work, actually, they don’t simply say, and I think science is making this mistake, okay? If you said as a detective, the only information I can act upon is that which would be admissible in a court of law, right? There’s a problem because anecdotes, weird occurrences, little bits of snippets of information are not admissible in the court of law. They’re certainly not enough to secure a conviction, but they tell you what to investigate next. They tell you where to direct your attention. They tell you what to explore. What you generally find when you look at true-life crime, which is an obsession of mine, generally, I would get onto Lucy Letby, where I’m not 100 % convinced of the statistical evidence that led to her conviction. I’m not saying she’s innocent. I’m just saying I’m not wholly convinced by that. Okay.
[00:11:08.740] – Andi J
Sounds like there is a separate true crime podcast.
[00:11:11.460] – Rory Sutherland
There is a separate podcast I should be on. But what I’m saying is… Okay, let’s take a look. Actually, the whole Audi endline, the for-sprung-durk technique ended up happening because John Hegity was taking a bit of a wander on the factory tour around Audi, and he noticed a sign which said it. I don’t know whether they post-rationalized, Let’s make Audi German from that or which way around it happened. But nonetheless, a large part of what you’re doing is effectively trying to get lucky. And you don’t turn your back on luck just because the luck isn’t conclusive. So the case I’ll always give is Levi Bellfield. The Surrey police had these various murders. Subsequently, he murdered Millie Dauer, the way. But that was a much later thing. You can go and watch it in the thing called Man Hunter. My brother-in-law was the scriptwriter for that. It’s a fascinating case. But they got some tip from someone who’d been Bellfield’s previous girlfriend. And she just said, He was my boyfriend. He was a bit of a weirdo. And I once found a copy of a magazine where he basically hacked out the faces of all the blonde women with a biro.
[00:12:28.370] – Rory Sutherland
And the victims in this case happen to be blonde. Now, that’s not really evidential. You can’t convict me and bang me up in jail for 30 years on the basis that I’ve defaced a copy of Grazia or whatever it was. But it’s highly significant and it’s worth investigating. That’s all you can say. You’d be damn stupid to turn your back on that. And so this scientific approach where you only act on information that’s robust and you can only publish if your information is robust seems the equivalent of saying to the police, Anything which isn’t admissible in a court of law, you must ignore. Now, I’ll tell you another story, and I worry about this because I worry that we’re becoming data purists and that actually we’re becoming insight. This is the thing that really frightens me about the ad industry, which is the automation of media has been a disaster for creative agencies because media agencies now have a way of making money in the absence of creative. But creative agencies, they’re in fault in part, by the way, but creative agencies haven’t yet worked out how to make money from creative or creativity in the absence of media.
[00:13:43.190] – Rory Sutherland
So you’ve got an asymmetry. The media agencies can go, Okay, we’ll automate this. We’ll do some performance marketing. We’ll do… And off you go. And then the media agencies make more money. And the creative agencies aren’t really being consulted on most of the actual creative work that’s getting generated. Now, boo-hoo, bad news for the creative agencies. It is our fault. When we stopped being paid on commission and started being paid by the hour, we had an opportunity actually to sell creativity in lots of different ways other than just filling in the blank spaces on a media schedule and we failed to do it. But okay, if you would just boo-hoo for creative agencies, I’d say, Well, that’s our fault and it’s our job to tear ourselves out of that hole. It’s actually really bad news for advertisers as well. Let me explain why. In the act of deciding what to put in an ad, whether it’s a TV ad, a press ad, a piece of direct mail, doesn’t matter, okay? In the time-consuming laborious act of actually producing those things manually, right? You followed a process of inquiry. Who are we talking to? What do we say?
[00:14:52.480] – Rory Sutherland
What’s the most compelling way to say it? What do we focus on? What do we neglect? Where do we stand relative to our competitors? Which was very, very generative of insights. And insights are the rocket fuel of marketing, ultimately. But we know. I always remember this because Jeremy Bullmore, more or less said something very similar way. He said that actually the most valuable part of advertising may not actually be running the ad. It may be that the questions you ask and the process you go through in producing advertisement. And we aren’t having the same, how do we sell this thing? Conversations, which will go on for two or three weeks, where you discussed what was Kit Kat about, et cetera. And the absence of those conversations and the absence of the discipline of that process has led, I think, to a complete dearth of insight. Now, you probably know my thing, the doornan fallacy, which is consultants come in, they look at a hotel, they define the role of the doornan as opening the door, which is a tiny fraction of the role of a hotel dormant. It doesn’t matter. For the purposes of automation, you define the dormant as the door opener.
[00:16:07.450] – Rory Sutherland
You look at the dormant’s salary, you realise that it’s more than the cost of an automatic door opening mechanism. You replace the dormant with an automatic door. You lay claim to the savings. You say, Didn’t we do a good job? And you walk away. Then three years later, you just go through all of the doornan is everything from security to recognition to the status of the hotel, the hailing taxis, to helping people with the luggage and everything else. You discovered that actually getting rid of the doornan saved you £20,000 in relation to opening the door, but it cost you £100,000 or a million pounds in relation to the actual rate that your hotel could charge and the premium it could enjoy. I think we’ve done this with advertising. We’ve said, Okay, what is an ad? It’s two things. It’s media and it’s creative. Therefore, we’ll automate the media and we’ll automate the creative. This will happen with AI even more. And what you forget is that the real value of the thing was probably the exercise of doing it, of having human beings doing it every bit as much as it was the fact that you produce some words and pictures that went out.
[00:17:14.920] – Rory Sutherland
I’m not saying for a second that advertising isn’t valuable. What I would say, okay, is that there are probably B2B companies in particular or companies with a very low ability to spend on media, which should nonetheless go through the process of producing an advertising campaign, not for the fact that it runs, but just for the value of actually going through those various steps and providing a period where there’s scope for real insight, real imagination, really, really interesting questions to ask. And I think we’re losing that. And as a result, advertising is basically most online advertising, there are very, very few exceptions, is completely transactional, soulless, and without any of human insight driving it. It’s just save money on this if you do it now.
[00:18:06.270] – Andi J
And the other thing with digital advertising is that the way that it can be tested. So I think in the traditional advertising way, you would test an ad pre-screening it. Whereas in the digital world, it’s like, well, we know broadly what we’re trying to flag. So we’ll just push 10 bits of creative out, see which one works best, and then we have a winner takes all and we’ll just invest in that one, which is not creativity in the.
[00:18:29.670] – Rory Sutherland
Traditional sense, is it? Well, yes, it is. What’s disappointing about it is it’s only testing the most. It’s not creative in the sense that even at the transactional level, I would have expected to see by now if there were humans involved. Let’s just take performance marketing, okay? Basically, most emails I get from online retailers are, We’re having a sale. Well, the sale is 150 years old, okay? Or, Save 30 % on this, or, Spend 100 pounds and get free shipping, or whatever it might be, okay? Now, if we were being creative about this, even if actually the ads weren’t brilliantly creative in the can-winning sense, you would have seen far more examples. For example, with KFC, we did a creative test digitally, and maximum four per customer, so dollar chips in Australia, chips for a dollar. And the most motivating banner was maximum four per customer, which is known in behavioural science. If you create the impression of scarcity, if your offer has to be limited in quantity, okay, you wouldit basically creates an impetus. It increases the perceived value of the offer and it creates impetus. One effect to that is far more people bought four, by the way, because they thought they wanted to max out on the offer.
[00:19:59.340] – Rory Sutherland
Now, that was the result of someone creatively thinking, what are a hundred different ways we could say this? And finding out which one works best, which doesn’t necessarily work for brand advertising, but it does undoubtedly work at the bottom of the funnel. And it’s really important, by the way, the bottom of the funnel. This is why I’m a big deputy of Mark Ritz and his bothism. Now, unfortunately, the mentality with which most people buy technology is cost-saving or efficiency, not effectiveness. Okay? Most people buy technology with an efficiency mindset, not with an effectiveness mindset. What I think digital probably means is that many companies may have to spend more on marketing than they did in the mass media age because they have to spend the money maintaining the brand values, which we did in mass media, and they have to spend more money on performance marketing so as to avoid not getting depositioned at the end of the funnel. I’d also argue, by the way, you should do the bottom of the funnel first. First, because there’s no point in feeding things into the top unless you know that the journey down is relatively unconstricted.
[00:21:07.910] – Rory Sutherland
I wouldn’t argue with someone who said, Let’s get our conversion rate right first and do advertising second. I mean, there are interdependencies there and so on, and you might be optimising for the wrong audience. They’re caveats, I’m going to add there, but it’s not a crazy way to proceed. But what’s weird, okay, is we did a thing for Dishoom. If you go to Dishoom, I think, and you pay before 6:00 PM, Monday to Thursday, and you’re a regular customer of Dishoom, you have a little dice or a key ring and you throw a dice and if you try a six, you get your meal for free. Now, that’s a much more exciting alternative to 16 % off. I haven’t seen companies 16.66 % off. I haven’t seen many companies, any companies online experimenting with that. This weekend, Black Friday is coming up, tedious thing, along with Halloween, which are two American imports, along with a grey squirrel that we could really, frankly, do without. But never mind. It’s too late for that. I mean, nobody in Britain even knows what Black Friday is. They just know it’s some sale.
[00:22:15.420] – Andi J
Makes no sense to anybody.
[00:22:16.690] – Rory Sutherland
Makes no sense to… Why is it black? I don’t even know that, by the way. I have no idea. I have no clue. But you would expect if people were really doing this properly, and I’m only talking about transactional offers, you would have expected to see a Camberian explosion in really exciting offers. You could literally… But effectively, it’s bog-offs, two-for-ones, it’s discounts. Why is nobody experimenting with this weekend? This weekend, if you buy X, 50 % of the things in your trolley will be free or whatever it might be? Or why is nobody experimenting with completely… I mean, not many retailers even do a version of Amazon Prime, which is one of the killer ideas, I think. It’s a brilliant, brilliant idea which transforms the frequency with which people shop with you. One large UK retailer, I think I can probably name them, I heard anecdotally that one large UK retailer offered their own equivalent of Amazon Prime. It’s not ASOS in this case, which does do.
[00:23:26.350] – Andi J
Something similar. They do have a version, yeah.
[00:23:27.680] – Rory Sutherland
There’s another one. And the average number of per customer annually went from one to five as a result of this mechanism. And so there isn’t even… This is what’s called, by the way, P&G call it this, and it’s really valuable to know. Because I always thought as a direct marketer, there’s much more scope, huge scope for innovation, not in what people pay, but in how they pay. Okay? And interestingly, I never knew what the name for this was. Now, P&G, I learned had a guy, and they may still do, but they had a guy back in the 90s, I think, who was the head of commercial innovation. And commercial innovation was described as every R&D, which doesn’t actually affect the product itself, but how you interact with it or how you engage in exchange with it. So very small P&G example, which would probably count, would be selling shampoo in small bottles at airports, or selling shampoo in vending machines would come under commercial innovation. Now, what’s tragic about that is because there isn’t a name for it. Most companies don’t do it at all, and it falls between the cracks of pricing and finance and marketing.
[00:24:44.060] – Rory Sutherland
But a really, really good commercial innovation like Amazon Prime can be absolutely decisive to a business. And I’d expect to see a lot of innovation in terms of how do you make an offer really exciting? What else? What could you do? Even just buy something this weekend and win this or whatever. I’ve come up with about three or four that idea of actually one in six people wins their shopping for free. Okay, that would really, really drive excitement. And I would have expected to see more of these experiments. I suppose one theory is people have experimented with them and they didn’t work. I don’t believe that’s the case. I think it’s just a total lack of the imagination and people are just following best practise. And so everybody else is Black Friday sales. Everybody’s Black Friday sales like everybody else is Black.
[00:25:39.390] – Andi J
Friday sales. We tend to follow the herd, don’t we? As marketers and often you recruit people from within the industry to hop from one person to one place to another, so they just bring the same idea.
[00:25:49.180] – Rory Sutherland
Well, it’s really interesting because in anything relating to human perception, best practises or benchmarking may be a bad idea. Not always, but may be a really bad idea, because what you do is you basically become invisible and uninteresting because the human brain pays attention to what’s unexpected.
[00:26:06.320] – Andi J
[00:26:06.730] – Rory Sutherland
Were talking about this in relation to an interesting concept, which is what I call premium economy, where it’s discretionary premiumization. So I’m a very big fan of the Moxie Hotel Chain.
[00:26:19.750] – Andi J
Which is- I saw this on LinkedIn, which I was wondering, are you now an influencer by the looks of that post. No, no, no, no. You’d be all over TikTok shortly.
[00:26:28.960] – Rory Sutherland
It’s quite embarrassing because we have a similar one which is offered by a loft, I think, which is part of Intercontinental Hotel Group. There was Citizen M. I happen to encounter the Moxie first because the Moxie dates back to 2012 as a chain, but there are 60 of them now in Europe. And weirdly, because I was having an eye operation in Lausanne and needed a place to stay, which wasn’t absolutely egregiously expensive, which is not always possible in Switzerland, I stumbled on the Moxie Lausanne and just really loved it. I thought this is actually… I didn’t expect to like it as much as I did. And having then on Twitter, done a little bit of advocacy, it was interesting because a couple of my other friends said, Okay, well, your recommendations are at least good enough for me to try it. And they had a similar epiphany. And the point about it is that you strip out all the extraneous shit that people don’t really care about, or which are often done for status signalling purposes. You would actually get rid of the dormant because it’s not that hotel, right? Yeah. Okay. You don’t even have a check-in desk.
[00:27:35.620] – Rory Sutherland
You don’t have a concierge. You check in at the bar, which is a bar and coffee shop in the middle of the ground floor. The ground floor, there’s also an ironing room, by the way, I noticed. They don’t do laundry, but you have ironing room and laundry room if you wanted. It was intended as a youth brand. It’s actually a bit more expensive than that because they tend to be in quite good locations. But the interesting thing is the Wi-Fi is great. The bed’s perfectly comfortable, there’s a really good TV. Your room is pretty small. It doesn’t even have a wardrobe. It just has a trellis work thing on the wall where you hang your jacket or you’re stuck. Okay, fine. I’m probably not staying there for a week anyway. But the ground floor is basically a bar and coffee shop, a bit like a cooler, funkier version of a WeWork, which means that when you’re not in your room, which is after all, quite small, watching TV, you can basically chill out there with a laptop, get on with work. You could spend the entire day there. To be honest, you could probably say the entire day there, even if you weren’t staying at the hotel.
[00:28:36.910] – Rory Sutherland
But you could spend the entire day there basically getting on with stuff without feeling like a weirdo. And it’s open 24 hours. There’s a snack bar, a little shop. If you want toothpaste, you buy the toothpaste. And it’s just incredibly well thought out. Effectively, what’s interesting about it is that it does… It’s what I call… Someone else in the comments to that LinkedIn article made the point that there’s an airline they used. It’s a low cost airline somewhere in Europe where it’s basically a cheap airline, but they had a sandwich on board and they said it was just an incredibly good sandwich. You can imagine what it is, like tiger bread or a Briage bun or something. But they said there is a sandwich, the thing you pay six pounds for in a fancy cafe. And they said, If you do everything basically, but you do one thing so astonishingly well that it basically dominates human attention, you have this wonderful middle ground between effectively what you might call between first class and premium economy is effectively what I was looking for. What’s interesting about it, there’s another hotel which is in Los Angeles which does something similar, which is called the Magic Castle, I think.
[00:29:56.810] – Rory Sutherland
And their famous thing is next to the swimming pool, they have a thing called a popsicle hotline, and you pick up this red telephone, and then someone comes out and gives you free ice cream for your kids. The rest of the hotel is actually fairly perfectly nice. By the way, often people go to the rest of its… It’s terrible, doesn’t it? The rest of it is good. The rest of it is good enough so you don’t notice there’s anything bad. But then you have one outlier thing that you do disproportionately well. Now, what’s interesting about the Magic Kingdom or Magic Castle, I can’t remember what it’s called in L. A. C, is that it comes like number eight on Tripadvisor among the best hotels in Los Angeles, despite the fact that actually the building, the location, etc, are nothing amazing. I did notice one other thing that when you get your laundry bag, they wrap it in brown paper and then put some, what’s it called? What’s that stuff? They then put a sprig of scented herb or something, probably rosemary or something like that on top of laundry, which is just a nice touch.
[00:31:02.390] – Rory Sutherland
It’s just that extra thing you weren’t expecting that you now notice. I think it’s interesting because I think there’s a big market opportunity there for people who are increasingly annoyed because, as I wrote to the spectator last week, you tend to have this problem that markets bifurcate or they polarise. And the reason is that although in theory, we’re making a trade off between price and quality, and an awful lot of purchases are either quality-driven or they’re price-driven. You buy a car insurance as a distressed purchase, you buy it on price. If you’re buying a pair of sunglasses, you basically buy it on brand. And this creates this annoying thing where there’s actually a… I always said the problem with John Lewis, it’s not their fault, it’s their customer’s fault, because John Lewis is providing what customers say they want, which is good quality at reasonable prices. But then when you actually look at what customers do, they want Prada or they want. Okay? Depending on everything, not only economic circumstances, by the way. And it’s worth reminding that one person has… That what’s luxury for one person is cheap for another and so on and so forth.
[00:32:18.360] – Rory Sutherland
But by and large, you still get this polarisation.
[00:32:21.520] – Andi J
And market research… Sorry, go on.
[00:32:24.270] – Rory Sutherland
I’m not for a minute. And market research doesn’t capture that because people want to sound sensible because they don’t want to say, I’m going to pay anything for sunglasses that make me look cool and who gives a shit. And equally, they’re not going to want to look like cheapskates by just going, I buy what’s ever the cheapest. So market research doesn’t really capture, I think, this polarisation because people are going, I want good value at reasonable price is.
[00:32:45.910] – Andi J
It goes back as far as Henry Ford, but about asking people what they want. But that’s not to say I don’t believe in market research.
[00:32:53.740] – Rory Sutherland
I’m fundamentally- No, it’s just got to be done in a very oblique way.
[00:32:57.010] – Andi J
Yeah, it’s how you design it. You talk about.
[00:32:58.930] – Rory Sutherland
Basketball in problem. I’m slightly sceptical about groups because what you’re capturing in a group is the way someone wants to appear to a bunch of strangers.
[00:33:09.360] – Andi J
Now, I do look for.
[00:33:10.630] – Rory Sutherland
This group. No, I’m not saying don’t do them. There are loads of things. If you’re buying the glass, you can read the body language, you can do all that stuff. You can also look at the dynamics in the room, which can be really interesting. But there is a fundamental risk that… There was a lovely case. We’re doing research on online book buying. Now, this would never come out in a group, but it did come out in depths, which is after we’ve been quizzes this guy who was quite a heavy book buyer. It was something like 45 minutes or something. Eventually, the effort of lying becomes too great. And this guy said, Can I be absolutely honest with you? He said, I’m not massively into reading books, not as much as my book buying suggests. I’ve just found that if you’ve read a couple of Ian McEwens, you can pull a better class. Okay, right now. Okay.
[00:34:04.980] – Andi J
The truth comes out eventually.
[00:34:06.450] – Rory Sutherland
Let’s be absolutely candid. There is probably… There’s an awful question to ask, which is how cultured would men be in the absence of women? It’s a terrifying question, isn’t it? Because how much of a… Would we just be basically just watching Jason Statham films in our underpants?
[00:34:27.510] – Andi J
With a single chair in a room and a big TV and a fridge. Yeah, exactly.
[00:34:31.800] – Rory Sutherland
That’s exactly it. Yeah, that is it. It’s a bit like Aristotle Anastasios’ thing, Without women, all the money in the world would be valuable. Effectively understanding that there was a peacock purpose to a hell of a lot of wealth acquisition. How much that’s true of cultural acquisition is a really interesting question. Would men actually be basically pretty crass? I mean, it’s probably a good- I mean, there’s probably a good- -without the civilising and the women actually exercising selection? It’s probably good to- The one thing I’m weird about, actually, the only thing I would say, my tastes are pretty demotic in lots of things. I’m totally unconcerned by going to fast food restaurants, et cetera, et cetera. I’m pretty easygoing and I’m pretentious about lots of things. Weirdly, I’m a bit of a cinema asshole in that I basically stopped going to the cinema except for Oppenheimer for about three years because of this blaming comic book franchise, Plumics. I’m a 47-year-old man. I don’t want any comic. Also, I like my films to obey the laws of physics, which is why Hopin’ Hybus is particularly good, I suppose.
[00:35:43.050] – Andi J
[00:35:43.500] – Rory Sutherland
Want to be-.
[00:35:44.060] – Andi J
Spiderman Man might.
[00:35:45.000] – Rory Sutherland
Not be. I can cope with Game of Thrones, because being Welsh obviously, Dragons are not actually mythical creatures. I could just cope with that level of weird in Game of Thrones. It’s like parallel universe stuff. But the superpower shit, I can’t cope with at all. I don’t want that stuff at all. Can’t do it.
[00:36:06.110] – Andi J
Well, I would love to dig into that. But the reason I invited you back was to talk about trains. And if I don’t ask you the question, we’re going to run out of time. We’ve got time. So, Graham, when I retire in a number of years time, I’m going to pack my worldly goods into a carrier bag, put too many pens in my top pocket, and go and stand around train stations looking at trains. I think it’s in my future somewhere along the lines. I do quite enjoy a conversation.
[00:36:29.150] – Rory Sutherland
By the way, a really point, which is that we really, really like them. Okay? We can see them. And that’s not irrelevant. Okay. The reason I probably go to Amsterdam on the train, if I’m being honest, okay, is it doesn’t… I lived quite close to Gatry. I might claim it’s environmental reasons, but to be honest, it’s because I enjoy being on a train and I like everything about trains. Also, it’s a change from flying. But the fact that we like trains is not an irrelevant factor in the same way that I’m a huge which is just about train related, of the Heathrow pod parking. Have you ever tried that?
[00:37:05.840] – Andi J
I have not, no.
[00:37:07.260] – Rory Sutherland
So it’s a car park. It’s called Business Pod Parking. It’s about a mile and a bit from Terminal Five, but you park your car there. There are then two pod bays where you go press a button or press a screen. The pod opens its doors. You get in typically alone or with your family. You don’t share pods except at moments of very high demand. And the little pod, you say, I want to go to Terminal Five. You could if you want to go to the other end of the car park, okay? But you typically say, I want to go to Terminal 5, and it then scuttle off and drives you there. And then the doors open, the Star Trek style, and deposits you at Terminal Five.
[00:37:44.210] – Andi J
Is this theThis is the same as the lift in Charlie and the Chocolate Factory, isn’t it? It sounds exactly like.
[00:37:49.130] – Rory Sutherland
That way. Well, it goes where you wanted to go. It goes horizontally. So basically, the reason it doesn’t go that fast. It’s probably 30 miles an hour, but the distance doesn’t really, you don’t really care. It’s on sometimes elevated tracks. It travels on unique tracks with little guide rails, but actually the pods are self-propelling and with pneumatic tyres, and they just go woo woo. And you said, Okay, this is very embarrassing. But I have a colleague who’s more serious minded than me, and he was 60 years old. And he admitted to me that every now and then he’d turn up for the Heathrow pod parking, and they said, I’m terribly sorry, sir, but even though you booked, the parking is actually completely full. So we’ve upgraded you at no extra charge to the short stay. Now, that’s like a 40 pound more expensive parking option for free. And his reaction was not, Oh, that’s great. Thank you very much. He said, My reaction was, But I wanted to ride on the pod. Okay? Actually, one really important factor about that is the joyousness of a mode of travel in terms of the extent to which it uplifts you.
[00:39:00.820] – Rory Sutherland
And the pods are very, very uplifting as a mode of travel because A, you’re on your own, because you’ve got to have a plane, particularly in arrivals, you’ve got to have a plane. You’ve been through airports, you’re sick of being with other people. And so getting into your own little pod and just sitting there is the thing. And they’re clever because if the battery gets low, they scuttle off. I think there’s a predictive algorithm. So in the morning, there are more pods waiting at the car park. And in the evening, when people fly in, there might be more pods. Actually, in the morning, it’s complicated because there are people arriving from long-haul flights. But generally, I think they’ve got a learning algorithm. There’s a predictive element to where they sit and they go and charge themselves if the battery gets a bit low and they queue up in a cute way. You might have two pods in a holding bay. So as soon as the person in front of you goes off in their pod, a little pod will scuttle around the corner and come and pick you up. But if you’re at terminal five and you’re in arrivals, follow the signs to pod parking.
[00:39:59.570] – Rory Sutherland
It’s free. I mean, it’s completely unpoliced for them, except by CCTV. But try it because the point about it is that it’s just really nice. I don’t think this is why I’m obsessed with trains, which is it’s the collision point between an incredibly reductionist quantification culture about punctuality, time, journey, time, speed, capacity.
[00:40:23.270] – Andi J
[00:40:24.370] – Rory Sutherland
Almost a Spurgic obsession with what is quantifiable on the side of people who actually design, and conceive, and fund transport, and a completely different mindset on the part of people who use it, which is I wouldn’t mind if… Look, the point I made is that High Speed Two asked the wrong question. They started off with, How do we transport this many people in this time from London to Manchester? That’s the wrong question. The question asks is, How do we produce a railway so enjoyable that people feel stupid driving? That’s the question you should have asked.
[00:40:59.100] – Andi J
I’ve been watching the whole HS Two debacle roll out on the telly over the last number of months. Very briefly, if you’re not in the UK, HS Two is a high speed two. We were due to build a high speed rail link, the thing that you’ve probably got in your country anyway, from London to Manchester, Liverpool, and the other way through Bradford, Leeds, and possibly at some point up to Newcastle. Wonderful. The cost has overrun so much that they’ve now cancelled almost everything of it to the point where it’s pointless. This has been playing out in the news over the last number of months. And every time I see it on the news, I scream at the TV, Why is no one talking to Rory Sutherland?
[00:41:37.220] – Rory Sutherland
Someone did actually relay what I said to, I think about it being the shadow transport minister, who I’m delighted to say has also read my and Pete Dyson’s book. It’s more Pete Dyson’s book than mine, but it’s called Transport for Humans. But the reason I got fascinated with trains is it’s the San Andreas fault between marketing thinking and what you might call reductionist engineering thinking. By the way, I think the Heathrow pod, because psychologically, if you look at the prices for pod parking, it’s like 70, 80 % as high as the cost of short stay. If you look at the longest-day parking, which has a bus transfer every 10 minutes, that’s like 30 % of the price of short stay. Well, people are voting with their wallets as well as their feet here. Now, what that says is that anywhere you want to park away station, you don’t actually need, literally, you don’t need the car park to be next to the station. Park and ride will be completely transformed, I think, if you had a pod system rather than the bus system. And there’s something weird about it, particularly with luggage. We really don’t like buses very much.
[00:42:49.830] – Rory Sutherland
I mean, there’s a weird thing that if you replace a bus service with a tram service, you get something like 80 % higher ridership, even if the frequency and speed isn’t much changed. What it is could be social status, could be all kinds of things.
[00:43:03.940] – Andi J
[00:43:04.700] – Rory Sutherland
Nevertheless, we have this really interesting question, which is that no one is factoring in to any of these equations what you might call basic desirability. Now, the desirability of a train may be only tangentially or very poorly correlated with speed. What it might be very highly correlated with is like… Well, I’ll give you an example. There’s a weird train out of Cannon Street, which I use as the last train home from London, and it goes from Cannon Street to Oxford. The reason I use Oxford station is basically because there are no ticket barriers. That’s not because I’m cheating. It’s just I hate the ticket barrier thing, and you end up missing a train because you’re queuing for a ticket. The car park is really nice and it’s a good coffee shop. Those are the three factors that basically decide me to use it often. On the way back, why I like that late Cannon Street train is because the train is in the station for about 30 minutes before it departs. So when the pubs close, as it were, or whenever I’m coming back from something, you head there and basically just go and get on the train.
[00:44:12.030] – Rory Sutherland
Now, for 20 minutes it’s not going anywhere. I don’t care. I’m sitting there in complete comfort. I’m doing the Wi-Fi. Nice and warm. Nice and warm, okay. Now, by contrast, what trains tend to do is imitate the Eurostar does. This imitates the most irritating facet of air travel, which is that you’re coralled in a holding bay in until the very last minute. Now, okay, I get that because aircraft have to maximise efficient turnaround. But if you literally had an airline which said, Actually, the plane opens up for boarding, you just built in a bit of inefficiency. The plane opens up for boarding 20 minutes early and you can just go and sit down and get your shit together. And everybody boards by… This was the case with that wonderful British Airways service from London City to New York, where they had a micro lounge. It doesn’t exist anymore, I think they service. It was business class only. But then they said, Well, the plane’s leaving in half an hour, but you’re free to board now if you want. And so people just basically drifted towards the plane, boarding was completely stress-free. I mean, there are a load of other reasons for that.
[00:45:18.830] – Rory Sutherland
Obviously, there are fewer people as a smaller plane. But the actual pinch points on the bottlenecks and pinch points are often psychological bottlenecks. They’re not really transportation bottlenecks at all. And this is why I refer to trains being fascinating as literally that San Andreas fault line between engineering thinking and marketing thinking. Yeah.
[00:45:43.940] – Andi J
Now, we’re coming towards the end. And if you’ve listened to either both episodes with Rory on this podcast, what you’ve probably taken away from this is that you come at problems in a slightly different direction to most people against the engineering mindset, as it were. You have a course called The Mad Masters. Is this the place to go to learn more about how to tackle problems in this way? So tell us about that. Is the time to talk about your new book? Are you allowed to talk about your new book?
[00:46:14.180] – Rory Sutherland
Yeah, we’re Let’s talk about this. What I want my new book to be about, although it will take a different shape because the process of your strategy formulation should be recursive and iterative. It shouldn’t be top-down. In fact, probably one of the wonderful book called Bottom Up Marketing by Reason Trout, I think it is, where they argue that you take a tactic and you elevate it into a strategy. You might argue the moxie hotels doing this. We take this one tactic and we actually then amplify it. Reason Trout, by the way, positioning the battle for your mind and bottom up marketing were two of the epiphany moments in my marketing journey. But as I said, the thing I wish I’d 10 years ago is actually do things backwards genuinely. And doing things backwards means you start with a consumer and you work up to the bloody business. And what most businesses do is they’re optimised for reporting upwards to aggregation, data aggregation to report to shareholders. And what the consequence of this is it’s created a Soviet style capitalism, which is all about top-down planning rather than bottom-up strategy. And I think it’s… Because, as you know, I’m a huge Ritz and fan.
[00:47:34.970] – Rory Sutherland
And one of Ritz and his great phrases, which I borrow and use all the time, is the average is the enemy of the marketer. But when you’re taking data and you’re aggregating it for the purpose of averaging, what you’re doing is destroying the very information. The anomalies, the outliers, the exceptions, the counterint, things, the Simpsons paradoxes, all of those things, I won’t go into that because that’s another podcast, Simpsons Paradox, the causalitythe direction of causation, all those things. When you aggregate up, you create a moron’s eye view of the world. This is why I think that strategy should be a post-rationalization, because it should have a what have we did this? This thing seems to be surprisingly successful. What if we did a hell of a lot more of it and made it a talking point? That’s a much more interesting, illuminating, and I would argue, a very profitable conversation. What if we actually make the talking point to this, not that? What if we price something like this, not that? What if we do this, not that? You can test it. You can look at existing data. You can ask for data because the data that’s most readily available is probably not the most useful data.
[00:48:51.810] – Rory Sutherland
You’ve got to do your police inquiry thing where you listen to a word on the street and you look for anomalies. But this process should fundamentally be done from the consumer perception back, not from business planning and capacity planning forwards. And yet because of the complete decline in influence of marketing, we’re the only people… Shortly before he died, Peter drugger, was more or less wheeled onto stage. He died in his 90s, so he must have been amazingly old. They said, What’s the one thing you’d like to say? He said, Do not hand the keys of your business to finance because they only look at the past, they’re not looking at the future. And that was drugger’s last… Not his last words, but his last recorded words. And that’s absolutely right. We’ve handed the keys effectively to finance and planning and given them over to people with an efficiency mindset, not to people who are focused on effectiveness and meaning. And we don’t actually have a phrase, by the way, emotional efficiency, but we should have a phrase emotional. I did it as a Google whack, where you search for it in inverted commas. And there are hardly any cases of anybody using the phrase emotional efficiency, but emotional efficiency is basically obtaining the greatest perceived advantage or differentiation through the least expensive or costly possible means.
[00:50:22.690] – Rory Sutherland
It strikes me as an absolutely obvious thing to pursue. And on trains, for example, making a train faster if it’s already going at 140 miles an hour to Manchester is unbelievably difficult. It’s even incredibly difficult because the faster the train is already going, saving 10 minutes becomes harder and harder and harder. You’ve got to go disproportionately faster to save 10 minutes on 150 miles journey, or whatever it is, 200 miles journey. But emotional efficiency, if you actually had fantastic coffee and a brilliant bacon sandwich on board, bored, or you just did one thing amazingly well.
[00:51:04.630] – Andi J
Wi-fi. That’s all.
[00:51:05.930] – Rory Sutherland
Anybody wants. Well, funnily enough, you can do that because I met a guy who worked for a company where they did a test where they basically had perfect Wi-Fi on a train. The reason is that the companies who provide the train Wi-Fi are too mean to pay the operators for a large scale connexion, a proper connexion. It isn’t actually the coverage, it’s that the bandwidth frequently gets strangled because they’re not prepared to pay the premium for it.
[00:51:34.980] – Andi J
But if we were going to pay 80 billion, is it to knock 30.
[00:51:37.690] – Rory Sutherland
Minutes up? No, don’t get me started.
[00:51:39.740] – Andi J
Okay, you can make a.
[00:51:41.100] – Rory Sutherland
Two-hour journey useful, productive, or entertaining, or you can make a non-entertaining journey 40 minutes shorter.
[00:51:49.530] – Andi J
But still non-entertaining. Yeah.
[00:51:50.950] – Rory Sutherland
But shit is shit, whether it lasts two hours or whether it lasts an hour and 20 minutes.
[00:51:58.280] – Andi J
Wasn’t that, David, and a riff-off, David, Abbott, and the shit that arrives at the.
[00:52:02.430] – Rory Sutherland
Speed- The shit that arrives at the speed of light is still shit.
[00:52:04.900] – Andi J
I love that. Absolutely right.
[00:52:06.120] – Andi J
But listen, hopefully we’ve got to the end and hopefully no one’s thinking this has been shit that lasted longer than the speed of light. But, Rory, thank you very much for your time. There’s a link to the Mad Masters and all the information about that. Sign up for the email. Thank you very much. The email is fantastic and well worth it. Then sign up for the course after that. Rory Sutherland, thank you again for your time today.
[00:52:31.520] – Rory Sutherland
It’s been an absolute joy anytime.