Spark.me 2017 - Rory Sutherland - "The Science of Knowing What Economists Are Wrong About"

[Music] so I need you to put your hands together to bring the house down and to welcome the man Rory Sutherland here oh what a joy I'm not actually that good I don't think anything I could deliver here short of taking my clothes off or something could possibly live up to that introduction but I've called this I've called this innovation can I just also say that you didn't have to persuade me to come because I wanted to go to Montenegro for years years years I had a friend who visited some years ago who always recommended it as the greatest place and he was right and the second thing it's been worth my coming anyway just to sit in the audience for about three hours today I thought aces talk this morning I thought an Stiller's talk just previously well those really fascinating because although what I'm talking about today is about really the positive side of advertising and marketing because that's my job okay both Asia and then still I think have talked about something that's been worrying me more and more for the last few years so I'm just going to start off with just a few minutes of echoing negative fears that I have so if we example on the 10th floor of this building or the hope and it's on the hotel next door there's a casino okay now I mentioned statistically about two or three people in the audience maybe more a gambling addicts or recovering gambling addicts the best advice I can give you if you're recovering gambling addict is don't go to casinos okay if you make sure you manage to obey that rule then the problem of not gambling becomes a lot easier the human brain has very very strong associations if you are a former heroin addict for instance you're told the first rule of giving up heroin is that Street where you used to go to buy your heroin you can't even drive within three blocks of that streets for the rest of your life that's the extent to which Association can drive falling back with addiction I won't be worrying me a little bit in the advertising industry is that if you imagine in an advertising agency that five people are seated around a table and you have a brief to sell an alcoholic drink or you have a brief to sell an online gambling site as somebody in the room says I've got a great idea why don't we put posters up for booze at meetings of Alcoholics Anonymous right now I'll be absolutely honest with you a few people will laugh people will go good idea but I can also guarantee something else nobody will ever do that because it's disgusting even if to be honest they don't think it's disgusting they know that the reputational risk is too high similarly going to meetings of gamblers anonymous and putting up ads for mobile phone gambling apps not going to happen in the real human world but algorithms going to discover that without even knowing what it's due algorithms are going to find out what people's weak spots are and they're going to follow them around now as I said in the physical world where where you were controlled what you could do there were very simple strategies if you didn't wanted to give up drink don't get a problem if you want to give up gambling don't go to casinos in the digital world there's no escape from temptation so where is someone who is trying to give up gambling could not read the rate of the sports pages of the newspaper not go to bookmakers not go to casinos in the digital world as for those things might follow them around absolutely anywhere they go divorced from any context and algorithms don't have an ethical sense they're probably programmed simply to maximise returns my guess would be that winning back a recovering gambling addict shows extraordinarily positive for natural returns as would discovering people who have a propensity to become addicts in the first place and we can be hacked in loads and loads of evidence from nature suggests that things evolved to hack us diseases for example viruses evolve the capacity first of all the hack us and then to fight our immunity and what happens when you have high-speed a be testing taking place at industrial scale is the same thing that's always happened will be going on but it'll be going on at a much much faster speed and if that is I think we have to acknowledge that it's potentially very scary indeed so I'm starting off being negative I'm going to follow up now with something which I think is optimistic I call this innovation because it's a form of it's not a misspelling it's a form of invention which relies much more on understanding the properties of the human brain and human perception rather than understanding the laws of physics so innovators as opposed to innovators are less interested in the properties of silicon and more interested in the properties of neurons the reason I'm excited by this is twofold I've worked in an advertising agency for about 30 years I've always had the feeling that there are hundreds of problems out there that we could help solve that we're never asked to solve the reason is largely is that there are several reasons but one of them is historical it's simply the fact that traditionally advertising agencies were paid commissioned by media owners so people who have problems that didn't involve bought media tended not to talk to advertising agencies we haven't been paid that way for 25 years we still behave as though that's how we're paid there's absolutely no reason for a solution that depends on human insight and and that depends on human insight and creativity there's no need particularly in the digital age but there's no need for that to involve bought media at all and there are hundreds of solutions you can find out there that have an extraordinary effect which may simply be achieved with a tiny little bit of human insult and a change in a single word I'll give you one example more than bullying the effectiveness of a call center by adding a single phrase into a call center script the simple phrase was most people do this if you're four people three choices and then you also flag the choice that's most popular it makes it much easier for people to choose because the human instinct is very heavily driven towards herd behavior and social decision-making and when we have to communicate not knowing what's more popular we feel like we're deciding backlight it's likely important adding and totally miss we've totally failed to understand this in selling financial services products when you buy financial services products such as a pension the usual heuristics we use when we buy a car what car did my dad have what car the people like me have what's the best selling car out there and what car did I buy last time habit all of those heuristics that we use to reassure ourselves in decision making are completely absent and when when you have those conditions making a decision was really really difficult and there is a really important thing here even if you think marketing is evil which is if you make making a decision really difficult people do two things they either decide really badly or they don't do anything at all so whatever marketing does to some extent at least you're improving on really appalling decisions or total inertia in if there are people who should have had pensions 15 years ago and the reason they don't have a pension isn't because that's a bad idea it's because no one ever presented them with a choice they could make we give you a very simple story which is worth knowing how wrong economics is about human psychology imagine you have two products and they're on the shelf one of them is ostensibly better than the other it has more features it's smaller if small is good or bigger if bigs good it has more of the things you want but it's cheaper now to an economist to a rationalist that's the easiest decision you've ever got to make more features lower price what actually happens in the market in the real world is people get confused again that doesn't really make sense does if that thing one really better they'd be charging more for it better cognition you like there must be something wrong here that product although it seems better if it's cheaper that must mean it's in some dimension I don't currently understand so what happens when people are presented with that isn't that they choose the cheaper better one if they don't buy either of them because they can't make sense of the choice those of you who remember low-cost airlines low-cost airlines always made a really big deal about what you didn't get do you remember that you don't get a check in luggage you don't get a meal you don't get a pre allocated seat you know all of those things you didn't get now that sounds really strange thing to do why would you tell people the downside to your airline and the reason was it was to make the low price believable if you've gone around saying you know we're just as good as Lufthansa but we're half the price the consumer does not react with oh that's great then fantastic I'll go with you they get no that doesn't make sense you're that much chief of the Lufthansa it probably means that there's something about you I don't know that makes you cheap maybe you then service the engines on the plane or your pilots are all on day release from prison or something like that ok so marketing is much more complicated than people realize it's not only about justifying a higher price it may be amount be stigmatizing a lower price now that's my first reason I'm excited the second reason I'm excited is I agree with Google about their whole idea of 10x part of alphabet is a thing called Google X Astro Keller is the kind of he's actually the grandson of the man who developed the h-bomb man called edward teller so we have some family experience in developing significant innovations but Tim the point there is that they say that too much effort in society is dedicated to looking at incremental improvements things that are 5 percent better 3 percent better aids and better and to really make a difference in the world you've got to look for something at 10 times an order of magnitude better and they're kind of right you know I don't think it makes that huge difference if something is 3 percent cheaper if a train is 5 percent faster I don't think those things that gain changes in the way humans think act and behave when I disagree with Google slightly is the Googler engineers not psychologists and my argument is that in 2017 making something 10 times faster for example you run up against the laws of physics it's very difficult to make a trade and go at a thousand miles an hour it most things in in terms of the physical universe there may be a few exceptions there their definition of the Google driverless car by the way is it's a 10x project because they want to reduce the number of road fatalities by by 90% that's why they call it a 10x thing but in many many areas of human life we hit the laws of what is actually possible we hit the laws of diminishing returns I would argue however in psychology I would say that most R&D put into 10x projects should be looking for things that are that feel 10 times different rather than are 10 times different it's very very hard to make an aeroplane ten times as fast on the 787 but you can make a hotel ten times cooler than another hotel at a fraction of the price and it's much much easier making a train journey ten times more enjoyable might be a far more worthwhile aim than making the Trent train journey 90% shorter in duration by the way if you want to make a train journey at ten times shorter but you're happy to use human psychology it's called a sleeper train the journey may take nine hours but you're asleep freight of them there is no aircraft that's as fast as a sleeper train in many respects so we're I think they're wrong is that too much engineering technological genius is looking for things that are ten times different whereas what matters to humans is things that feel ten times different now if you think this sounds really weird it's already happened in nature this should be the official plant of the advertising and marketing discipline it's a chili okay you probably thought it was a paprika for this part of the world didn't you it's actually a chili like the paprika fella sure it contains a thing called capsaicin the interesting thing about capsaicin is it isn't hot it doesn't hurt you okay you know that feeling when you eat something very very hot whether it's a curry or something really really spicy you're thinking this must be really you know my lips are stinging my mouth is burning this must be really really hurting my skin the truth matters not actually doing anything what capsaicin does it doesn't tinker with reality it was very difficult if nature tried to do a google 10x saying we want to make a plant that's genuinely really hot that would mean a really difficult thing to do okay you'd have to maintain an insane temperature at all times not easy to do the way capsaicin works is it messes with our sensory receptors in our mouths and skin and makes them hypersensitive and makes them detect heat when there's actually none there so the chili is a fantastic thing that is apparently we all think of it as a hot thing to add to food doesn't change the actual heat acidity telling that the food it just changes the way we taste it by messing with our perception now this is a point for an Austrian economist Ludwig von Mises the interesting thing about the Austrian School of Economics is they accepted that value is entirely subjective and therefore you can rage value just as much through changing perception as changing reality in this quote from on human action von Mises actually means here by the man who sweeps the floor he explicitly means marketing and advertising sounds a bit weird the point is that your ability to enjoy a meal isn't just dependent on what the meal is it depends on the context in which it served to you if you were served a michelin-starred restaurant michelin-starred meal in a restaurant that smelled slightly of sewage you wouldn't enjoy the food at all the idea that we value things objectively free of the context and expectation which we bring to them is completely wrong therefore there are two ways of making that restaurant better the restaurant that says fantastic food that smells of sewage one of them is to make the food even better the other way is to get rid of the smell now an awful lot of the time because people think it's the objective thing that matters we must make the food even better so it's the best food in town they neglect the context in which things are presented now how many people here use TripAdvisor the truth of the matter is ok that your enjoyment of a restaurant is very much dependent on a whole host of reasons which are almost nothing to do with the restaurant ok secondly if we're in a bad mood in a restaurant we decide that it's the bad restaurant and we invent reasons why it's not very good even if it wasn't the restaurant that put us in a bad mood this is called emotional misattribution nearly everything that humans experienced emotionally they come up with rational reasons for but the rational reasons are entirely post rationalized so I'll give you an example if you go and look for really really negative reviews of restaurants on TripAdvisor it's amazing to see how many of and start with the words we had booked a restaurant for my mother-in-law's birthday okay what I really mean is is the person didn't really want to go out for a meal anyway because it's his mother-in-law's birthday they've got to go to a much fancier restaurant than the restaurant they really wanted to go to because it's her birthday he knows he's going to end up paying he wanted to stay at home and watch Champions League then before he gets to the restaurant he has a bit of difficulty parking now he's in a really bad mood and it's almost impossible for the restaurant not to be a restaurant because he's in a bad mood he's in a restaurant therefore he hates it and he'll just look for any evidence to corroborate the fact that the restaurants bad this business we're by the way we have a first impression or we have a first emotional state and it effects everything we do because we just look for confirmation bias we saw a wonderful data set from a hotel in Memphis and it measured what people thought of various things in the hotel including a pretty irrelevant thing which was an ice sculpture and the garden they had a massive radar sculpture in the garden during winter virtually every perception of the hotel depended on what your check-in experience was like if you had a good quick check-in everything about the hotel was good not just things that are relevant like the quality of service because you could argue that check-in is part of service if people have had a quick experiment check-in they thought the ice sculpture was brilliant if they'd had to wait 20 minutes to check in behind a United Airlines flight crew they thought the ice sculpture was okay so the idea that we have this objective measure of things that's free of context just forget about it everything we judge is based on our prior expectation for us what we compare it to what we've experienced before the idea that there's just this thing called utility which is produced in a factory and is completely dissociated from the context in which the thing is consumed not happening now just to prove this we can all think of cases where not brilliant product and I'll show you a few examples not brilliant products have been marketed fantastically so the people love what I always wanted to find was a case where a fabulous product was marketed terribly now how many of you have heard heard of it ed Sheeran yeah okay good right so he's been number one in the UK for about ten weeks he's probably in a weird kind of wave one of the most successful musicians most popular musicians in the world and what would it take to get somebody to market an Ed Sheeran concert not just their cheering concert but a personal one to one edge sharing contact concerts in a really terrible way this is just to prove that it doesn't matter how that your product is if your marketing is terrible now who's going to do that well the answer is to Australian comedians this is what they did go hello hi we peep shows they have a pretty bad name normally associated with a lude content but by definition there has to be someone it attend to change them we took one of the world's biggest performing artists kept all these clothes on and then of an Ed Sheeran Peep Show would anyone dare to believe what was written outside and come into our very dodgy looking very very Filipino ones that was fair enough because we dressed Hamish is a fairly shady looking Spreaker in charge of getting customers I gotcha Sharon everyone's who's here alright I can hear him do you think I genuine I don't think we'll get it could be a brave soul I wouldn't I wouldn't come into if there was dude with a beard a hat and say like governances aid was right this was going to be tough paper this year in sativa insurance you want to pee pad ed sheeran ill off what are your into big fella that it's you an idiot beautiful cheese you hear men did not install for you reckon fever got edge here interesting on its Dylan anyone keep up to that sir abates think about it actually pretty good value it's quite trying we had a total lack of interest for over 50 minutes it's been some time we should have got your walk healthy terrible yeah what every fella ganache here and you need an interval in here you need this urine inducing it yeah there is not I think one of the big problems is people think edge here and the code word for a new drug have you I'm like insurance - like two bucks if a second things like what like they just say no yep dirt cheap dirty here we go two bucks Duke Duke and we're prac in too high and that's why we're not getting people coming in I think tool is preset we're gonna put the Friday geoengineering Peep Show to buck but not a school playing a song if someone actually does think it's the page shows and I quickly give you the go-ahead to take away your clothes you're willing to do that the drinking a lot of beer recently all right a couple of months ago maybe but I'm in shape that's just be shaken with the taper two hours in Amos was getting more desperate Jerry literally sitting in it on the stage why do you feel $2.00 we were feeling it as well the just normal thought this had been a giant waste of everyone's so good luggage here you love it here seems pretty on sizing it up to that good because two bucks yeah I guess Barry thinking God look at it but only one my partner we've opted you on here here we go he's here in TV show he's there till midnight all right you're sure notes you get this mounting and walked away literally if you laugh I'm decided he goes went after Gary opit nearby and also probably later on to back 30 seconds I think you Burt can come if you want to tip at the head everything is about forward I can assure you not absolutely not like can't guarantee what it'll do but yeah baby us and after two hours 23 minutes including some final hesitation we finally found people brave enough to take it easy to picture it a lot there you go 85 months down the beach so yourself to listen to the announcement everyone JEP cover our welcome to the picture your total star darling I will be loving you til baby man her double a heart Twiggy and I'm thinking bout how people fall in love the Thompsons fine thank you nothing [Applause] interesting first rule if you haven't got trust doesn't matter what you got to sell you can't sell it so if you use all those low trust kind of indicators what did get them in if you notice the trivial when in our know properties of behavioral science it's going to get pretty busy later on remember that when you book on an airline website remember only four seats left at this price create a bit of scarcity you only get thirty seconds so actually giving a reason you know it's only thirty seconds but also you can both come in we're a herd species doing something strange feels much more comfortable if you can do it with someone you know now that sounds of trivial finding it also helps in getting vaccinations against unpleasant diseases in the developing world if you want mums to vaccinate their children they've discovered this don't have one nurse have two nurses and allow mothers to come with a friend with the friend's child and both children are vaccinated simultaneously you get much bigger take-up than if you make people do it one at a time but notice that that you know again you know you know it's going to get pretty busy he's only here until twelve O'Clock scarcity value known absolute behavioural technique the second really important thing to know before you get obsessed with objectivity which is what is on product like objectively is that we don't perceive the world objectively you want the simple reason for this evolution doesn't give a about accuracy it only cares about fitness if evolution has to make a decision between do I sacrifice a bit of objectivity and gain a bit of fitness or do I sacrifice a bit of fitness and gain a bit of accuracy it's going to go with fitness every time we haven't evolved to see the world as it really is but you're seeing the world as it really is doesn't help us survival or reproductive fitness we have to notice faces much more than we notice other shapes we have to notice movement much more than things that say still we have to notice contrast much more than absolute values but furthermore we think we can separate what we see from what we hear from what we smell or from what we taste we think that all our senses are independent but again what evolution needs isn't an accurate depiction of what all your senses are doing it needs a non ambiguous depiction of reality that enables you to make a decision and it will distort reality as much as it needs to in order to give you an advantage have a look at this anyone loony we are being bombarded by sensory information our brains do a remarkable job of making sense of it all it seems easy enough to separate the cells we hear from the sites we see but there is one illusion that reveals this isn't always the case ah ah ah look at this what are you here ba ba ba ba ba ba the look what happens when we change the picture ah ah ah ba ba ba ba and yet the sound hasn't changed in every clip you are only ever hearing bark with a B ba ba it's an illusion known as the McGurk effect ba take another law bar constantly observed on the right of the screen bar amount to the left of the screen bar the illusion occurred because what you are seeing questions with what you are hearing are in the illusion what we see overrides what we hear just you remember that but actually what evolution needs it we have this is beautiful phrase by George Lowenstein that behavioral economists just as we have a sex drive and a food drive we have a sense making drive we have an absolutely innate urge to make sense of the world to eliminate ambiguity if you think about that that's equivalent really to data correction so there's a black box system in our head we're not aware of its operation we can't control it it here's a B it sees an F and it makes the decision will it's probably more likely that I've misheard that I've missed seen so as far as you're setting it just overwrites the B with a nap lately I wanted to present this on a very wide stage where I had to go to stand completely to one side I couldn't see this dream and as it was going on I started talking it's not working but you see these little worlds here those are exactly the same color it's not alternating blue and green things they're both green but we detect color relative to other colors why because in evolutionary terms it's a better thing to do contrast matters much more it's not worth evolution planting a campaign catalog in our heads what matters is the contrast between one color and another color see the right both of the worlds of that color of green now I'm assuming about the sense making drive by the way I'll give you a few interesting examples of that one of which is if you want a really successful example of 10x innovation it's the electronic cigarette more and more people actually continue using these things and they switch to zero nicotine without really noticing it in a weird kind of way what the brain was addicted to wasn't so much the nicotine it was addicted to the act of putting something hot in hitting the trigeminal nerve at the back of the throat that something hot breathing out relax why if you give regular drinkers a couple of gin and tonics and then for the rest of the evening you give them tonic water in a glass where the rims been dipped in gin just so they get the smell okay not only will they not notice for the next 10 drinks or five drinks or whatever they actually become pissed okay so they've only had two real gin and tonics they've had six fake gin and tonics which are 99.9% tonic water plus the smell of Jay they act drunk okay so what that is is the brain effectively taking a shortcut every time I do this thing I start talking bollocks and swaying around so that's why I'm going to do now if you want to use the McGurk effect in your real life to save money don't buy a new car have your existing car Valatie right list this when you have your car professionally clean not only is it a cleaner car it's smoother quieter it accelerates better it corners more nicely everything about the car becomes better and that's because actually our perception is very very leaky that's why when people sell their car they always have it cleaned if you try to sell a dirty car people would also think it was noisier less pleasant to drive everything else by the way that also applies that perception also applies to price is anybody had got an espresso machine ok now I've got one objectively they are insanely expensive if you have to buy an espresso coffee in a jar like Nescafe per equivalent dosage of caffeine a jar of Nespresso would cost about 60 pounds about 60 euros you look at it on the Shelf collecting the same I can buy Nescafe for only 5 or 6 euros but it doesn't come in a jar it comes a little pot so the frame of reference isn't rest cafe it's a coffee shop and you think we'll in the coffee shop I'd be paying 1 pound 20 this little pot only cost me 28 cents machines practically making me money so our perception of things is relative what the frame of reference is what you compare something to matters much more than whether the thing is actually expensive or not here's another one by the way if you put up your hands maybe put up three fingers so that you cover the join between the grey bit and the white bit what you'll actually see is the top and bottom of that thing are exactly the same shade of grey again it's just the brain effectively doing the work for you going the most likely thing that is is a white thing and a gray thing cover the join it's all grey take the Sex example Oh if you hit spacebar perfect that's a bit of a weird one it's actually the same photograph rotated through 180 degrees most of you I think see the feet is sticking out on the left and invented normal foot prints on the right so right good now again the brain has to make a decision here it can't have them both indented or both sticking out and the brain makes the decision which is it's more likely that a source of light comes from above them from below so to pick that to you as though it slipped from above if you look at that same picture if I can turn the screen and make it flat it might make it flat on the ground it might look totally different that again is your brain just making sense of stuff faces we can't help seeing them okay now the interesting thing about that is it's Jory evolutionary advantage because anything with two eyes in the nose that they were face it might be predator it might be something weakening eat it might be another human being who is angry with us it might be another human being who wants to sleep with us being able to spot faces and read them is really really valuable in evolutionary terms and the simple thing is that we're calibrated to be highly sensitive to that so that as a result we generate the brain generates quite a lot of false positives it's like a smoke detector if you think about it okay it's good that your smoke detectors sometimes goes off when you make toast because a false positive from a smoke detector isn't that big a problem particularly not during the day when you're awake what you don't want from a smoke detector is a false negative you don't want to really chill and smoke detective again hey that smells a bit like burning but let's give it the benefit of the doubt right so smoke detectors when in doubt they've beep like hell our brain when it might be a face it says face that the interesting thing is when you develop facial recognition software they've discovered it has exactly the same bias as the human brain if you wanted to recognize faces reliably it's always recognize faces when they aren't there and that's a piece of face and facial recognition software that's suffering from what's called pareidolia the human urge needs to spot faces in rock formations the man in the moon the fact that we see faces in lots and lots of places where they don't exist it's just a computational necessity so what so here's my little bit of advice in a sentence it's a bugger of a sentence I grant you that but what we need to do is marketers is look for things that are either objectively similar that's objectively different in other words something where you can take the same thing and make it ten times cooler by presenting it in a different way or things which are subjectively similar but objectively different in other words how can I achieve the same effect as this expensive thing with the chief of thing let me give you an example of some of you did that uber if you've been running a cab company obsessed with objective measures ten years ago you would have measured lakh things like average number of cams available average waiting time how long the typical passenger had to wait for a cast cup all objective stuff okay silver the principle valuable discovery of the man who founded uber not the slightly man who runs it now but the nice Canadian chap who started the company he saw a James Bond film where there was just a moving map in a car and he thought what have you had a cab firm that could map the arrival of your car now the magic not all the magic but a large part of the magic of uber is that the human brain doesn't care that much about duration it cares about certainty because I said we have this sense making edge the brain really really hates uncertainty there's some evidence that people are more unhappy if you say there's a 50% chance you've got a serious disease come back in three weeks time and we'll do further tests they'd actually it'd be fear if you said you we got serious disease that's how much we really really hate uncertainty whatever did was allow us to make stories about where our tumbles we look at that go well okay look you stuck at those traffic lights we are happy awaiting 15 minutes for a train if we know it's 15 minutes than waiting four minutes for a train in a state of uncertainty that's what I mean when I say look for the things which are objectively similar but subjectively different or vice versa if you want a fantastic case of this by the way how many people have ever used customer service live chat instead of talking to a customer service agent on the phone you basically get your the kind of audience that would the weird thing is if you look at live chat objectively it takes ages right I mean it's four times slower than a phone call and yet some psychological reasons I don't fully understand no one Minds the reason by the way it's economic is the people are doing three or four people at once the guy who's actually dealing with your query also has four other queries on the go he also has the advantage you'll be able to use cut and paste quite a lot you know so I imagine if you're pretty experienced of doing this you can actually be quite fast what's strange about this I had a thing with my daughter's mobile phone it took an hour but at no point did I even get mildly pissy about it the single best thing the London Underground did to improve passenger satisfaction per pound spent wasn't faster more frequent more comfortable trainers it was dot matrix displays on the platform again we're happy waiting eight minutes if we know it's eight minutes the problem is and I spoke to her about this it's incredibly difficult for them to make the business case for installing these information systems because the business case is all predicated on objective reality not subjective experience well in case of innovation that way Spotify people complained about the buffering time with the music and they went to the engineers and they said how those can you get it they came back a few weeks base and said we've managed to get it to some I think it was was it I got over 3,000 minisode no nothing it must be tired 220 milliseconds and the guy said can't you do any better than that I said we could but there's no pot but this is the human brain 220 milliseconds is damn near the same as instantaneous 250 not so good we noticed the delay but there's a certain point rather like the retina screen at which we just don't notice making objective reality better than our ability to perceive it is a really dumb effort the only way cueing the psychology of cueing is a really extraordinary case okay now the objective measure is usually just the length of time someone spends in a queue if you look at what upsets people about IQs cues the keep moving keep people happier than queues the rotational a stationary if you really want to piss people off in a queue you just have another queue alongside that's moving faster than their queue okay um the weirdest thing about a queue which I don't think anybody will actually know is a large part of the emotional stress of being in a queue is created by the people behind you McDonald's and KFC notices when you have a long queue you'd think people would order perfectly because they've had you know eight minutes to rehearse the bloody menu yep they suck it up they go Bibble I didn't know dog in bucket but there is people behind you it's like stage fright they stress you out but virtually nobody if you ask them that what the objective measures were that matter in queueing would say I don't like having any buggers behind me because ostensibly the people behind you are completely irrelevant to your experience but they're not they weird you out by the way having the end of the - out of sight also makes it a lot worse this is a difference between the objective measure which captures a very narrow thing and the subjective experience which is kind of multifaceted whoo now if you want the classic case you could this is a 10x by the way how many of you when you land on a plane and you'll net you don't go to the air bridge but you get a bus you're pissed off aren't you right and you feel treated I've paid for this goddamn thing and I've got a bus right and you feel short-changed everything buddy I always felt like that I used to get really pissed off you know there's a bloody bus and then one day I'll and easyJet at Gatwick and a pilot some sort of behavioral science genius following things he says I've got bad news and good news said the bad news is that we have to be able to get an air bridge because there's a plane blocking our gate but the good news is that the bus takes you right next to passport control so you don't have far to walk with your backs that's always true ok so here's the case where you can take something that's bad redirect our attention to the good bit of it and we now think it's good next time you're on a plane and there's a bus just say quite loudly it helps if you're with somebody else they don't look mad just think what loudly actually I'm glad there's a bus because it drives us all the way to passport control and you don't have to carry your bags through the airport and everybody within earshot will be made much much happier just through hearing that you can take something that frame is a different way redirect human attention to something different and they think it's brilliant you don't believe me apparently if you buy a Ferrari from you they'll deliver the car to your local Ferrari garage for free but they also offer you something else you can pay 500 euros have a tour of the factory in Maranello and then take your car home I don't if you notice this but by positioning it is a factory tour they've got you to pay to collect your own bloody car but something they normally have to do on a truck at their own expense those of you who know exist Tom saw a painting the fence doesn't it no Americans here yeah he persuaded all his friends that it was great privilege to paint the fence and reframed what was a tedious chore as something enjoyable now that's a 10x whatever you think about it ok I think you can achieve 10 X's with people perception of paying tax if you just have a bit of an upside the human brain is calibrated to look for the upside and to minimize regret by telling a positive story the Fox and the grapes is a classic example that two thousand years old if you can give people a bit of an upside then accept change much more readily than if it's all downside so what I've seen challenges at the moment for innovation is you could get people on the short train journeys to stand up on trains how do you actually make people want to do it if you can create a positive like special standing booths which have tables cup holders and a plug standing up might actually be reframed as a choice not as a compromise I don't know the answer the question by the way we asked really weird questions like why do people hate standing up on trains that sounds stupid but is it because they felt they paid for a seat in they're being cheated is it because it's uncomfortable standing up or allegedly because of something weirder which is it takes a lot of cognitive effort not to fall over if you're standing up on a moving vehicle don't know but if we could find that out it exactly like queueing the real reason and the stated reason may be miles apart so very short summary of everything now this is just the science of knowing what economists are wrong about because economists think that objective reality is perceived directly in the human brain as if we have an objective take on the world and the simple fact is we did if you'd asked a bunch of rational people right we want to compete with Teddy Cola how do we 140 years coke be the most popular cold non-alcoholic drink in the world apart from water how do we compete everybody would say the same thing right we need a nicer tasting drink than coke that cost less than Coke and comes in a really big cap so everybody gets great value for money no one get this agree with that coming better tasting drink cost less really big can and yet the most successful attempt to compete with coke in 150 years is this it comes in a tiny cam it costs a fortune disgusting now it actually researched worse than any carbonated drink that's ever been researched by a company that only researches carbonated drinks there's something about it by the way I think this is in the human brain I think it's about relating to the placebo effect that if you want people to believe that a drink has medicinal powers medicinal psychotropic powers it can't taste all that nice does it Amin but actually medicines has to taste a bit yucky for us to believe that they're medicinal you know so I think there's something deep deep in psychology in this which is why it actually works so first rule don't always just test the obvious things if your product isn't selling don't just test dropping the price test putting the price out we've just had an experiment back in the UK people who have refused to upgrade their broadband with six previous communications when they were offered to upgrade for free of those remaining people 47% upgraded when you charge them 1p to upgrade okay so six adding one penny onto the price effectively tripled the successfulness of the communication don't quite know why that is but as I said don't just test what economics tells you to test because all your competitors are doing that anyway you won't find anything interesting test weird paisa desk strange things and when they succeed you know something that nobody else does that's what's really valuable in business so anyway few problems everybody in business always represent all ways recommends logical thing there's not because they're necessarily better but because it's much easier to get fired for being illogical than for being unimaginative so everybody in business competes to be more logical than everyone else which means that every business ends up in exactly the same place which means the area of the market which is already most heavily contested very quickly I'll just end on this I've only got a few minutes left where complexity economics technology and psychology overlap you can achieve brilliant things I am the one case delayed prescriptions this reduced the number of antibiotic unnecessarily prescribed by about 65% just by saying to people take this prescription away you've got a bit of paper you don't just give you that it's dated till Friday if you still feel ill on Friday go and get antibiotics very simple thing if you think about most patterns of illness you have who I feel I'm feeling worse I'm feeling worse I'm really feeling worse god I feel terrible I'm beginning to feel a bit better right the second you get to the under gains feel a bit better your appetite for taking drugs diminishes by about 90% if you can get people to wait three days before they go and get the drugs ie three days after the doctor's appointment 66% of unnecessary use of antibiotics disappears very very few how about two more minutes the right two more tiny things okay trust economists think that all people are interested in is low prices that's the economists assume a model of perfect trust and perfect information I would argue that there's a very very strong way to signal trust if you look at game theory okay there are one-off games where it pays to defect and there are repeated games where it pays to invest in a reputation by cooperating time after time after time a reliable way to signal that you're trustworthy is to signal that you are in the game for the long term how would you signal you're in the game for the long term you do things which are costly up front and only pay off over time so most marketing is often an example of signaling by good manners well I include that in marketing right can anybody all instances I can think of of being polite involve a bit more effort than being rude so generally you know what politeness is is dealing with people in a way that's nicer for them but involves you in a bit more effort than if you're just a rude tosser opening a door for someone standing up when someone comes into a room all that kind of right it's always effortful the fact that you do it suggests that you're playing the long game again if you weren't intending to interact with those people more than once you wouldn't bother learning or marketing whether it's expensive advertising whether it's replacing the furniture on your seats we automatically trust people who do things that have an upfront cost and a long-term payoff that's the engagement ring by the way that's also a form of marketing okay if you're just planning on a one-night stand there are cheaper alternatives right the only reason you're buying this is because you're planning to make this relationship pay in the longer term all right there's another particular reason why women like being given jewelry and flowers by men we have it it's precisely his men aren't remotely interested in jewelry and flowers if you buy your wife flowers and a necklace for Christmas you've made an actual sacrifice to make her happy whereas if you buy your wife a drone for Christmas there's probably a strong suspicion of self-interest if I'm doing a solid okay right so this applies to marketing behavior economists hate it five guys the burger chain which is growing throughout Europe everywhere very very expensive burgers but they do some really odd things when you order fries you order a small cup of fries they fill the whole cup up to the top then they take an extra scoop of fries and they just put it in the bottom of your bag for free it's a bonus hey why do they do that because you'd only do that if you are thinking about them coming back it's instantly a high trust thing because it suggests you're playing the long game which is trustworthy and cooperative not the short game which is untrustworthy and psychopathic so I the one-off game if you want a bad meal go to a tourist restaurant I mean Trip Advisor's arguably killed that the tourist restaurants had no expectation of anybody coming back so they just had to serve a meal that was good enough to keep the person alive long enough to pay the bill okay if you rely on a local clientele you have to be nice to them because if they don't come back you've got no business that's the first little thing to know about costly signaling second thing is satisficing I'll end on this is quite important most real-life decisions aren't like archery aim for the ten if you just miss you get a nine if you miss that you get made there's no optimal place to a but it's real life decisions are much more like darts if you're not very good at darts aim at the southwestern quadrant of the board you won't get a triple Trinity but you won't get a one or a five the average score is better this is called satisficing now why humans have evolved to satisfy is that if you make a decision with imperfect information that's what dearly all human decisions are we don't have it's not like a math problem when we have to get married or decide what to eat or whatever we don't have perfect information to make an optimal decision therefore when they see a decision which is probabilistic look yeah when you make a decision that's probabilistic you have to consider two things you have to consider the average outcome but you also have to consider the variance not it in other words there's no point in climbing up a tree a hundred feet to get four extra cherries if there's a 1% chance of death unless you're really really hungry guys so we don't optimize we actually also adopt a minimax strategy where we ask the question what's the worst that can happen and we often choose the option which has the lowest chance of catastrophe not the one that has the highest average outcome that is reimann this is what the cat does right what's this chicken birth if it might be a snake treated as if it's a snake okay because the consequences of a false positive embarrassment the consequences are the false negative a death okay there probably were cats a million years ago who went gosh look at the lovely cucumber oh it's a snake those cats those taps didn't leave many descendants so we have disproportionately descended from people who whatever there are the faults avoided making really really shitty choices at least until they reproduced okay now if you look at this okay that is the most successful restaurant who will not because it's the best restaurant of the world it's a pretty low average McDonald's but it's a really low variance McDonald's isn't very very good as a restaurant it's really really good at not being terrible okay you never you never disappoint you you're never ripped off you never get ale right you know give you a Michelin star restaurant one time in five you spend the afternoon on the blog okay go to McDonald's you're safe you're not going to be amazed you're not going to be high-fiving anybody it's not much good if you want to pull but if you just want to eat and you don't want to get ill it's really good at not being awful now why this is important is we the silver things about satisficing if you want men to buy cocktails in a bar you will never sell a man a cocktail bar unless the menu contains a picture of the glass in which the drink yourself if the male brain thinks there's a not one percent chance it'll arrive looking like this in order of beer instead okay now understand that's why brands are popular I would argue this is contentious okay once you understand that we care about variants not only average lots of human behaviors which appear in rational suddenly make perfect sense that's why third behavior if you copy everybody else the car you buy if you buy the best-selling car may not be the best car it won't be terrible okay habit if you've done it 10 times before and it's always been ok do it again because it won't be terrible okay and that's the end that's my brands work people pay a premium for grams David Ogilvy was on to this in 1960 and unfortunately went nowhere people pay a premium for brands not because they think brand B is better than brand a but because they're more certain that it's good it's less likely to be terrible it's insurance against disappointment now the reason I think this is important is when you look at the world negatively and when you're also happy to test counterintuitive and apparently trivial things that's when you discover a 10x and that's probably my last slide is my last slide go and google it the 300 million dollar button okay something that should make virtually no difference at all to how likely people were to order something I think it's from Best Buy this was checkout as guests if you allow people to actually order their product and then click a button saying and password register me it when you did that for free previously they'd either have sign in or register and you registered and then you bought the product when they're under the additional option of buying the product anyway and register at the end 97% of people offer the chance of registering at the end still register at the end they made three hundred million dollars extra sales even though the amount of efforts haven't changed at all all that had change was the order in which people were there hear something about the human brain typing in your name your address when it to do with the delivery of your fridge feels reasonable typing in your name and address when it's framed as registration feels like a pain in the ass even though it's the same thing it's objectively similar but subjectively different and that's where the not for 10x is thank you very much me and however I do Oh Oh Oh SpaceX shares there are harmless Oh so the guys are always pulling my leg that I over exaggerating but from the standing ovation you can tell for sure that I wasn't exaggerating this time before we start you don't need to wait for me to say are there any questions just raise your arm right now keep it raised and one of the girls will bring you the mic this was a dynamite like sixty minutes full of wisdom sorry I will summon quote yeah wisdom believe me and part of what I'm saying actually is genuinely just feel free to test silly things because um what happens is that people think if you pretend that economists are right you'll never get fired okay but equally you'll never discover anything that interesting so before you test dropping the price to something try cooking the price up and a lot of time I'll tell a story about this later but there's extraordinary pressure on people in a business organization to look rational okay because it makes them look serious and it doesn't it doesn't disturb anybody because you're you're following the model and it's all bad if you're a large part of it is just red bull I'm gonna mention I can't imagine under communism trying to make a case for Red Bull okay what we really need comrades is you know an expensive disgusting tasting drink in a tiny gap how do you make the case for it and this is where actually really good businesses like dog it's like Darwin in evolution more than his like a planned economy because chemically weird things succeed if you want to admit that so out of all the sound bites and all the wisdom the thing that struck me actually the most was the very first in Rory seventy stepped out of the dis boarding does anyone remember including you What did he say if they don't have anything to do with his stop now it was I was sitting in the crowd and listening to other speakers that's exactly the same word jvk sergeant said here in 2014 he was the closing speaker in 2014 that's not just what great speakers do that's what great men do thank you for that special okay we have our first question from the audience you know hi I would like to ask you you're actually doing marketing stuff for clients right yes so do you ever achieve to sell a story like this that clients actually do change their way of thinking and I would just like to add one more thing to this retinol scenario McDonald scenario these are all entrepreneurs which actually invented the whole nodejs approach so is it even possible to come into the company that is doing you know for years and years the same product the same way to advertise it and say okay I'm going to sell you something different and they actually buy it and change their companies I think it's fantastic that which is you're actually right that the role of the entrepreneur and this is sort of something that Hayek the old economist went on went on about a lot there is that unique role of the entrepreneur in capitalism and what makes the entrepreneur partly different I think is he doesn't have to explain himself to anybody else to quite the same extent in other words he's not part of the big structure he and if you've been I'm still missed quite a lot of on from there's a kind of win I mean they might be psychopaths they might be someone FLA's actually really stupid by the way okay there's a reason I just stupidity that this is I'm front friendly within the same caliber and one of things he talks about is that one of the reasons capitalism works on a kind of larger scale level is it just rewards people who are lucky I love that sense ridiculous because we like to believe that all the people who make it bigger make it rich deserved it and they all tell the story they deserved it sometimes you just come along you open a restaurant in the right place at the right time you couldn't have known what you were doing was good in advance but when you're lucky more money comes in so the thing is expand to be lucky survive and the things that's happened to be unlucky get weeded out and it's totally unfair sometimes stupid people are actually differently lucky two intelligent people because they do things that intelligent people wouldn't do now when you do think that intelligent people wouldn't do in fairness you fail more often because you think something stupid but when you do something stupid which happens to be really clever because you're the only person doing it you can succeed to an extraordinary extent now when McDonald's came along they were kind of animal brothers it's complicated who's the entrepreneur there is it Ray Kroc or is it the original brothers and they take in the kind of Detroit model of car manufacturer and applied it to burgers now what they're doing I think this is interesting is that the same as uber ok all car manic or all taxi firms would have had certain metrics and to some extent uber said we're not going to bother particularly with those metrics do no degree of uncertainty when waiting for a car and also low degree of hassle and getting out of the car because there's no paper changing hands you don't need to ask for a receipt you don't have to hand over cash you just go thanks and that probably makes it feel like a service not a transaction so I think in it I think also we do but I think you feel a bit cool because you just walk out onto the pavement just as the car draws up which makes you feel a bit like new either 14 you know but I think that it instantly is the metrics that Bluebird is really good at a different and with McDonald's every single American diner when the dolls started would have assumed that a huge degree of choice I don't know how familiar you are with American diner culture it was all about eggs over easy egg sunny-side up peel one off the wall which means something today I remember this I think it might mean but there were like hundreds of phrases for how you customize your meal and American diners and Madonna still wanted no you can't have any choice being haven't really fast and so one of the reasons why I kind of stupid or pigheaded people do well when they do well they do really well is because they're ignoring all the category norms which everyone else has important things are important and just emphasizing something completely different map there's a weird property about the human brain which is work name you ought never even heard of Daniel Kahneman Thinking Fast and Slow now he won the Nobel Prize in Economics for a prospect theory which is a thing about human expectation and decision-making but when some last him what's the most important lesson of your life's work he didn't mention the thing that won him a Nobel Prize he said this he said nothing is as important as you think it is while you were thinking about it okay now the interesting thing there is my story about easyJet read a good book robert cialdini's book prix suasion by the way if you want to go book renovation one of the things entrepreneurs do is that if you go to an American diner you think it's all about choice because the emphasis the menu it's all about choice so choice is important she suddenly went to a new McDonald's it was all about speed and you were encouraged to focus on speed so speed became salient and where our attention lies that's what we think is important so with that easyJet pilot when he said you won't have far to walk to the gate because the bus will take you all the way there he changed our focus from we don't get a bloody gate to avoid a walk and suddenly what was bad became good because we were looking at something else and yeah I mean if you look at it in a weird way I suppose it really cool boutique hotels do this you often you know it's not really about you know if you take the old fashioned mind you know five-star hotel of the 1970s it was all about opulence and then as fashions change as taste change but also just by changing people's focus you know what you do is you don't do any of the opulent but you put a Nespresso machine in the room something you know sorry this is this is to discuss sorry you had one question on false arya week me dr. devonshire there was another question hi people books wasn't working hi Marie as you said in Europe lecture the important thing when you want to try to change things if you cannot change the things physically you can change their perception and if you're an entrepreneur like the McDonald's brothers you're affecting people who are your customers but if you work in a corporation and you need to get the management buy-in for the decision and for the audacity to try something new what is in your practice in your opinion a better way to approach this is it better to present them with the with the rationale arguments like the examples that you've shown them today to us or is it better to play from their emotions having to get the buy-in that you need very nice but it's also there's an important question to ask which which and what I talk about when I talk about satisficing it's sometimes called in corporations defensive decision-making where we make the decision not what's the best decision but the one where we are least likely to get fired for it you know the famous line no one ever got fired for buying IBM now so there are actually two questions there what's the best thing to do which is good for your career and what's the best decision to make and then not actually the same I'll give you an example this when you have penalty kick out because you shoot out to the side even major things like a World Cup final if the individual players should kick straight down the middle what they do they've been more likely to score not all of them obviously but if one or two of them just shot the ball straight down the middle anymore like you score and that's because goalkeepers tend to dive because they don't want to look useless the reason that people don't take down the middle is not because you're less likely to score you're more like is scores like me you look much stupider if you fail if you kick left in the bill get goes that you're unlucky hit right in the goalkeeper goes right you lucky hit down a middle you're more like you to score but if the goal team is happens to stay in the middle and save you look useless right so there's an interesting question about how you give people permission to be a bit weird in a business so one of the things to do if you have someone you know someone who reports to you going to say to them that it's an out now I'll just make the parallel okay if you're a manager of that football team your job is to shoulder the blame and what you should do before their penalty is you should say player 1 and player 4 I want you to kick the ball straight down the middle now if you fail you can say that I told you to do that okay we've got that now they're more likely to do it because they can say I didn't want to kick that middle running manager made me do okay similarly as a boss maybe what you should often say is I want you to come back with three or four possibilities to do here and I want one of them to be weird does that make sense because then if you choose the weird one so there's a very very strong bias on organization to pretend no ever got fired for pretending that economics is true so if you go we aren't selling this product so I think we should drop the price okay if you do that and it fails you'll never get fired because you've obeyed the logic of economics if you say let's try putting the price up we're looking you might succeed make even more money because you'll sell more of a higher price if you succeed you'll get a few brownie points but if it fails you now look stupid because you are like doubly wrong and so one of the important things I think is permission for people to test counterintuitive things because the default is always to go and test what makes sense do know you makes it I'll give you the lovely example of this what what what I find fascinating about this whole area is advertising is a bit better than Galapagos Islands of understanding human behavior you get lots and lots of peculiarities you can apply what you find in a really trivial way but you can take the same finding in a platformer a really big so I'll give you an example where people are conventionally rational everybody who's producing drugs who works for a pharmaceutical company thinks let's make these drugs really easy to take so we'll make them as small as possible really easy to swallow okay and that's not the totally bad thing that they assume that's what everybody's tragedy actually if you have a drug that someone has to take every day it's probably better to make the drug a bit awkward to take so you create a ritual around it so you've got to grind it up in a pestle then dissolve it in water because then people can't forget if they've done it for a week before they go to bed they'll notice not doing it where swallowing three pills which are microscopically small something you can forget whether you've even done it or not okay but the lot the easy logical one is all in it let's produce a nicer tasting drink than coke is really easy to sell to her to an institution the counterintuitive answer always requires a more complicated argument and makes you look much wit much worse if you fail and so if you can create some sort of culture at least around you as far as you have the power now one really important thing to say is this okay testing in the digital world is easier and you can cut off failure faster than you could in the real world do one argument you can make your boss is look if this will print you know if we were actually printing invitations to this event we go with the default logical thing of save twenty percent right but because this is digital for the first week let's throw out ten percent of them at a higher price okay this big unethical but but weren't in a prettier digital world the cost of being wrong about the the slightly illogical is much much lower because a it cost less to do in the first place and B if it doesn't work you can find out and kill vastly faster than you could do in a world of state in the physical world so once what logical argument you can make is actually the returns to weirdness a higher in a digital world therefore we should be weirder and one of the strange things as battle me is that so you know in the digital world the the payoff for bravery is higher and the downside is more contained by and large and yet strangely businesses have become more cowardly rather than less over the last 10 years that makes that one last question over there so actually that's the first guy in the whole wide world who texted me when we announced you is like all right guys yeah thank you thank you both personally for coming on this stage and added one yet to make it happen I just want to do you mentioned a lot magan's and I would love to ask you your your point of view on the trend it's so many leading brands are developing vast range of sub products so there's different tasters now you have one brand put on on the shelf with I don't know 20 dates is 20 different colors from eggs all from one burger with cheese and coke now we have I don't know 200 products on in the offer and how do you see that from from the market point of view and for marketing for you it's complicated because it depends one of the reasons you do that is simply it depends which field you're in but one of the reasons you do that is simply to get shelf spacings because consumers tend to think that the brand there's more off on the shelf is more popular and because of the her distinct dimension so in one case it paid very heavily so walkers which is the frito-lay crisp draft in the UK they discovered that more and more crisps were being bought in big supermarkets in multipaths and they introduced a load of new flavors now if you look at British this is gets out really weird because I know every country is very different in the way it consumes crisps or chips as the Americans call them ok so it's finally of Spain and Britain a very similar but there need to go to Italy Italy complete hip but maybe 90% of Britain's buy salt and vinegar ready salted or cheesenut ok and paulien prawn cocktail then is about 8% and all the other weird flavors are really really niche but the reason they added them was simply that it made them look much much bigger than their competitor on supermarket shelves even though they do the shelf-life is fairly long as well so in some cases the rationale is quite good in other cases it dilutes what seemed to be the positioning of the brand and it can it also be really careful because it can mess with the choice architecture really really badly so you know the weird thing about the choice architecture I mean a very strong human propensity as if you have three things people's default to the one in the middle and so what there are really clever things you can do ok with this when P&G it's called the Goldilocks effect because of Goldilocks of this one's just right the one in the middle when PNG launched pampers before they not have does the perception of disposable diapers was that they were really expensive what P&G did is they launched a really really expensive brand of diapers disposable diapers and they advertised it they always intended to kill it ok but they did it so that when panthers came in they were half the price of the other brand so they seemed cheap okay I'm being told and the people here is slightly pervy about their dishwasher finish you have finished your record been Kaiser they launched Finnish quantum which is the most expensive I would say with us booze by the most expensive dishwasher thing there's a slightly pervy think I know the bloke II think isn't it weird okay they launched this super expensive income quantum and leads Italy after the 2009 financial crisis because they realize if you have one thing that cost 16 euros for sort of 40 some people will buy it and they probably make money out of it but what it's really there for is to make the rest in the dishwasher powders seem a lot cheaper than the cotton it exploits that comparative perception effect so I mean but what you're saying is really interesting sometimes what it can do is completely mess up so if you're if you're sitting in the sweet spot of the bar kids just right in the middle and you introduce variants like light and super light what you can end up doing is knocking your main brand out of look that sweet bit in the middle and that could be really damaging but it's hugely complicated I think is the biggest example of all by the way you know if you combine them McGurk effect and which is we perceive not just objective reality we've perceived lots of other things as well when we stand it over we change one of the first parts came to us for a large biscuit manufacturer in continental Europe and they said we don't understand because we introduced this new low-fat variants of our biscuit and it was 20% lower fat but nobody in blind tasting could tell the difference in taste and now we've launched it sales are down like 25 step it's a catastrophe and we citizen you didn't put now leather fat on the packaging did you listen of course we did why would we spend a fortune reducing the fat amount of biscuits and lot tell people if you put little fat on the packaging will taste oh I'm not making this up ok if you just make a health plain if you if you put kinds of the environment on washing powder people who think it's less effective really sorry for this prove ok so the way to do it by the way this is really interesting if you want if you want people to buy concentrates one of the problems of concentrates is that when we put less in we think it's doing less of a good job so the trick is have nessam volume which is time to the environment but make up for it with complex city so if you have flex in washing powder a little color effects we think it's more effective because it's got two things in it rather than one and then if you happen if you look at the man who likes to finish quantum that's right like got three different things arranged around the power ball in the middle and can it's complicated we think it's really good okay now with the biscuit thing what they should have done if they wanted to improve the health of people in the country what the children's has reduced the fat content and not told anybody because if you put now with lower fat on it won't taste as good the human brain this sense making edge looks for trade-offs and if you if your children something's now healthier we'll just assume it doesn't taste nice and therefore it won't taste as nice and it's really weird I mean but when they research the taste they just said what you think of the taste of this was blind now one of the dumb things which drove me crazy which I noticed they backed up on is that Coke cost me to save money and started making the lids and do you have Diet Coke or coke like there the lids always used to be white or silver whereas standard coke had a red set and possibly to save money they started putting a red lid on coke lines and I just said to them immediate you're insane so this will ruin the taste of Diet Coke seriously okay because you've been there for ten years going though I like the one with the silver lid put a red lid on it the taste shade will think it's high-calorie all sorts of well now interesting you I notice they've gone back to silver you notice that now my Amish is that sales dropped off by so 10 or 15 percent now I know that's really weird but the fact is that the brain is the product of evolution and it has all these heuristics and tricks it you know and one of the strange things is we conflate taste with site we conflate tasteless smell because generally that's more efficient for data processing purposes and that's what helped keep us alive this was awesome in order to conclude this I will paraphrase you who said if you have trust you aren't going to sell duck absolutely thank you and thank all thank you very much reflected in your trust [Applause] [Music] you [Music]

Channel: SparkMe Conference

Views: 23,178

Rating: 4.8767123 out of 5

Keywords: startup, conference, interactive, social media, innovation, speakers, spark, creativity, marketing, advertising, Crna Gora, Montenegro, Budva, economics

Id: OYVKVyhDNvU

Length: 85min 26sec (5126 seconds)

Published: Sun Jul 09 2017