The Marketing Secrets Apple & Tesla Always Use: Rory Sutherland | E165

i think the nhs could create massively greater patient satisfaction by deploying certain behaviors and techniques like what well rory sutherland he is an author columnist and the vice chairman of ogilvy uk one of the largest marketing companies in the world he's an ad man the stories are the pdf files of human information they're the vehicle we use for storing information and the vehicle we use for sharing it if you want to improve how people feel psychology is a better area for exploration than rational improvement don't make the eurostar faster make the journey more enjoyable and that's one of the cleverest reframings you can do the uber map is a psychological moon shot what bothers us about waiting for a taxi isn't actually the duration it's the degree of uncertainty and if you have a map which shows you where the taxi is you're basically relaxed you can genuinely perform magic in perception what is the seat covering for the tesla it's called vegan leather now actually to be honest we would have called those plastic seats back in the day if it makes things feel more valuable is it a con without further ado i'm stephen bartlett and this is the diary of a ceo i hope nobody's listening but if you are then please keep this to yourself [Music] brewery first of all thank you for being here as as someone who built a marketing business and has worked in a sort of similar industry um to you for a huge portion of my life um you're someone that i've always looked up to and even young members of my team here cite you as being an inspiration on an ongoing basis for the work they're doing just broadly on some even of these new platforms like tick-tock because the principles and the psychology and the the sort of rationality underneath much of your work is is really really timeless um so thank you for being here what a great honor and um but we'll get into some mutual fanboying later um but no i mean i one of the great insights i think which i hope helps motivate everybody working in our industry and related industries is that when you create perceptual value you are creating value value can be created in the mind every bit as much as it can be created in the factory and i think there was a an unfortunate story about marketing that treated it as a kind of optional extra it was the fairy dust on top of the real intrinsic value that resided in a product or service and i completely dispute that i think we value things according not to what they are but what they mean and what they mean is context dependent it can be massively transformed by storytelling framing recontextualization and you can absolutely use psychological mechanisms to make things more valuable more enjoyable more precious that's one important part i might make the additional point which is to be honest overambitious but i make it anyway which is that actually perceived value is a very environmentally friendly form of value to create because you can generally create meaning and imbue a product with meaning um with a lot less carbon consumption that is necessarily involved in making the product three times bigger or five times faster and you know my argument would also be if we're looking for breakthrough 10x moonshot improvements it's actually much easier to find psychological moon shots than technological moon shots you know making a train ten times faster you know it was possible in 1840 1820 okay it's very difficult to do now um to a point of just dangerousness or you know extraordinarily difficult uh engineering problem making a trained journey ten times more enjoyable that's still doable in my view give me an example then what's the example that always comes to mind for you of where someone has managed to put tremendous moonshot style value on something a brand potentially just with marketing and advertising but what i'm always very fond of is i think the uber map is a psychological moonshot and it's based i mean the the story which may or may not be true is that one of the founders of uber was inspired by watching goldfinger and when he saw bond effectively following goldfinger using a tracking device there was a scrolling map in the dashboard of the db4 which showed him where goldfinger's car was so he could trail it while remaining out of sight then um what was extraordinary about that was that it was based on a very clever insight into human psychology which most of us ourselves aren't really aware of which is the we would say and we'd confidently say we believe that i hate it when a taxi takes a long time to turn up i like it when a taxi turns up quickly so a rational person or an engineer would react to that by saying what we need is a predictive algorithm so that taxis tend to be available in areas where we predict heavy demand so that we can service customers more quickly and by the way there's nothing wrong with that it may be a very worthwhile thing to do although it's worth saying that it requires quite a lot of scale in order to achieve that but the real insight with the map is that deep down you know somewhere in the amygdala what bothers us about waiting for a taxi isn't actually the duration it's the degree of uncertainty in other words is he here yet maybe he's part round the corner or what if he can't find the house maybe he's already left was the person on the phone lying and so wait that period between booking a taxi and waiting for it to arrive was one of general high stress now what's interesting is you could reduce that stress i admit by getting the taxi to turn up very quickly or at least you'd reduce the period of stress but the stress would still remain on the other hand if you have a map which shows you where the taxi is you're basically relaxed okay instead of going oh my god you know where is the where is he i'm sure you know maybe he's already left i better go and stand out in the rain so he doesn't miss me or get impatient you just look at the map and you go oh look he's stuck at those traffic lights i'll have another pint okay now what's interesting is that the quantity of weighting is the same with or without a map you know in pure quantitative measured si unit terms of time and duration no difference the quality of the waiting is totally transformed it's almost taking it from a system dependent on trust how much you trust that particular firm have they performed in the past do they sometimes lie to me have other taxi drivers sometimes lied to me to a system that is almost completely trustless or i don't need to trust you because i can see for myself and i suppose there's also an element of trust which uh okay was provided historically in london by the knowledge and the knowledge was an interesting thing because i occasionally debate this which is was the knowledge really about knowledge in other words we don't need black cab drivers to study to this level of detail now we have the technology of the sat nav yeah and pure sort of utilitarian people go why on earth am i paying a premium for a black cab driver to learn all this stuff um when he could simply buy a tom tom for 300 quid and stick it on the dashboard and there's some argument for that okay the only other point is that you have a very high degree of trust one of the great things you could say about the knowledge is it sunk cost it's commit it's proof of commitment you're only going to actually go through that process if you're pretty serious about being a really good cab driver also it provides you if you think about if you've spent what a year and a half two years scuttling around london on a moped with one of those clipboards rehearsing for your sessions of the knowledge okay you'd be a bit of an idiot uh effectively losing your taxi license day one wouldn't you okay you know it's you know in other words it is something it's rather like medieval guilds they required extraordinary stringent conditions of entry into the guild but that was what ensured honesty because uh the cost of being thrown out of the guild given the effort you'd put into actually being admitted in the first place was therefore made it not worthwhile to cheat you you also say something in in your book about how making a process more difficult can sometimes make it more attractive to consumers so i mean this is known sometimes as the ikea effect which is that um certainly um kamprad who's the kind of owner and founder of ikea believes that the fact that you assemble the furniture yourself contributes to its perceived value in other words you've committed something of yourself to its assembly and creation you might also argue it destigmatizes low prices okay so i'll give you an example of that there's a very big difference between cheap strawberries and pick your own strawberries now pick your own strawberries are cheap but there's a narrative as to why they're cheap which is i put into some of the effort into the harvesting of the things and i have to go out into a field and pick the things myself cheap strawberries by contrast may create some degree of uncertainty because you look at the market and go well if these strawberries were really good why wouldn't they charge full price for them what's wrong with this and so quite often you know sometimes you have to make things more expensive to make them trustworthy oddly okay you know you can be too good to be true that consumers won't necessarily trust something that's cheap unless there's a narrative around it as to where the cost savings are made i mean i think i think a lot of lo if you think about low-cost airlines okay they spent quite a lot of effort talking about what you didn't get you don't get a meal okay uh you have to pay to check in your luggage uh you don't get it originally with easyjet you didn't even get pre-allocated seating okay it was you know effectively like a bus you had to book online you couldn't book through a travel agent and those constraints to some extent were there to make it believable to the consumer that there was a legitimate form of cost saving going on now if you'd said if you launched easyjet and you said we're just as good as british airways but we're half the price the untrusting consumer is going to ask how are you doing this okay does it mean you're not servicing the engines or the pilots are all on day release from prison or something right you're going to start having doubts so interestingly sometimes negative stories around a product can be used to offset the negatives which a consumer would tend to imagine if ikea had ready assembled furniture which wasn't sold in a warehouse it was sold in a kind of posh heels style emporium we'd think there was something a bit iffy going on so you know and there's also the wonderful ikea effect which is the effort of actually going to an ikea and navigating the maze makes it more or less impossible for you to go home empty-handed you know you have to buy some tea lights at the very minimum just to validate your trip now the i suppose the earliest manifestation of this although it's sometimes called the ikea effect was a very famous marketing case study um for betty crocker cakes where they had a cake mix where you just added water put in the oven created a cake and it didn't sell very well and a psychologist came in and said there isn't enough effort involved in this to make it feel like cooking and so they added the slogan just add an egg the addition of the egg although it actually imposed a cost and a small degree of effort suddenly made the product much more popular why now the idea would be that now it was actually cooking you were preparing something for your family you weren't just cheating perhaps i mean it's an interesting debate because we don't fully know that this this wasn't tested to an absolutely robust level of academic uh certainty uh you know but nonetheless it's a very common a very popular anecdote within marketing that sometimes the counterintuitive i think that's all you need to derive from it okay all you need to derive from it in business decision making is sometimes the counterintuitive approach might be better and this i was thinking then about these modern sort of meal delivery companies so you have obviously on one end super convenience you have uber ubereats etc delivery and then you have this middle ground of where we'll send you the ingredients and tell you how to put it in the pan and we'll make it so that would be gusto or hello fresh yeah exactly yeah but you just got to put it in the pan and mix it and i want to only take you 10 minutes or so which i think is kind of probably appealing to the same sort of psychological desire to feel like you cooked it's a very strange thing um because one of the founders of gusto actually met me shortly before lockdown and i was i couldn't really make sense of the product okay at first and this by the way really interests me because bill gates once said of technology that the problem we have with technology is people don't know how to want the things we can offer them and one of the things that increasingly fascinates me is products which an economist would call them an experience good where it's only really possible to perceive their value by actually using them i have to admit when i was presented with gusto and hellofresh i thought this is kind of dumb i've gone you know cardo account i can order things from sainsbury's for click and collect i've got well my wife more accurately has got 20 or 30 cookery books of various kinds all i have to do is pick a recipe from a cookery book effectively order the necessary ingredients follow instructions cook at home job done why on earth would i want a box with um you know pre-selected ingredients and the right ratio arriving with a recipe card but anyway i met this guy and he said i'll send you a free box now you know i'm not so you know ungrateful and nasty a human being that i go i don't want your stinking box to free food and i think it was actually towards the beginning of the pandemic anyway so i wasn't entirely sure that food was going to remain abundantly available so i said shop you know absolutely i'm delighted the other thing is i probably ordered a gusto box for um the only reason we stopped was actually we had our kitchen replaced and had a period with an oven but pretty much every week my assistant anna who's in the next room has also had a gusto the majority of weeks for two and a half years ever since experiencing it you asked me to explain this i mean this is what's so glorious which is i can't quite explain why once experienced this is such a compelling benefit that's right um okay um it possibly is the fact that because these ingredients in the right ratio and have a limited shelf life it forces you to cook them and therefore it forces you to cook what ends up being a restaurant quality meal at home with not too much effort okay in by the way a reasonably healthy quantity as well one of the problems with takeaway food is if you want variety you end up with completely excessive quantity don't you you end up either keeping the stuff in the fridge or with an extraordinary amount of food waste because the take unlike a restaurant where they think well if we give them slightly too little food they might order a pudding or something else in take away food you don't get a second chance to top them up so the great paranoia i think of all takeaway restaurants is not putting enough quantity in and so you do end up with a restaurant quality meal at the price of a ready meal um which you have cooked yourself that's very logical they give me the illogical uh was there something that some surprise and delight in i do genuinely i don't i've just got one product okay which is the greatest example of a product which genuinely kind of creates massive contradictions in my own mind which is the quicker i don't know if you've got one instant boiling water effectively oh yeah i've got one yeah you've got one over there yeah if you want the story of the cooker by the way i'll tell your listeners because it's fascinating there were two people i think at unilever who were who their brief was effectively to invent copper soup and they did it very successfully they produced what is a powdered form of soup and one of them said right job done we've created the cuppa soup boil a kettle pour the water on you've got a nice mug of soup job done i'll go back to the day job and the other dutch guy basically felt now i've only solved half the problem here because you still have to wait for the kettle to boil and for whatever reason i mean he must have been a kind of compulsive inventor he became obsessed with solving the second half of the kappa soup problem which is how can we create boiling water faster which was technically off brief but nonetheless for some reason absolutely preoccupied him and so he effectively ended up creating what is a dutch company quicker now okay half of me you know perhaps the more puritanical rational half is going you've just paid not quite a four figure sum but a very large three figure sum for a very fast kettle yeah and the other half of me is going i wouldn't go back you know having i don't know what your relationship is with your cooker but i find it difficult now going back to a kettle having experienced instant tea making instant soup making if you want to poach an egg you can fill a pan with boiling water uh instantaneously you don't have to wait for that to cook up suddenly of course you discover new and complementary uses for boiling water but that all seems very logical to me that makes perfect sense yeah i mean the only thing is i think you've got a lot of products which are much much easier for you to defend or understand or appreciate in retrospect than they are for you to write a check for in advance right and that's that's a marketing problem the electric car by the way is i mean one really interesting question i always ask about any technology which i think is a question that's asked too little people ask what are the unit sales of this technology and how fast are they growing actually any new technology grows very slowly to begin with it's a sigmoid curve nearly anything significantly new starts off fairly niche yeah and the reason is that the two driving forces of human behavior are habit and social copying and therefore when you've never done it before and none of your friends do it doing something is much more difficult to do and i'm old enough to remember the time when the majority of my friends said i don't understand why you want a mobile phone okay i mean i can actually remember when mo i used a mobile phone on oxford street in 1989 two people shouted abuse at me from passing taxis it was like a brick it was a social statement it wasn't my phone it was we had company phones and we signed them out for the day but just the act of using one of these things in public would expose you to a general a program and it's impossible for anybody now to think back on that because i don't think anybody knows anybody without a mobile phone the example that i that comes to mind for me and it's also to do with a crooker i don't call it a cooker i just call it the tap but yeah it instant hot water and it's in cold water um is music and a friend of mine told me the story of standing with the hmv i think it's hmv ceo looking out on the shop floor at all these people buying cds and he said to him we'll always have a business because people love music now what he got wrong is he was right that people love music but they don't love getting in their car driving in the rain and then getting a plastic seed a piece of plastic which they can then get damaged very easily they can only carry a few of them and driving it back to the house people loved music and he only really found they didn't really like cds yes i mean i might make a point by the way that in terms of its if someone has a design sensibility in terms of its proliferation the cd laughably named jewel case the plastic hinge case in which the cd came was probably the nastiest single you know manufactured item in everything from environmental terms to just usability you know the fact that it opened with a horrible sort of cracking snap now what's interesting is that vinyl has made a resurgence but i don't see any sign of a cd resurgence any more than i see there are a few weird people who are back into cassettes aren't there but i think that's fairly nichey yeah that's kind of like lomography and photography it's one of those sort of weird counter cultures but but but i can understand i just about understand it's slightly weird when my daughter asked for a gramophone player for her birthday because i'm kind of going you know i was born in 1965 i spent my whole life trying to get rid of the nuisance of physical music to you know effectively something akin to spotify and now you're weirdly reverting to this thing you know it made no sense to me um possibly there's an element that if you're really devoted to a particular band you want to spend money and signal your devotion in some physical form i don't know what's going on there fully i think is that not just a case of like scarcity yeah i i mean well i suspect one of the one of the curses of capitalism is that is recursive fashion exactly so um jeremy bulmer who's now i suppose in his late 80s wonderful guy who was the creative director of j walter thompson he was a director of wpp for many years he made the point by the way as you get older you realize much more of this here we go again you know because you have greater chronological context in which to appreciate it but he made the point that when he was a child all cheddar cheese came with a rind so most cheese you buy in a shop was cut from a wheel and it would have either some sort of wax or or else rind or sometimes it's cloth on the exterior and someone then started selling rindless cheddar and they charged a premium for it you see because you know oh brilliant i don't have to pay for the rind and i don't have to cut it off what a wonderful convenience and then memories being short and obviously some people being born before they could remember cheddar with a rind anyway about 25 30 years after that people started introducing farmhouse artisan cheddar with the rind left on and they charged a premium for that so you do have this peculiar thing where um that's all marketing there isn't advertising because what you're saying that's the real cheese it's it's it's human it's partly human neophilia so that what's different attracts our attention okay so undoubtedly we disproportionately pay attention to things which are new or seemingly different and we're novelty seeking to a great experience what is the story though if i buy that artisanal cheese the story for me especially a big artisan is this is the real cheese in my head i immediately go that supermarket stuff is just fake processed but the rhine signals that this i'm paying for real cheese well i mean we can look at the we can look at the interesting uh rev exactly it's a recursive trend yeah i've got in fashion it happens all the time that you know uh the the most bizarre fashions including sort of flares and um uh afghan coats have you know sequins have made a massive comeback and you um and the truth is that when they come around a second time the context is different so they mean something different you see the same with brands like feeler like these old brands have exploded felix isn't a good example where it was it became when i was 10 years old you but if you bought feeler you had no money and you weren't no no no when i was 20 if you had feeler you were the coolest person burberry had that as well they went from being oh if you're if you're wearing burberry you are a bit of a roughy right you're a little bit rough as a person to this kind of i guess it was a branding exercise where bran burberry then became really cool again maybe because part of the term for this is sometimes counter signaling it was a bit like um hipsters drinking pabst blue ribbon ribbon i think it's called uh which is a it was historically down market blue collar american beer right okay okay it was down market of kind of budweiser and the other you know and cause and so forth and this is a really interesting thing in human behavior sometimes in marketing itself but also in how humans market themselves because i think one of the conclusions we've got to come to and we have to admit and which the better understanding of will be i think central to understanding how we solve things like the environmental crisis and indeed over consumption is that the human brain itself has quite a large marketing function you know it has an accounting function it cares about the efficient use of resources it has you know all kinds of kind of algorithms and heuristics that are kind of in many cases innate and built in but it also has a marketing function it very much cares about uh image and status effectively what something you do means to other people now one thing that is common to lots of animals is signaling you know the most common example is the peacock's tail elks antlers things you do often costly things you do to demonstrate that you can do them ferrari okay um and you know in many ferraris in london of course yeah you know i mean the extraordinary thing when you think about it is having a ferrari in central london is about as deranged a car choice as you can imagine okay but the very fact that it's impractical and ludicrous is almost what gives it meaning okay as i said you know if the um this is a very mischievous sentence but if people were attracted to people who drove expensive vehicles okay then they'd find lorry drivers more attractive than ferrari owners in many cases because the truck is actually more expensive as a vehicle or a really luxury motor coach but the motor coach actually has a practical function which diminishes its signaling value because if you want to show that you really have resources to spare nothing beats waste indiscriminate waste shows that you really have resources to spare you know or you pursue things that are disproportionately scarce the real interesting thing with humans though and i don't think there's a case where animals do this is they also practice something called counter signaling which is showing that you don't have to try because you're confident enough in your other attributes okay so an example of that would be in academia a a a professor who's aspiring to get a let's say a named professorship or tenure will go around in a suit okay a tenured professor who has job security for life will go around dressed like a [ __ ] you know if you've won a nobel prize my hunch is once you've won a nobel prize i think famously george stiglitz used to actually turn up at the world bank with no shoes on okay now interestingly you do that it's a bit like that little joke why do dogs lick their own balls because they can okay and to some extent people do what they can get away with so you know the classic example is you know people who play in very fashionable bands can afford to be extraordinarily scruffy because what effectively liam and noel are saying is that our presence in this band renders us so unbelievably cool and sexy that we don't even have to make an effort on the sartorial front i've seen this in my own life it's funny yeah just through the journey of my career in the last 10 years the example i'd give is in my early career speaking on stage i would try and dress really smart and wear a suit now yeah i think it's much better that i present myself in the tracksuit bottom in the tracksuit that i would wear like going around the house when i speak on stage a because it's more akin to who i am b because i can yeah and c i think the psychological thing that i'm not admitting because it might make me seem like an [ __ ] is it's actually more of a status play to not wear a suit and to not show off and the same applies for louis vuitton like early part of my first five years of my career when i was just about getting some money i'd buy these designer brands like louis vuitton now i genuinely think if i hold a louis vuitton bag it makes me look bad so i i've like rid myself and when i walk in somewhere i say to my manager because i've just got the one left that hasn't managed to break yet i say can you hold that because i don't want to be associated with that level of signaling if that makes sense i guess no and the argument is that you know you're famous enough now that you no longer need fashion brands um uh to accord you know in fact the very fact that you were trying um uh given your fame to actually uh signal your success through fashion would probably be counterproductive it would suggest you were insecure or trying too hard yeah and so that thing of we do what we can get away with to signal what we're you know what we're capable of so it's a very oblique form of status signaling it might be very valuable environmentally counter signaling might be something you need to harness in other words it's cool you know it's cool to own less yes because i don't have things i don't have a watch i don't have as i said to you i have an electric bike which you've just seen i have to be fair i do have a nice cut um car that they drive me in sometimes but other than that in terms of my own possessions it's really all about utility yeah and not buying it in excess and i actually think that's a really good point that that can be leveraged to try and um help the environment which i i think that's happening there's a very interesting thing happening which is in electric cars and i was speaking to the marketing director of skoda they produced something called the enyak which is actually it's similar to the volkswagen knight e4 but it's very very good electric car and one of the things they're noticing i migrated from a jaguar to the ford mustang machi um quite a few people on the mackie forum are actually ex-luxury car owners and quite a few people um the the skoda marketing director was telling me um that quite a few people who'd gone to the skoda eniac could actually come from for example audi jaguar fairly premium cars so there is a thing that actually having the electric car even in a you know a less leather clad you know wall that infested form that's now the status component it's not the brand of the car it's the fact that it's electric tesla's the same i think tesla is a big um i don't give a [ __ ] in a weird way i think it's a big for me it's a um the journey honestly would be you you'd get a lamb if you were insecure and this is what you're into you get one of those really fancy brands and then the next step is saying do you know what i don't give a [ __ ] which is what you see going on in san francisco with the billionaires and the ceos and the vcs i'm going to be a tesla person now which is i care more about the environment and other things and i don't really care if you think it's still a premium brand to be honest because let's face it any tesla is probably less than three years old and actually most people don't buy cars from new ever or only once in their life it's not fancy but it's not it's not particularly fancy i mean there's a wonderful piece of little alchemy in it of course which is the invention of the phrase vegan leather oh really if you think that the reason i broke the book alchemy is partly to elevate the status and centrality of marketing in business success that actually what you are is effectively a product of how you make people feel okay ultimately and that's psychological it's not technological and therefore if you want to improve how people feel psychology is a better area for exploration than what you might call rational improvement don't make the eurostar faster make the journey more enjoyable okay put wi-fi on the trains serve better food okay it's a cheaper way actually to compete okay strangely engineers see it as cheating you see if you have a an engineering or a finance background you see psychological value as invalid but the vital thing about psychological value is whereas it's very difficult to perform magic in the world of physics or engineering you can genuinely perform magic in perception now what is the what is the seat covering for the tesla it's called vegan leather now actually to be honest we would have called those plastic seats back in the day in my childhood in the 1970s and 80s we've got it's got plastic seats okay now i'm sure that vegan leather is better than the plastic seats which you'd find in a vauxhall viva in 1977 okay i'm sure it's better in all kinds of ways breathability you know cleanliness whatever but nonetheless calling it vegan leather in other words i'm doing this for the planet rather than plastic which is in other words what you're doing is you're making it a choice not a compromise yeah and that's one of the cleverest reframings you can do an aspirational choice as well and indeed so yeah no and so you know i i abs you know i look at things like range anxiety and i get that's psychological okay okay range anxiety is a big obstacle to electric car purchase oh yeah in the uk in two in two two levels okay one it probably well three levels one it means that cars tend to compete on their range which in a sense is further emphasizing a negative to the consumer because if electric car advertising is all about range okay people start to see range as more of a problem than it is secondly it makes the batteries bigger the car's heavier and more expensive than they probably need to be so it's interesting because so often i think the obstacles to technology adoption are really psychological hurdles much more than technological hurdles this is why i think marketing is so fascinating because there are these products exactly like gusto or holofresh which once you experience them 50 of people become a convert but the real marketing challenge is well that's fine that's great but how on earth do you convert people in the first place and that's a very interesting case where after the pandemic and this is i think the value i think there's a multiple value to having occasional disruptions in life one of which is that businesses become much less risk-averse when they're facing a crisis it's a necessity as the mother of invention but consumers also have a narrative for why they're doing things differently i mean in a way you could if you looked at the whole path of human history the 1930s in the united states i.e the decade immediately after the great depression was probably the period of greatest innovation in terms of you know human welfare in everything from cars aircraft etc it was an extraordinary period of innovation and yet it came on the heels of this total economic disaster and i think there is something there in that idea that um it's almost like annealing when you make a samurai sword you actually bang the thing while it's cooling that actually some periods of disruption that some degree of variance and instability in economies is possibly long-term healthy i mean i i i'm a huge devotee more so than you i know you've got a very intelligent approach to flexible working which is yeah that's what i wanted to talk about yeah but but it was interesting it was interesting that given the fact that the whole promise of the internet really i mean i think this is in a douglas copeland book called microsurfs where one of the geeks who features in this douglas copeland book it was written in the 90s i think but he makes a very interesting comment which is the whole purpose of what you might call silicon valley technology is to make location irrelevant in other words it's to make where you are irrelevant to the performance of a particular function and by the way there are negatives to that there were great positives in my childhood to the fact that what you could do was constrained by where you were so when you left the office you couldn't meaningfully work okay because your computer was on a desk you photocopied in the photocopier room you met in the meeting room you you know you you wrote things at a time at a keyboard where you were determined what you were doing and so a certain focus arose from that which i think has been destroyed by the mobile phone to some degree which technically lets you do anything from anywhere i find myself on holiday and day three worrying about what i'm going to order from ricardo when i get home actually you shouldn't be doing this another thing it probably does by the way is it encourages us to over plan and i'm a big believer like i booked a holiday um in july and august and i'm trying to say to my family no no we're going to land in chicago we're going to leave from new york what we do in between those dates we're going to leave open until the very last moment the the other great problem the internet allows you to do i think with your holiday is to plan it down to a kind of granular level of detail which is actually inimical to having a good time you know a good time it often requires spontaneity and you know my wife and i discovered new mexico installed american stuff we knew it existed okay we discovered new mexico more or less by accident we're on a driving holiday and we got stuck in el paso and needed to get somewhere else so we said well let's try this you know let's los alamos i've heard about that right okay fairly famous okay let's go and have a deco absolutely gorgeous state and we've been that back five times we discovered it effectively through serendipity so there aren't downsides to this you can do anything from anywhere but it is a bit weird that you know trillions of dollars invested in the capacity to to obtain effects remotely hadn't made a dent in the commute at all now i'm by the way i'm totally open to people who say entirely you know okay airbnb has gone uh effectively remote forever fully remote forever now bear in mind as a company working as a company the entire company is is going to be 100 remote working now there are two interesting things going on there one of which is if you're airbnb and your slogan is be at home anywhere okay it's it's a bit countercultural to demand that people why weren't you at your desk okay there may be an element of henry ford to it you know that henry ford partly created slightly apocryphal but not entirely created a two-day weekend for his own workers because he thought if it actually spread then it'll be worth people buying cars if he could increase the salary and for factory work and give people two days of guaranteed leisure then you had people who could both afford and make use of a car and with airbnb if you think about it uh they stand to be fairly major beneficiaries of working from anywhere so doing it with their own staff there was a rumor i'm not sure it's true so for god's sake don't sue me on this there was a famous rumor that unilever created uh dressed down fridays okay and to be honest i think it's a conspiracy theory i don't think this happened if it did all credit to them and the idea was if we could create a social norm where people went in to work in chinos and you know sweatshirts on a friday we get one extra day of laundry because you dry clean a suit but you launder a a chinos or you launder um you know polo [ __ ] well you're not ordinary white shirts but you launder cotton jackets and you know casual clothes so the argument was it was actually a laundry maximization ploy by either png or unilever not sure that's true it would be very clever if it were but henry ford undoubtedly did write about this that creating leisure was part of his strategy for selling cars now that's interesting because most businesses nowadays don't have that vision to say actually we don't necessarily have to optimize what we do for imagined static human economic behavior we can actually change the way people behave we can change what things mean we can change whether something feels cheap or expensive we can make feeler a really cool brand you know and this is why you know i wrote the book alchemy partly saying we have a kind of culture in business particularly in the finance function of business which doesn't which refuses to believe in magic now i'm not saying magic is easy or that everybody can do it all the time it's certainly not that easy but you shouldn't discount it because there are vegan leather the uber map there are magical solutions out there i had a few words to say about one of my sponsors on this podcast what's this one that's sure so do i need to mix it with water or do i just drink it it's um no no no no no you wouldn't put it in the water don't put it in the water yeah okay we'll give you a separate glass if you want it is a nutritionally complete it's a meal and a drink effectively oh fantastic this is a this is an interesting brand actually for many of the reasons we've been talking about so this is the last year the fastest growing e-commerce company internationally and think about what what what they're doing so hewl our nutritionally complete convenience um it's basically i think it's sadly delicious by the way delicious it's not less quick i'll say that so it's not like you know raving delicious but nor should it be because we wouldn't believe it amen if you made it too tasty we wouldn't believe it's medicinal properties it's exactly like the weird taste of red bull which i was so two lessons are magic is possible in psychology even if it isn't in physics and the second lesson is sometimes the opposite of a good idea is another good idea in psychology you can actually uh you know there's dyson and there's the henry you know they're both strong vacuum cleaner brands in entirely different um uh directions if you like and the point i'm making is that i think that high school maths encourages us to believe that there's a single optimal answer uh which comes from resolving a trade-off and economics economics always assumes trade-offs i want to show you this grenade bar it's in the drawdown so this is this shows how what you're saying about that the opposites can be two good ideas because this company run by another one of my friends both these companies run by my friends has taken the complete opposite approach they are a pr a protein bar right yeah i've bought them actually that's amazing just as good as a chocolate bar and i'm gonna probably tell a lie here but i believe they are the fastest growing chocolate bar or the most bought chocolate bar in the uk now they are a protein bar and they focus entirely on taste and they've just sold to modern delays i think for well i know for several hundred millions so the founder is very very wealthy now good friend of mine right they went for taste and they won these have gone for much the opposite which is really really focused on being nutritionally complete and healthy and i've sat in there i mean it's not repellent it's not absolutely not quite quite the opposite i would drink this perfectly contently but it tastes good enough for you to trust it if it tasted even better i would stop trusting it and having sat in the room with the ceo and the founder we they brought in these bars that tasted like this what tasted good yeah and there was a small compromise to the nutritionally complete um part in these new bars and the founder and the managing director said no we'd rather have bars that taste worse and protect that nutritionally complete sort of philosophy than to have it taste really good and an interesting and interesting piece of psychology is that diet coke has to taste slightly more bitter than standard coke for you to believe it for you to believe it in other words it's kind of um in other words you have to have that slight little bit of extra bite because otherwise it doesn't unit it doesn't feel like a diet drink well you can say a red bull you're saying about we'll write a lot about the interesting there's a lot about red bull because it's this mysterious thing which is so counter-intuitive in that you know it tastes nastier than coke it costs a lot more than coke and it comes in a much smaller can than coke and part of that is i think it's not a drink it's a it's a medicine i mean the whole marketing behind it it's it's a drug it's and actually the promise of psychoactive powers is delivered much better by high price and weird taste and small portions you wouldn't really i mean okay to give you an extreme case there there is a case where they discover that drugs that upwork for relatively minor conditions by which i i i let let's say as mild asthma okay also work for certain rare cancers and apparently when they do this they exaggerate the side effects because you feel that if it's to be tackling a much tougher challenge which is cancer you would expect greater side effects to believe i mean you what you wouldn't want is an oncology treatment which was pineapple flavors and so there's this weird thing which is you can you can do things which kind of make sense which is we want this to taste as nice as possible and you can end up being logically wrong rather than illogically right yeah and i think that distinction is really useful because um i'll give you an example actually nearly all pharmaceutical companies make the pills as easy to take as possible okay as small as possible you know and as few needed as possible and so forth and when we heard this both dan ariely and i who are on i think a zoom call at the time said oh dear and they said well it's logical you know we're designing a drug we produce the drug how can we make the drug and we said well when you make something very small and very easy to take you also make it very forgettable and we actually said there are you sure we shouldn't add a degree of difficulty should you actually require people to grind the drug up mix it with water because there are several reasons that the more effort you put in the preparation of the drug will probably boost the placebo effect okay but the second thing is you'll also create a ritual which means you'll remember whether or not you've taken it whereas if a pill is literally you know you have these pills where the biggest problem with treating the condition is not finding the medication it's that it's patient compliance and we said maybe if you had a bit of a daft ritual around this where you had to actually grind in the pestle and mortar and add something you'd find much higher levels of compliance and and a boosted placebo effect as well really interesting that this idea that friction can create create value but it also can ingrain something in your routine the other thing that i i i think about a lot sometimes by the way some travel websites deliberately make the search procedure artificially slow because you value the results more highly if you've had a screen that says we're now searching easyjet british airways al italia and then 15 seconds later after a sort of flurry of activity on the screen it delivers you your holiday results you attach more significance to those results and are more likely to go through and book than if it just goes bang and gives you an instantaneous result well i think you did a thorough job so i trust you more if i see you've done you've searched 50 i go okay well i don't need to do that myself yeah you've looked at them all for me yeah that's really interesting i now feel scammed this interesting and this is a sort of philosophical question which is if it makes things feel more valuable is it a con so okay i mean if you take this whole question of how we perceive value you could and you wouldn't disagree with the fact that the nature of a restaurant and how it's designed at the service adds to the appreciation of food well if it's too quick to deliver me my meal i think they well that's that's a very interesting point yeah absolutely right um so the way in which the food is presented affects your appreciation of the food now my argument is your your job as a business person is to create as much perceived value as possible and if you okay now i was talking to jay rainer the other day and just be clear on this you cannot create a great restaurant with rubbish food okay okay that's not gonna happen but once you reach what you might call table stakes in terms of food quality the things that make a restaurant great are often what you might call tangential to the food or the meal itself or you know it's it's atmosphere decor you know theater who the other diners are it can be all manner of different things and so just as i think you're wrong running a restaurant where you say the food is the only thing that matters because you could serve michelangelo food in a restaurant that smelled of wee and nobody would enjoy their meal even though the food was objectively superb um i think the worst thing you can do in in both environmental terms and in business terms is to create under-appreciated value is to go to the effort of manufacturing something without actually working out how to allow people to realize how great it is scarcity and packaging um one of the things that i'm quite i saw one of my favorite brands the other day do a trip around their warehouse showing the warehouse and on one hand i loved seeing the warehouse i love seeing the craftsmanship that goes into it and then they panned across to this big rail and i saw the item that i buy and i saw like like thousands of them yes and i remember thinking oh [ __ ] and and it made me reflect on what apple do by just laying out like one of the products on the shop floor and how much how much more that makes me think there's tremendous value because i just see one ipad and one phone and one watch there is a kind of genius to that yeah they will the ancillary products they will show in some sort of bulk if you're buying mouse mats or something they don't mind having 10 of those but the mainstream products there is one of them and the rest of them are kept out of sight yeah which is very interesting brands don't do that enough i don't think there is also an interesting question about the tour of the warehouse which is you know how much do you want to let people in on the reality i mean yeah because it can be like it can kill the magic to a certain point depending on what's going on in that warehouse it all depends i i went out and when we were working with lapela the famous italian yeah you know lingerie brand and i flew out to the there were a client of those i flew out to italy to their warehouses and i i read the story of golden scissors the original founder who would make all of the lingerie with her hands and golden scissors and i saw these women who all have a another woman standing over their shoulders ensuring perfection in the garments and my biggest thing to the ceo of lapel at the time was like oh my god you've never told the story of golden figures you've never filmed this process you're now just competing on the high street against um these sort of uh cheaper lingerie brands who are selling at 30 pounds you're selling 150 and no one knows why no because you just haven't told you've not sort of it's what you said about a large lounge area is a fairly and substantial product so it's not enough this is the no so no one sees the craftsmanship i had no awareness of that either there you go and isn't that and i'll tell you what happened to la perla they went bust and it and and when i got when i've seen in italy just the unbelievable the fact that all of the people hand-sewn they never told that story on a slightly more prosaic basis i always every time i meet kfc i always tell them to tell people that colonel sanders effectively founded kfc when he was 65 years old you know he had a convoluted career but he had spent about eight years perfecting this recipe for chicken and it's an extraordinary story you know the fact that a multinational corporation was created by someone in there basically at retirement age and my argument is i can't explain entirely why but it just makes me think of the thing differently knowing the knowing the foundational story behind it can i tell you a really secret a really easy way i've found to do exactly that to instill any product with a apparent sense of huge value in historical like story is just by naming it after a person so if i named if i knew if i have salad if i have italian uh spaghetti sauce which i've just made in a factory and i called it i don't know la la bellies yeah you immediately think of a family history that must have been attached to that product and and years and years of iteration from this family and it was so good that people now borrowed on mass and tesco and i think that's that for me is such an interesting example where just by calling it after someone who sounds italian yup implants this whole va you know this this story of heritage what do you think about personalization and when i say personalization i really mean the surface level personalization of tickling someone's ego by yeah i always talk about starbucks i'm just writing your name on the side of the cup or this share a coke campaign where they put your name on it that was instigated that brilliant idea but um um it's very interesting personalization because it's one of those things you have to be very judicious about you know it can be spooky okay and you know there are companies that get it worryingly wrong uh by essentially uh playing back to people things that they shouldn't know or didn't need that and so it's often one of those things which i think is interesting because it's best done obliquely spooky example so if you know something about someone in a personalized letter you say you know uh you may be the kind of person who recently did this rather than saying you did this and it can it can be spooky and it's one of those very interesting things where knowing how to play it uh is um uh really really critical i'm gonna give an example where i think someone played it wrong because i was thinking about gone yeah so one of the this is maybe slightly different but um i went i registered for a gym on the other side of the world i won't say the country because they might listen on the other side of the world right and 30 or 40 minutes after registering for the gym i got an email from the ceo saying hi steve i've just seen you registered for our gym um if there's anything i can do while you're in town please let me know blah blah blah now on one hand people might think that's that's great and that's lovely of them to do but i don't know how that individual got my details so i gave it to an ipad on the front desk to a nice indonesian lady right and then the ceo who's a british person is clearly what else did they see of my details did they see my my password do they see my bank details so it just kind of it hurt me it was cool i was a bit shook by it i was like how in 35 minutes since i put that details into the ipad has the ceo in the uk emailed me email not just has emailed my manager and then i'll give you a good example which is i flew to india i got to a hotel in india and as i went into the room they had a chocolate taj mahal and they had my company logo social chain and a small rice paper sticker on the the thing and i thought that that made me feel special yeah one of them made me feel like they'd invaded my privacy a little bit and the other one made me feel really special and i took my phone out and i do loads of instagrams about this hotel and this taj mahal rice paper sticker that cost two dollars so you're right there is a fine line there and you can i mean it's very interesting because there's all you've also got to be very very alert to cultural differences so that germans have a paranoia about data protection and privacy uh which is an order of magnitude greater than that you find in say the u.s where i think most people in the u.s kind of have the mentality that the horse has already bolted it's too late everybody already knows all this stuff so leaving aside things like medical data and stuff that is you know naturally expected to remain secret um because i thought with the machine it's funny because when you put your details into computers and like login forms and registration yes you assume they're going into some vaults it never occurred to me that because now because you'd self-inputted it yeah um you'd assumed that effectively it was anonymous yes and it was going into some vault in a computer yeah that was encrypted and secure so to get an email 35 i go well these people saying all my data everyone's got my phone number he's got my password and that was just felt like a bit of a what's interesting is you you found it unpleasant another person otherwise demographically identical to you would be cool with it yeah they thought it was yeah great customer service generally it's probably it's probably a caution that people who work in marketing are less um likely to be sensitized to positive possible negative interpretations of what they're doing because people who work in marketing are high on openness i'll give you a lovely example of this which i better not name the client but it was simply there was a special offer by a credit card company and uh the envelope sent out just said final reminder in red because the offer was about to expire okay and we thought it was you know reasonably cute you're going to open a letter with final reminder on it and it'll tell you that you've only got 10 days left to enjoy this particular discount and a significant minority of people went bananas with this and the reason was you know they said that to a londoner this is incomprehensible okay if you live in london or you live in a large city now my postman thinks i don't pay my bills because they've received a letter with final reminder on the outside of the envelope now most people in london don't really know their postman and they certainly wouldn't worry about their postman going around and gossiping about them because in a place like london there's a left anonymity if you live in a small country village totally different matter because the postman drinks at the same pub as your friends oh yeah of course that's one of those cases where nobody working on the thing had had any consideration because londoners wouldn't be bothered by that someone who shares a doormat with five other people might be bothered by that let me give you let me get i want to get some rules um some advice from you then so i'm i'm launching a a brand soon and it's an apparel brand and we've been working very hard on it over the last year or so maybe a bit too hard on it when when it comes to delivering that apparel brand to the world and making it um it's actually an extension of this podcast so it's called doac dyro ceo um what advice would you give me as it relates to delivering that product to the world to make sure that it is inherently valuable and that people you know uh one one piece of advice in any form of uh e-tail two two forms of advice actually uh the two mr and by the way i think marketers spend too much time focusing on the addition of positives when a lot of time needs to be spent on the removal of negatives uh one thing is answer the phone okay and do not hide your phone number [Music] i find that so what seems to happen in most e-commerce is you have what you might call the sales area which is everything that happens up to and including a point of purchase and everything there is glorious and attractive and you know and slick okay assuming by the way you don't have a weird question to ask um but i would argue one um what then happens is if something goes wrong with your experience either the delivery of the experience or you need to cancel something as soon as you deviate from that very narrowly preconceived sort of purchase funnel you enter a world of pain okay and the two things which are i think grossly under under invested in uh in terms of e-commerce are one giving what tends to happen is once once the marketing job is done because the person has clicked buy the responsibility for that customer is now handed over to people whose metrics are anything but customer satisfaction their cost reduction how can we make sure that nobody phones us up how can we make sure that every phone call is as brief as is feasibly possible and how can we minimize the cost of delivery and distribution now one of the things i think is a grotesque mistake that most e-commerce providers make not all of them but many is not offering you a choice of delivery couriers for example okay now i know why they do that they want to put everything through one delivery courier so they can maximize their rebates through volume economies of scale actually i think you know i think many me two problems happen there one if you don't get to choose how your items delivered if anything goes wrong you blame the company you don't blame the delivery company or yourself if i'd chosen to have it delivered by royal mail and it went missing i'd blame royal mail if they insist that i have it delivered by you know without singling out ups dpd whatever and it goes wrong i blame them um secondly you know people have various preferences you know your liking for every used to be called um uh hermes okay varies enormously depending on which postcode district you're in because if you have a very good local driver it's incredibly good and if your local driver is off sick it's a disaster in some cases okay um and by not resp not respecting the the fact that the person is paying for the delivery should choose who delivers it strikes me as a fundamental failing the business of hiding the phone number so that anybody who has a problem is effectively treated like a second class citizen so you have this very characteristic thing which i think is a problem with e-commerce which is when it goes well it's miraculously good okay but the second anything out of the ordinary happens you enter a world of pain you know um and i think that is that's a fundamental failing this is a customer service point the importance of customer service right a few people i mean selfridges self just do it pretty well okay um other things i do is i would offer a kind of amazon prime equivalent where if you pay a few pounds for delivery you get free delivery for a year that seems to be a you know fairly obvious brilliant idea because why should loyal customers pay you know inordinately more for you know delivery than one-off customers do um i think you know i think you can make an effort around how the thing is delivered and packaged and presented which some people do well and some people don't bother to do at all what do you think the secret is there to doing a good job with packaging um possibly there's a little bit of costly signaling involved i mean if you order something from selfridges um the inside of the box is actually yellow with the selfridges logo on a kind of shiny backdrop and there's a little bit of tissue paper okay so you're never left um that will have a halo effect on your perceived value of the product by the way you know i know we don't like it but actually packaging is to some extent packaging is where a product first becomes a brand it's where it first takes on a personality and identity uh you know you know a kind of an implied target audience and so in in this thing now the interesting thing is how are you going to uh what's your shtick do you have for example scarcity is the clothing available yeah so limited runs we actually we actually sold some before when i did a tour of the uk and you had to come to the tour to buy it and every single night on the tour we did nine nine nights three nights at the london palladium took it up another country and sold it every single night every single item to the point that we sold the ones on our backs yeah and we'll gave them away but um every single item sold out and every single size on the tour so this is like the second drop of it everyone's well aware that the first the first run of it all sold out um we have a very limited line uh we have a limited amount of items again this time and i think the key thing with this um release is we've just agonized over the story of the piece so it's like it really looks more like art than it does clothing and we've worked with artists and there's this big movie that i'm releasing with every single item to explain the meaning of the piece and then we've put a lot of effort into the packaging the unboxing experience so it is limited it will honestly probably sell out in the first day and um i don't even think we're gonna make money from it but that's not really why i do it it's more because i just love the i love the process but um probably will you probably will make money i mean merch is um i'm just really not bothered by making money from it it's not the thing in my life same with a tour like i spent every penny i could on the bloody tour because it wasn't really why i was doing it there's probably more of a bra a wider brand play yes to doing it which is like it's it's bringing our audience closer to us so it's maybe a lost leader in terms of the financials but in the broader engagement no i mean this is this is actually the great curse of a lot of modern business given the title of your um podcast which is that people generally over obsess about things which are immediately quantifiable and under invest in things which are valuable but hard to actually put a figure on yeah and so things like engagement or loyalty of course i mean it's worth noting that customer loyalty is much much slower to measure than for example conversion yeah and so the extent that money's invested in performance marketing or the bottom of the funnel relative to let's say wider brand fame yeah it's a widespread problem in the whole business world which is that the money isn't necessarily being spent in in the in the channels it is because it's more effective there but simply because it's more of it's easier to prove that it has an effect the truth of the matter is the world will always be too uncertain for us to know who our customers are in advance and therefore since you know 97 of the potential customer base aren't in market at any given time and therefore won't be uncovered by search or you know remarketing or whatever spending money on the 97 of people in advance ahead of times is still a very effective thing to do the reason people do too little of it is that it's hard to quantify on that particular point then having worked in the advertising industry this is a conversation we have all the time with clients which is that you'll meet a certain type of client who is very uh who's they're religious about the bottom of the funnel they're really if it if i can't track it and i don't know exactly i won't do it i won't do it then you'll sometimes meet the opposite which is yeah someone who just loves to spend on brand and i don't know they're both wrong yeah i don't think they should yeah i mean i mean mark ritz very good marketing professor always talks about the importance of both ism and he says it's vitally important that when i actually speak about the importance of brand marketing that you do not interpret this as denigrating digital marketing in fact i go a bit further and say the bottom of the funnel in many respects is the thing you have to optimize first because there's no point in actually uh if there's a bottleneck at the bottom of the funnel if there's some constraint or a problem or a failing uh you know if you have very poor conversion okay there's no point in spending money on advertising because you'll just introduce more people to a disappointing experience you're wasting money so you've got to get the back end and i would argue the first thing in theory you should optimize if you're being an absolute purist is repeat purchase because having gone through the expense to acquire these customers and actually that's the that's the metric that always fascinates me because we were talking earlier about electric cars and i said the question about electric cars isn't how many people are buying them okay it's not what percentage of the new car market in the uk in july were plug-in vehicles now only question worth asking really in the long term is does anybody who buys an electric car go back to buying a gasoline car because if the answer that is hardly anybody then okay you don't know the exact shape of the s-curve but you know the growth is going to be pretty spectacular and so the thing to understand i think in a market is to what extent does your uh product actually convert someone to something hmm and then the lifetime and so you'd start with repeat purchase then you go to conversion and then you'd work your way up but what tends to happen is that when people are obsessed are obsessed with quantification of everything okay it's worth noting by the way that all big data comes from the same place the past all right so there's a limit to how much big data particularly if you've had some major event like a pandemic in between how much big data can actually tell you about the future in any case as david ogilvy famously said you're not advertising to a standing army or advertising to a moving parade people are coming in and out of market all the time and so you're absolutely right you get some people who are just fame junkies and by the way i suppose there are brand categories where that's appropriate if it's sold through retailers you know in other words if it's mostly sold in the physical space you might you know you might argue to an extent you know for let's say a burger king or a mcdonald's that's not a totally crazy position although it is now because suddenly they've got to think about delivery and and whether people order through the app or order through an intermediary because it has a major bearing on their business but but at the same time yeah i mean the tragedy is this idea of this false dichotomy between brand advertising and what you might call performance or digital marketing as if you have to be in one camp or the other where is the balance though and how does one go about is it just intuitive is it just there are figures on this so if you look at the work of um liz burnett for example in peter field the ratio shifts a little bit but generally they'll stipulate a figure around about the 60 40 mark in favor of what you might call brand mass media uh expenditure because they have a a mutually beneficial relationship my obviously 20 years of my life was spent in direct marketing and actually you know because direct marketing was unfashionable we spent a lot of time denigrating advertising spend because they got much bigger budgets than us not necessarily rightly but they were also you know much more indulged than we were because they didn't have to prove effectiveness down to the same sort of level of statistical significance but we came to realize pretty quickly that actually um first of all there's nothing harder than direct marketing a product that nobody's ever heard of yeah and that every time just to give an example every time american express went on television or advertised big in mass media the response rates to direct mail would not quite double maybe but they increased pretty significantly you had to work less hard and you had to work it's that wonderful phrase which comes from a book by uh let me get his job right uh his his name right um uh i i think it's matt johnson who's just written a book called um uh brands that mean business and his wonderful line is having a great brand means you get to play the game of capitalism in easy mode yeah and that's and what what is true is fame to some extent brings a load of benefits which aren't necessarily sales related so for example you can [ __ ] up and your customers will be more forgiving okay uh take the example of apple i mean on a couple of occasions apple has produced products which had fairly major flaws which might have proved pretty fatal to lesser brands you know the famous phone where if you held it in the wrong way it didn't make phone calls for example and um given the reality distortion field around the apple brand people have passed over those incredibly rapidly and so they're all you know people are less price sensitive that's not easy to measure by the way as well it's very easy to measure the extent to which something has an effect on sales but the effect to which something has an effect on price elasticity and the extent to which you can command a premium because it's a great brand because it's a great brand it's harder to measure because you don't have the counter factual you know when you sell something the counter factual is that you assume that you wouldn't have sold it otherwise but if you sell something for a high price you can't in fact determine that without your advertising you wouldn't have sold it for you know for that for that premium price so it's it's to some extent this quest for perfect measurement to to reduce marketing to a kind of newtonian physics is a bit of a false god fame you talked about fame there fame can also be applied in the topic of personal branding as well obviously social media has allowed us all now to build our personal brands you've got the gary vaynerchuk's of the world who have built you know you know their companies are famous because they've they've branded a person at ogilvy and within your sort of your marketing what kind of shift have you seen in the desire for people to become brands themselves and how valuable do you think that is i think advertising always had those personal brands and if anything it's slightly diminished actually really um uh campaign magazine always did a very good job of you know making sure there were 30 or 40 sort of famous names within the within the business that just happens in a different medium now right it happens on linkedin yes i agree i mean you know so i mean one of the greatest things for example there's a wonderful wonderful guy who now must be i don't want to name his age but he you know he's you know past retirement age called dave trott you probably know dave okay he'd be a brilliant interviewee by the way on the show absolutely fantastic but what has been absolutely fantastic is that um you know he's a glorious advertising mind i mean just an absolute ornament to the industry and he through twitter and through blogging has had a completely new lease of life and influence to a completely new generation of people um and has been you know hugely valuable as a teacher and what's interesting about that actually is that of course uh he does that unpaid and one of the things that is complicated about this new world okay you know the most valuable thing i often do in the course of a working week is either to give something away or to put somebody in touch with something else neither of which you know that kind of barter um neither of those things is in any way monetizable is it well reciprocity would say otherwise yeah i know i suppose you've just got to rely on a high degree of reciprocity in some respect i mean always it always bothers me about this which is that we're in a business advertising which is paid by the hour which is a terrible way to pay for ideas because the value of something has no relation to the time uh devoted to its inception and um it is genuine i mean you know i always joke about this the most valuable thing i probably did was almost accidentally my working life which was to go to the government's behavioral insights team and as a sort of fanatical vaper i'd been a long time smoker and had been able to quit for the first time successfully by switching to vaping it took me a little while but once i'd made the switch i've never gone back um [Music] and i went to the government's behavioral insights team and i said look um these things are coming over from both japan and the united states they're electronic cigarettes i think there are two things you need to be alert to in psychology one of which is that um because they actually replicate the habit of smoking not just the nicotine they are a major kind of what you might call a gateway drug out yeah they're a major source of harm reduction at the very least uh it may help people to quit uh at the very least it'll help people to shift to something a much less harmful delivery device versus patches versus patches and guns and things like that which didn't replicate the behavior and then the second thing i said is the second thing you've got to be alert to is that because of peculiar human psychology half the people in the what you might call the health and anti-smoking lobby will be fanatical about banning electronic cigarettes and all credit for the behavioral insights team um under a guy called david halpam i think they went to the cameron government and said favor here can we have a light touch on vaping regulation please and various parts of the eu have gone for much stricter regulation there were some countries which were more or less banning it the u.s has banned jewel for some reason bizarre on that on that point of personal branding though do you think building a personal brand is important yeah it's very interesting i mean you have a personal brand whether you like it or not but that's one really important point about branding which is that everybody you know and that's by the way why i think marketing is so important because it's not the brand is not the heated steering wheel of the marketing world you know the optional extra that you can do without but it's quite nice to have people are going to perceive you in some way regardless of anything you do okay they're going to form an impression of you they're going to form an impression of what you're worth what kind of business you are um you know and they will use all manner of kind of inferences and heuristics to arrive at this conclusion and in many ways i suppose this is why i argue that marketing isn't an optional extra it's an essential because the worst thing you can do is build a great product and fail to present it in a way that is convincing appealing attractive or which confers status on its users and the same applies for your personal brand and the same yeah the same price you're going to have a personal brand whether you like it or not so you might as well try and have a good one i think it probably is true to say that the personal brand requires sacrifice you know that that old saying that strategy is the art of sacrifice but wait not totally true i think there are win-wins you know what is the sacrifice of a person but well i i suspect you don't need to suspect you've got a personal brand yeah you you have to have weaknesses as well as strengths now interestingly for example one of the things that will be part of my personal brand is i i'm not a ceo i'm no aspiration to be a ceo and i know enough about myself no i would not be good at that job okay there are certain forms of uh of ambition and aspiration which you know constant with with a personal brand that i have uh are basically their avenues that are closed to me i'm not very good at administration i'm very bad at making difficult decisions self-awareness is a personal brand strength yeah but i'm now where i'd be useful i'd be useful at making oblique or unusual suggestions i'd be useful at getting people to consider the same thing in five different ways or uh promoting a counterintuitive thought i might be useful at suggesting somebody you know i've got fairly good personal rolodex you know before you run off and do this on your own why don't you talk to this guy at this university who's been studying this for the last 15 years when you think about why you are successful in your career and why you know you're very very well known in the industry and people speak very highly of you why in hindsight do you think as you look back and connect those dots you were successful um i think um and by the way this is also an argument for you know ethnic cognitive all kinds of diversity i really really love the advertising and marketing industry i think it's a source of endless fascination i think it's much much more economically important uh than is recognized in the contribution it makes to innovation to progress uh to human flourishing actually uh so i tend to take a fairly positive take the only the only thing i'd say is i've always had half one foot out of the industry i haven't entirely bought in you know i never i half bought into the awards culture let's say but retained a degree of skepticism you know i half buy into purpose but but you know in other words i haven't become ideological about anything to some extent i'm ideological about not being ideological um you know human psychology is immensely complicated okay even at the level of the individual at the level of individuals interacting with other individuals it is immensely complicated i don't think it's something you can generally pronounce confidently about all you can do is start by asking better questions and perform better experiments i think and i think that's to some extent why entrepreneurs are so essential uh in innovation a bit of it a bit of it is the one disadvantage big companies have in innovating is that it's very difficult to get the timing right and if you think about it while one big company has one shot at an idea 15 entrepreneurs will launch it 15 different times and one of them will get the timing right just by the law of averages okay so the timing is one issue but the other issue is that maybe the really innovative products require some component of nonsense i don't mean nonsense but i mean nonsense you know there's a degree of uh either sort of counter-intuitive or seemingly illogical quality to them i want to know about you though okay why you were successful so you said that sort of unconvention maintaining unconventional thinking and it even actually struck me because when you said you went to this bug convention giving yourself another point of reference to inspire creativity or out of the box out of the industry thinking is quite clearly a huge advantage yeah curiosity is probably the kind of table stakes in in this business if you're generally curious what about what else about you though um i can i has it again i'm quite i'm gonna okay i'm quite good at the spiel yeah i'm quite good at my feet which i don't know where that came from uh you know growing up in wales is a bit of a bonus spiel what do you mean well you you grew up in plymouth okay now without without disparaging people in the southeast of england okay in the west of england and in the celtic fringe people talk not just to convey information but to prove they're good at talking there's a kind of musical quality to celtic irish welsh conversation which is it's a form of kind of regardless of the actual information it contains people enjoy seeing it done really well why do they why do you think people enjoy hearing you talk because i would agree i think that you're a very very good talker oh one thing um by the way which naseem talib is very interesting on this nasim talib always says you should mumble or you should speak very fast and his argument is that if you make it slightly difficult for people to comprehend what you're saying either by speaking very fast or by speaking slightly indistinctly they pay more attention to what you're saying i think i think there's an interesting thing just from hearing you speak today where um you're actually you're very engaging speaker because when you introduce a point you introduce it with a compelling slightly ambiguous story so even you'll net your you'll start it with that and then the next sentence leads me up to you're almost making me a promise of what you're going to reveal to me in that story and then you deliver upon that promise by telling me a a story and certain i have i see her a lot with people when they're speaking and also there's other things like your tonal fluctuations so if you and also your use of pausing but your tonal fluctuations actually do keep that maybe a welsh thing by the way maybe so i don't have a welsh accent but some people have said i have kind of got welsh intonation i've sat here with authors before and they they're so smart but honestly i just can't i can't stay with them because it's always like this the whole time of the conversation is like this so you just really it's fine it's really you know what i mean yeah and it's just that it's so but you yeah see you can't you can't accuse the welsh of not uh adding a little bit of musicality to uh it's just interesting when you look back in hindsight because i genuinely believe having spoken to you today your delivery of ideas and stories and it's funny that i even use the use of the word stories is such a huge part of why you've been able to rise above the crop and i actually think about it with myself it's it's it's all good having talent and genius and smarts which you have and a lot of people have but then the ability to equate it and to articulate it in a way that's captivating i think stories are the pdf files of human information okay so they're they're the vehicle we use for storing information and the vehicle we use for sharing it it's a universal format like the pdf file you know it doesn't matter what hardware the recipient's got they can read the file okay just a bit again okay so you said you introduced a really compelling idea that i'd never heard before i think they are the pdf file of human information i think what and then you have me and by a lot of people don't do that a lot of people don't introduce the first concept in the sentence as being something slightly ambiguous and unusual which inspires curiosity via engagement so it's it's an interesting it's probably a habit that you have but i think it's a very useful one for people to try and learn so i was a classicist at university whether i learned it a bit uh i've been doing i'm a big fan of classics in schools by the way because i think first of all i don't think you can actually decide as an english speaker which language you should learn in advance so learning a language which allows you to learn other languages more quickly may not maybe the best approach for modern languages ironically is to teach dead languages and german might be an alternative because that at least teaches you how language sort of works um didn't you say something actually in this book about this about how making something ambiguous is actually sometimes more effective because yes the idea that trump was quite a valuable deterrent i'm not sure that they would have invaded the ukraine if trump had still been president because uh this is this comes down to the realm of game theory which is that being irrational in some senses is is actually an intelligent strategy because no one's quite sure what you're going to do in response once you're rational you're predictable and once you're predictable you can be hacked and so having some element of this is where probably the need for human temper and anger arises you see if you had someone who would never lose their temper and lash out even at some risk to their own safety okay you could dick around with them almost endlessly couldn't you if you had someone who was 100 docile and would just roll with all the punches and would never lose it and would never retaliate simply because it wasn't rational to retaliate against say unsuitable odds i mean there probably were people like that but they didn't have many descendants i think from a darwinian point of view no you're right and actually entirely rational people wouldn't have spawned many descendants because their behavior would have been too predictable to be very easy to trap them i just think there's a broader point here which in which is it's i mean it's central to advertising as well which is people overlook the importance of communication huge in in in overall outcomes and even when i sit here with people that can speak well and tell stories well and convey ideas well i don't even think half the time they realize that that's such a huge part of their brilliance over the course of a lifetime imagine imagine the opportunities you'll create the ability to sell yourself the ability to push your ideas forward whether they're right or wrong the ability to inspire others and i i honestly think well actually one of the things that's most painful to me about watching the dragon's den is now i i occasionally watch shark tank or one of the american equivalent okay now americans have this tradition of show-and-tell don't they way even when you're at primary school you have to go up and give a talk about something and generally i find most americans are pretty good at you know at giving an account of something 100 and one of the painful things about the brits on dragon's den is sometimes i can see the people have actually what is a pretty good idea but they're telling the story from like the wrong end of the telescope completely yeah i'm going this is this is actually painful to me because you have this fantastic idea now you know okay this is okay slightly unethical but in a few cases i just go look if you just invent a story about how you came up with this okay now apparently the whole ebay story about pez's was never really true you know that his girlfriend wanted to trade pezzies but they felt they needed a foundation myth for how ebay got started you know and you know i've i bet i wonder if it's actually true that the uber came up with the map when watching it all the time you see these wonderful stories come up just come up with a you know you know a great story but also the way in which they um that their ability to generate perceived value through narrative um is their greatest weakness i'm watching this and i'm going this is just painful you know i mean actually schools should be teaching this yeah that's what i'm saying i mean it leads you to worry you know are there people out there and by the way i'm sure this is you know this is true there are there must have been people out there who had extraordinary inventive skills whose complete lack of marketing skills effectively meant they died in obscurity just even their complete lack of simple communication skills yeah like not even marketing is maybe step two but just being able to tell someone else like an investor or a potential co-founder about their ideas in an inspiring way that will galvanize them and get them in to join the mission yeah i i honestly i think the most important skill in the world that you could you know give gift to a child or anyone is just the ability to communicate effectively tell stories and which is ultimately what we call sales yeah and you do it when you're meeting a girl in a nightclub or whether you're inspiring employees or investors or you're building a personal brand or you're talking to customers the ability to understand how to keep people um i've got an idea i want to propose to the government that i mean i think that if we take marketing thinking and alchemical thinking we can also deploy it within politics and government and and um uh public sector decision making you know i think the nhs could actually create massively greater patient satisfaction by deploying certain you know behaviors and techniques just for their meaning not for their objective medical value okay but um like what well i i'll give one example i think you could actually reframe waiting time for an operation in some cases as preparation for the operation so if that time can be put to good use actually losing weight in my case if ever i had to have invasive surgery okay if they said okay the operation's in six weeks that means you've got six weeks to lose so many stone and this is how we're going to do it and so the time is actually spent improving the odds of the operation rather than just waiting secondly you could probably borrow a tip from uber and you could continually remind them of the date remind them of milestones so they didn't feel that part of the reason they're terrified of it being six weeks away is because they think it's going to shift by another six weeks you know it's a bit like there's a very big difference between waiting for a parcel to arrive which you can track and waiting for a parcel to arrive that you can't track yeah so you know making making things sort of trackable in some sense to reassure people i think there are a lot of psychological uh things you know just as actually deschume ingeniously if you have to queue for deschum they come out and make you shy okay and they serve chai to the waiting cue now that's very clever because that act of generosity inspires reciprocation so you're much less likely to quit the queue i think another one i'd do is i'd reduce student loans significantly if people had worked for one or two years before they went to university i think that i think that could be a major major game changer because at the moment why why okay right what what happened okay this is one of those invisible effects which nobody notices when i went to university in 1984 okay okay you know i i had a private education not a you know very good one actually and i i went to cambridge in 1984 okay then if you had a degree from let's say a russell group university it was um sufficient to get you a reasonably good starting job but it wasn't necessary what happened when we expend expanded higher education was a degree became necessary but not sufficient okay and so you have a bunch of people who might be better off or happier going straight into the world of work who are now required to get a degree in order to start work at a kind of level in which they can reach positions of reasonable reward okay now it wasn't like that you could you could go into you know well-paid work without a degree in 1987. you can't do that now okay very easily now i think if you reserved a whole load of university places or you discounted university places for people who'd worked somewhere first some of these people may well find out that they loved the business so much they wouldn't bother going to university at all but you'd also create a social norm where there was nothing weird about not going to university before you started work so you'd break that assumption that university automatically comes straight after school but the third requirement would be if we're going to educate people it's not a totally crazy requirement of them to make them prove that they can actually function in the real world with other people because i'm not sure i was b i'm a bit sad that kenny badnoch was just knocked out of the conservative leadership thing because a she didn't have a degree in ppe from oxford which is a positive in my book but also she worked in mcdonald's now i'm not sure genuinely that in terms of tacit knowledge understanding of the world i'm not sure that i wouldn't have been better off with one year less at cambridge and one year more working at mcdonald's i'm not you know we forget this we have this extraordinary narrative that education adds to people's human capital okay and that somehow the second you start work you know you become just you know you learn nothing this is completely the opposite of my experience you know i learned just as much of my first three years at ogilvy as i did at three years in university the idea that working isn't educational and that there's that the only way you can add to human capital or value is by putting people through these incredibly artificial sort of oblique intelligence tests which aren't really very good you're looking at a dropout so the interesting thing the interesting thing which must be true statistically and it must be true simply because simply because of bill gates and mark zuckerberg is that the average harvard dropout is almost certainly much richer than the average harvard graduate because even zuckerberg and gates on their own would make that a statistical necessity yeah yeah and i would not be surprised to hear that because i think it also points to another characteristic that those individuals have that is conducive with success we do have a closing tradition on this podcast which is the last guest writes a question for the next guest yeah um and this guest has written a question for you now their handwriting is not good so this is i've been staring at this for about 15 minutes trying to figure out what it says but here we go um if i asked you at the age of 16 who in the world you would of liked to be what would you have said and has your answer changed uh probably not it probably would have been someone like john cleese um i venerate comedians the comedian john keys of the monty python okay and faulty towers it probably would have been someone like that i think because i venerate comedians because they bring this extraordinary fresh i gotta use a fancy epistemology you know their way of perceiving the world is in and this is why i'm very much against politically correct um uh sort of political activists uh trying to effectively sense the comedians because what you're allowing there is for a group of people who have an incredibly narrow unsophisticated and moronic epistemology to legislate on people who have a spectacularly sophisticated and nuanced and um and complex sense of perception it's completely the wrong way around you know comedians should be able to ban political activists for being boring in a healthy world not the other way around um so yeah i i venerate comedians to a particular degree i think um so your answer would have been um yeah i think i think it would have been some kind of comedian uh i would have you know whether later on it might have been the 9 o'clock news team i didn't know who he was at the time but john lloyd who is behind a great deal of actually very successful advertising uh but also behind a great deal of very successful television comedy has to be considered one of the all-time greats and has your answer changed no not really no i still i still venerate uh those people you know i'll sit down with youtube and watch you know three hours of bill burr and four hours of dave chappelle dave chappelle by the way you know as uh in terms of delivery is we were talking about that whole business of how you speak um i mean i i just sit there in awe you know um and so no those are the people those are the people that i kind of can't help but uh venerate first of all just want to say thank you it's been a really inspiring conversation absolutely is really great it's really challenging in all the right ways but it's based on so much truth and experience that i really believe that it's one of those essential books for people that are working in this industry or just in really any industry because if you're in business the principles within this book are so applicable to so many things um that i feel like it's a really essential book so thank you for writing it thank you for being here today it's been a real honor to speak to you um and yeah continue being yourself because i think the world needs a few more people like you that think in the way you do so thank you so much keep trying thank you very much and keep up the good work it's been fantastic and an inspiration thank you quick one as you might know crafted one of the sponsors of this podcast and crafted are a jewellery brand and they make really meaningful pieces of jewellery the really wonderful thing about crafted jewelry is it's super affordable it looks amazing the pieces hold tremendous meaning and they are really well made i think i've worn this piece for almost a year it hasn't broken hasn't changed color because it's really really good quality and it costs roughly 50 quid people will be surprised when they hear that they'll probably assume that all of my jewelry is like solid gold and cost thousands and thousands of pounds but what's the point when you can achieve the exact same effect from a piece of jewelry that's high quality and costs 50 quid that's why i buy crafted [Music] oh [Music] [Music]

Channel: The Diary Of A CEO

Views: 645,410

Keywords: The Diary Of A CEO, podcast, the diary of a CEO podcast, CEO, rory sutherland, rory sutherland marketing, rory sutherland alchemy, rory sutherland life lessons from an ad man, marketing, how to be good at marketing, The King Of Advertising, how to market a, how to market a product, how to market a clothing brand, how to market a book, how to market a service business, how to market a brand, behavioural science, behavioural economics, rory sutherland 2022

Id: Hz3RWxJck68

Length: 98min 18sec (5898 seconds)

Published: Mon Aug 01 2022