deductive logic they were a feat of the imagination
imagination
very quick thing you've got paul zach
this afternoon so i don't need to go
into huge depth on this two huge forces
in human behavior habits basically and
social copying evolutionarily
evolutionarily
we've defaulted when in doubt do what
i've done before and when that doesn't
work do what everybody else does because
it's not necessarily perfect but it's a
non-catastrophic heuristic for decision
making if you do what everybody else
does it might not be perfect but it's
unlikely to be a disaster you know if
everyone if i've eaten the purple
berries before and i've never got ill
it's safe to eat the purple berries
again if i don't know which berry to eat
and everybody around seems to be eating
the purple berries but ignoring the red
ones i should probably do what they're
doing too perfectly logical evolutionary adaptation
adaptation um
um
social norms are the other big thing and
that by the way has changed a lot
because video conferencing has been
normalized that isn't going to go away okay
okay
in 2019 when i had a two-hour meeting in
frankfurt the coca-cola answer was to
fly to frankfurt for the day and video
conferencing was dr pepper you know it
was an outlier you had to explain why
you were having it you know now i
apologize for any texans in the room
because i understand that in texas and
new mexico dr pepper is basically the
default drink so this doesn't apply to
any texans but you see what i mean it
was like you know now now to some extent
if you've got a two-hour meeting in
frankfurt now video conferencing is
going to be coke and flying over is
going to be dr pepper in terms of the
social normalization of the behavior
they've kind of reversed we see some
changes by the way in business travel uh
ey in the uk has vetoed flying for any
trip of one night or less
google interestingly has instigated two
weeks of work from anywhere so with your
line manager's permission in addition to
your two weeks of meager vacation which
americans are given um you also with
line manager's permission can go
somewhere else like stay with your
parents or go to hawaii and provided you
do your work it doesn't matter that
you're somewhere else
so there will be some lasting changes
not everything will revert
but as i said and as this book says very well
well
um actually what we tend to do is we get
stuck with a mental model and it's the
vladimir putin approach to life you get
stuck with a mental model and when it
doesn't work you basically dig in deeper okay
okay
and quite often what what we should be
doing is instead of asking the same
question and continually trying to come
up with answers to the same question we
need to ask a new question from time to time
time
now this book actually um roger martin's
book he was the dean of the rotman
business school in toronto makes exactly
this point um
um
so this is the standard question should
your employees be able to work flexibly
it's a wrong question
this is a much more interesting question
do you want your customers to be able to
work flexibly
because i would argue that
if you look at most of our staff in
london after we've paid them and after
they paid tax 50 percent of their
after-tax income disappears in
transportation commuting and
accommodation costs
if you give you employ if if america as
a whole had a greater degree of autonomy
around working patterns it would be a
huge injection of cash into the
discretionary economy
which benefits you guys
if you really want to get serious if i
were in the travel industry in the
united states i'd spend 90 of my
lobbying budget um basically lobbying
for four weeks of guaranteed paid vacation
vacation
i don't understand why you don't do that okay
okay
true truly okay bernie sanders was the
only person they thought he was mad i
don't think it's mad i think america
would be wealthier because if you have
the reason only you know forty percent
of americans have a passport isn't
because they're uninterested in
traveling is they haven't got time to go anywhere
anywhere
do you actually campaign for four weeks
i know it sounds communist doesn't it to
the americans
seriously in europe i've never met
somebody so right wing who thought we
should have less vocation genuinely okay
it's just normalized four weeks
perfectly standard you wouldn't take
less you wouldn't work for anybody who
offered you less
given that money spent in leisure time
is actually more labor-intensive than
money spent on goods it would probably
benefit the american economy if people
had more time to spend it you think i'm
mad okay okay this is the well-known
commie who really came up with the idea
henry ford who very largely created the
two-day weekend for his workers
not entirely out of his own beneficence
but because he felt that if that spread
if the two-day weekend spread across
american workers
what happens when you've got a two-day
weekend it's worth buying a car okay
okay
so henry ford asked a different question
which was not how can i get my workers
to work as hard as possible he asked a
question which is is it possible to
create more leisure in wider society so
that it's actually worth owning a car in
the first place
and i think we often we need to ask more
interesting questions because
because
and we also need to experiment more and
i think this is why i think they're just
more good ideas that we can post
rationalize now good ideas we can pre-rationalize
pre-rationalize
i'll give you a couple of creative
examples one of them travel related okay
these are things which are obvious in
retrospect i spent years traveling
around the world with about 15 plug adapters
adapters
okay and literally years and years i had
the one for south africa the one for
australia the one for the united states
and i had several of each because i
needed to charge two mobile phones and a
laptop and everything else
it took me 10 years before i realized if
you just have one plug adapter and you
buy one of those three gang
extension cables
you're catered for absolutely everywhere
one universal adapter one of those and
you don't have to unplug the table lamp
of the television in order to charge
your laptop
it took me years now if i suggest if
anybody's getting their kitchen done
here's a suggestion get two dishwashers
and you're looking at me again this
guy's nuts he's in the pay of bosch or
indesit or something right generally is
everybody thinking why the hell would
you get two dishwashers
if you have two dishwashers you don't
have to unload the dishwasher
you have a clean one which you use as a cupboard
cupboard
and then you use the stuff and you put
it in the other one and that's the dirty
dishwasher right
and then when the dirty dishwasher is
full you turn it on and that's your
clean dishwasher
so you never have to unload the
dishwasher you just move things from one
side to the other
okay but it's only obvious in retrospect
and when you first said everybody
thought i was mad right why on earth
would you do that
it's only in retrospect that so many
things become obvious and i think the
world's just full of these things
and i think quite often you know the
opposite of a good idea is another good
idea that don't engineers tend to think
there's a single optimal answer and
everything that isn't that answer is
wrong because in engineering that's true
in mathematics it's true
psychology in many cases the opposite of
a good idea is another good idea they're
two great ways to check into a hotel
fully automated or really high touch
high service it's the middle that's
boring in many cases it's the average of
two things that isn't the solution i
always thought the open plan office was
a mistake because it sold for the
average didn't it
the open plan office is neither sociable
nor is it solitude
so you can't get your head down and
right and you can't really have a proper chat
chat
the future of the office i think it's
half library half pub to be absolutely
honest okay
um but what often happens is people go
in between the two is the right place to
be no no when you've got a contradiction
either embrace both extremes or resolve
it creatively with a third idea which
solves the problem overall the average
is generally not as good as it looks it
always seems logical but it really isn't
that great
now in engineering one plus one equals
two and three times one is the same as
one times three and psychology these
rules don't apply really important to understand
understand
we need a kind of psycho maths if you
like to make things work let me give you
an example okay um nearly all travel
planning transport planning including
high speed 2 in the uk
assume that
10 people
saving 40 minutes
10 um let's say
let's make it better okay 100 people
saving 40 minutes 10 times a year
is the same as 10 people saving 40
minutes 100 times a year okay because
the aggregate time saving is the same
if you think about it psychologically
they're totally different right
right
cutting time for a journey that the same
people make very frequently is a
life-changing event they can now live
somewhere they couldn't live before a
place becomes commutable that wasn't
commutable before if you spend money for
example on high speed 2 between london
and manchester what you're doing is
you're giving
maybe a few million people a mild convenience
convenience
five times a year
that's not the same as giving a million
people a massive change in potential
life 100 times a year
and yet most most models assume commutability
commutability
one of the reasons the concord didn't
really work well if you'd had
psychologists they would have closed
down the concord one because it doesn't
work flying west to east at all
because the best way to fly west to east
is when you're asleep okay
it's not taking up a whole day in the air
air
where weirdly you'd have to leave new
york at nine o'clock in the morning
which makes no sense to anybody okay but
the second problem of the concord is
nobody flew between london and new york
frequently enough for it to really
change their life
you know
even the man who flew on the concord
most he was on the first flight he was
on the last ever flight he was the
heaviest user of concord by a factor of
about four and i worked out that it
saved him about five minutes a day for
every day of his working life so rather
than having a supersonic airliner he
could have just moved a bit closer to
the office to be honest okay
understanding that the other thing is
that one plus one doesn't always equal
two in psychology really really small
things can have huge effects the uber
map okay costs almost nothing but it has
absolutely monumental effects one of the
best things we ever did for british
airways was simply to change the layout
of their pricing
nobody as a consumer can buy premium
ticketing okay unless you can see what
the economy price is
there are a few really really important
things because if you look at if you
look at every single airline website
it's designed for the business traveler
okay it says
where are you going when are you going
and what class of travel do you want now
for a business traveler that's fine
because they know when they have to go
and they know where they're going
because my boss very rarely says to me
i'd like you to go somewhere sunny
sometime vaguely in late august right i
have a place to go and i have a time i
have to get there okay and the class of
travel is determined by my employer so
those are all questions i can answer
to a consumer all of those questions are
it depends
search for a consumer is an iterative
process whether i go premium economy or
business or economy depends on what the
price of the other available tickets is
ah okay
you can't decide to go premium economy
until you know what the economy price was
secondly whether you go in july or
august depends on the ticket price and
where you go might depend on the ticket
price so i don't think we've even yet
designed a really really good interface
for consumer travel selection
read eric johnson's book on the recent
book on choice he's at columbia i think
for more about this
what also choice does is it feels
completely rational but we never it's
dating sites are rather terrifying like
this okay because we never see what we
just missed
you know
as he made the point as someone who is
five foot seven who only looked at
partners on tinder who were five inches
taller than them would automatically
eradicate george clooney from the search
uh from their from their search
but we need somehow a much much better
way of looking for travel which
acknowledges the messiness of human
decision making as opposed to the
neatness of business decision making
and one of things i'd love to talk about
if anybody's interested and if
travelport has the technology to make
this possible you know i mentioned that
three times one isn't the same as one
times three okay
all yield management and revenue
management seems to use the price
mechanism to encourage people to change
their behavior okay
okay
it always says save 30 pounds
now let's think about this a bit if
you're a hotel okay any hoteliers here
there must be a few okay a family of
five when they stay at a hotel are
probably paying for three rooms out of
one income
a dual income couple with no kids are
paying for one room out of two incomes
that means it's actually more expensive
for a family of five typically to stay
at a travel lodge than it is for a dual
income couple to stay at a five-star hotel
hotel
why are all the offers always about the
price of the room why isn't it second
room half price why aren't airline
offers why is it always we will drop the
price of every single seat instead of
kids go half price
discount to the people who are most
price sensitive price discrimination is
great don't always use the individual
ticket price as a way of changing
passenger behavior
use your loyalty programs
about a fifth of the people who belong
to an airline loyalty program would
crawl over broken glass to get an extra
five tier points so why are you
discounting the price of a ticket to get
them to fly at twelve o'clock rather
than nine in the morning when you could
be using your loyalty program or you
could be using information
about twenty percent of people would be
motivated to go on a later flight if all
you put on the website was this is the
least crowded flight of the day
because what's the best airline in the
world in many ways it's the one that
isn't crowded okay
a flight that's 70 percent full will
almost always be nicer than the flight
that's 100 fault
especially if you're in the seat with a
broken tv okay because you can go and
sit somewhere else
and i think economics and logic and
numbers has taken over yield and revenue
management to far too great an extent
there are loads and loads of ways you
can change people's behavior before you
have to resort to bribing them
and i think yield and revenue management
at the moment simply use the price
mechanism as if there's no other
motivation i think it's really expensive
way of doing it don't tell me it does
work but my god there must be cheaper
ways of doing this
so i end with a little recap you've got
paul in the afternoon so you don't need
much of this here are five things we
don't currently have
metrics for
which humans really really care about
status certainty autonomy relatedness
and fairness
all five of them interestingly crop up
in the travel industry
or you know certainty we're happier
waiting for a train if there's a display
saying next train 10 minutes we'd rather
wait for a train for 10 minutes if we
knew it was coming in 10 minutes then
wait five minutes for a train in a state
event not knowing
okay relatedness a large part of loyalty
programs is you like to know that the
airline knows that you fly with them a
lot because you trust the airline more
if you know that they value you
disproportionately as a passenger okay
fairness there's a whole lot of work to
be done i think on pricing and ticket
refunds and rebates and travel which
could better understand fairness
autonomy we love the freedom effectively to
to
you know make last-minute decisions not
to get trapped in things and status you
know all about but those are five things
which deep in the human brain they're
heavily heavily embedded they don't
generally come out in market research we
don't have numbers for them and
economists don't understand these things
at all
they don't feature in economic models
and yet they're nearly always there so
it's a wonderful checklist to use and
i'll finally end on this okay
marketing and innovation are basically
the same thing
now let me explain okay there are two
ways you can create value in the
marketplace you can either find out what
people want and work out a really clever
way to make it or you can work out what
you can make and find a really clever
way to make people want it
and the money you make is
indistinguishable regardless of the
direction of travel of that process so
it isn't necessary to introduce a new
product to perform r d
one other way of doing r d is taking an
existing product and presenting it or
pricing it or positioning it or framing
it in a completely different way
psychological arbitrage is where quite a
lot of money is made today
there are psychological solutions out
there that could save a fortune if you
want people to get an electric car we
currently subsidize electric cars very
heavily we also have a subsidy if you
install a home charging point
but in order to install the home
charging point you've got to prove
you've got an electric car which is kind
of the wrong way around and i said to
the government no just subsidize these i
said if you can get people to pay a
hundred pounds to install one of these
on the wall okay don't bother about
subsidizing the electric car they're
going to get an electric car anyway
because if you put that on your wall
you'd feel a bit of a going and
getting a diesel wouldn't you
right just get the order right don't
worry about the incentives get the order right
right
so there are tons and tons of
psychological solutions out there if you
want to hold digest to them i've
co-written this book transport for
humans uh with my former colleague pete
dyson who now works for the department
of transport in the uk as the head of
behavioral science that's my old book
but i'll also be around right till the
end of the day i hope so any questions
please come and ask me i'd love it thank
you very much [Applause]
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