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Rory Sutherland on the Magic of Original Thinking

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what really excites me actually

particularly about this industry is the

interplay between technology and psychology

psychology

because quite often we get stuck in a

mental rut

and when we dig a little bit deeper we

realize that the only reason for that

assumption that mental model that frame

of the world is that

in 1890 technology didn't allow you to

do anything else

so for example the season ticket

the rail season ticket is a product

really of 19th century ticketing

technology it doesn't make any sense anymore

anymore

what we should be investigating is a

kind of amazon prime system where you

can still make a commitment but actually

you pay as you go to some degree

and there are loads and loads of

opportunities i think in this industry

for us to do something quite exciting because

because

i always joke that the sad but

inescapable truth about not so much the

travel industry and truth but transportation

transportation

is that it's effectively a business of

engineers who are desperately trying to

pretend they're not in the entertainment industry

industry

and i remember talking to the board of

british airways once and i said if i

didn't work in advertising i think i'd

worked for an airline

and they said why and i said because

what i absolutely love about airlines is

the mixture of absolutely hardcore

logistics how do you get a replacement

fan blade uh you know delivered from

dubai to kuala lumpur by three o'clock

in the morning combined with the fact

that you're dealing with a bunch of

completely irrational passengers who

regardless of the extraordinary genius

you've put into actually putting them

into the air in a pressurized metal tube

at 35 000 feet go i don't think i'll fly

with that airline last last time i went

the nuts weren't very nice

and i said that's what really appeals to

me about working for an airline and they

said oh really they said that's what we

hate about it that's the thing that

drives us crazy

but it's a little similar this is a

brilliant observation from kamal

galhatra who's the head of ford in north

america that car making is a hundred

thousand rational decisions in search of

one emotional decision

and of course all the mental energy all

the sort of selectivity gets focused on

the rational decisions designing the

drive train etc etc

but ultimately then if you're american

you then choose a car on the number of

cup holders i think that's right isn't it

you know that's what i've always noticed

funnily enough volkswagen despite the

fact they got fined many billions of

dollars uh volkswagen only had about 0.5

market share in north america and the

reason was that german engineers refused

for years to put cup holders in the cars

and if anybody has ever worked in the

fast food industry you can't make drive

through work in germany because

something like 60 of germans will not

allow food or drinking as a car until

any circumstances because your car is a

temple and the idea of defiling it with

a bargain bucket is just unthinkable

and so a lot of things which look like

technology or look like engineering

ultimately boil down to psychology and

of course psychology

not unreasonably is deeply discomforting

to an engineer because they're used to a

world where you can quantify everything

that matters you know the thing that

distinguishes engineering or logistics

problems is there is a single right

answer and you have numbers for all the

things that count as soon as you

introduce psychology into the mix you

you enter effectively a different world

and i ended up accidentally becoming

famous on the ted talk circuit really

because what was partly a joke

which was i merely said you know if you

looked at problems psychologically

rather than technologically you might

come up with different answers and at

the time this is god 2007 i think it was 2009.

2009.

we just spent 6 billion pounds reducing

the journey time of the eurostar from

london to paris from about 3 hours 20 to

2 hours 40 something like that and it

cost six billion pounds but it involves

building completely new track between

london and folkston

and i said

to be honest why don't we stop looking

at the quantity of time and start

looking at the quality of time because

even though it took longer to get to

paris by train before they'd spent this money

money

people were still

deserting airlines in droves and

traveling by train even though it took

three hours and 20 minutes and the

reason was nothing to do with the

quality the quantity of time it was to

do with the fact that on a train you

plant your ass in your seat you have

three hours to read watch your film or

get on with some work and then you

arrive in central paris

the plane is faster but it basically has

an hour of around at the

beginning and an hour of around

at the end okay

and i said you know rather than spending

six billion pounds making it faster if

you want to compete with the airlines

why don't you just spend 50 million

pounds putting wi-fi on the trains

it was another 10 years after they'd

spent 6 billion on tracks it was another

10 years before they added wi-fi to the

trains which to me was the bigger

comparative advantage over flying

uh than actually time

and then i just added a little whimsical

joke at the end i said if you really

want to spend more money than that you

can always spend a billion pounds hire

all of the world's top male and female

supermodels get them to walk up and down

the train handing out free chateau

protruce to all the passengers

you'll have saved yourself five billion

pounds and people will ask for the

trains to be slowed down

if you think about it make a journey

enjoyable enough and nobody's that

bothered about how long it lasts nobody

boasts about how fast their cruise ships

are do they okay

okay

and actually to a great extent the

perception of time as measured by

engineers is measured in seconds

in humans it's kind of measured in pain

or boredom or irritation it's not

measured in seconds you can tell that

from the english language we have

phrases like time flies while you're

having fun or it was the longest 10

minutes of my life

okay and our experience of time is

fundamentally different but the reason

this bothered me a bit is i said if we

only try and optimize travel and

transportation using objective numerical

criteria s i derived units like distance

and speed and capacity

we'll miss out on a lot of things this

you may some of you may recognize if

your brits this is the heathrow pod

parking system of driverless autonomous

vehicles which run on kind of virtual

tracks and if you ever go to business

parking in heathrow it's about two miles

it's about a mile actually from terminal five

five

to be honest if you're ever stuck

landside uh in terminal five for four

hours between planes just amuse yourself

on these okay

now i realize in i'm in dubai where they

probably had them in 1978. okay

the extraordinary thing about these is

you the the price for parking at the pod

parking which is about a mile from the

airport often exceeds the price you have

to pay for parking in the short stay car

park now no one will actually admit this

but it's because they want to ride on

the pod i have colleagues business

colleagues who are serious people in

their 60s otherwise highly intelligent

adult people making you know mold

breaking worldwide decisions and

occasionally they turn up for the pod

parking and they're told i'm terribly

sorry the pod parkings are actually full

today so we've upgraded you for free to

short stay parking which is right next

to the airport

that's basically you know you know

traditionally in a normal world you'd

pay sort of 20 pounds more per day for that

that

and they admit to me secretly they say i

always go away go oh i was looking

forward to riding on the pod okay now

the problem with that is you probably

can't justify that as a mode of

transport using conventional metrics

because a bus would be just as effective

a bus might be quicker

but a bus doesn't feel the same

but the problem is we don't have

numerical metrics well maybe we do mr

zach will possibly show us

this afternoon but we don't yet have

adequate numerical metrics for how

people feel

that match the ones that we use to

measure the physical world now that

wouldn't matter if people perceive the

world objectively they really really don't

don't

and so the trick is actually ask more

better questions

okay we need to explore more david

ogilvy never actually said this but it's

often attributed to him which is the

trouble with market research is that

people don't

think what they feel they don't say what

they think and they don't do what they say

say

understanding what people feel is

difficult we are starting to be able to

measure it but until we can

do not rely on people to tell you what

they want because they don't completely

know because the parts of the brain that

do the feeling aren't really connected

to the parts that do the talking

very large amount of uh effectively of

psychology assumes an awful lot of

business activity assumes that we have

kind of mental access to our unconscious

motivations and desires when in truth

they're what's known as opaque to introspection

introspection

you can't find it out

and the other thing we have to do more

is simply experiment

don't experiment with everything by the

way often when creative people come up

they go we need to experiment more we

need to test we need to throw away

established wisdom no no no you don't

need to do that because established

wisdom is mostly established for a

pretty good reason

but you've got to have a ring fenced

area of 10 to 20

where you're allowed to fail

now if you don't believe me have a look

at bees okay they've been around for 20

million years and interestingly much the

astonishment of bees experts um they

noticed that whereas bees have evolved

this extraordinary system called the

waggle dance where they can communicate

to other bees a good direction and

distance to set out to find a reliable

source of pollen and nectar

what horrified bee scientists is that it

varies but about 20 percent of bees

ignore the waggle dance they go off at

random they said this doesn't make any

sense because in the short term if you

want to maximize the efficiency of

pollen collection

you'd want a hundred percent you know um

obedience to the wiggle dance why

haven't b compliance officers evolved

you know to demand 100 percent adherence

to the waggle dance to bring our nectar

collection uh in line with our

forecast for quarter three you know this

doesn't make sense and then they modeled

it as a complex system and they realized

it's what's known in ai by the way is

the explore exploits trade-off it exists

in animal foraging and it also exists in

artificial intelligence and all dynamic

systems need a trade-off between

exploiting what you already know in

other words that you know load of

flowers over the hill which we've been

successfully getting pollen from for the

last two weeks but you've got to devote

a certain amount of money or investment

to the things you don't yet know either

because the future is different from the

past or because you simply haven't

discovered it yet

and so bees interestingly have this

indulgent class of dilettante bees who

are allowed to make mistakes now i

imagine the obedient bees hate the

random bees don't they they go look at

them most of their journeys complete

waste of time bloody dilutantes just

buzzing around the place at random

ignoring the waggle dance if you don't

have a certain degree of this variation

built in

you become over optimized on the past

and the hive starves to death

the other thing that happens by the way

if you're over optimized on what you

already know you never get lucky either

you you don't have a system that allows

you to exploit lucky discoveries or even

lucky mistakes

and i think that's an important thing

we've got to recognize here which is

that we're trying and this is a great

book by the way by roger l martin

anybody know him he's canadian a

wonderful business writer it's he isn't

out yet but he gave me his an advanced

copy a new way to think he argues that

we're trying too hard to innovate simply

based on what we already know rather

than by exploring what we don't yet know

and he thinks we need to have what we're

effectively trying to do is to use data

to make every single decision an act of

logical induction or deduction

and his argument is you simply can't do

that the really significant innovations

never come about that way they come

about through a leap of the imagination or

not from the question what is but the

question what if

and if you look back okay now i'm old

enough one great thing about being 56 is

you can remember a time before all these

things existed okay

and one of the interesting things is if

you imagine yourself back to a world

before dyson the world before red bull a

world before uber okay

none of those things really well before

nespresso none of those things really

made sense in advance before red bull

existed no one was walking around going

what i don't get is why does nobody make

an overpriced drink in a tiny can that

tastes really disgusting okay nobody was

asking for that before starbucks existed

no one was going what i really want to

do is spend nearly five dollars on a cup

of coffee and then wander around

carrying it in the streets okay nobody's

asking that if james dyson had come to

me uh in the 1990s and said look i think

there's a great market for an 800 vacuum

cleaner i would have said james mate

look let's look at the market right

peaks out at about 400

that's a mila there's no evidence in the

marketplace whatsoever that anybody will

pay 800 for a vacuum cleaner it's a

distressed purchase you only buy a

vacuum cleaner when your parents force

you to move out you move out of rented

accommodation or your old vacuum cleaner

breaks right i've never heard a couple

go hey i'm bored this weekend let's go

vacuum cleaner shopping right

for the lols okay

and i would have said besides anybody

who could afford an 800 vacuum cleaner

probably pays someone else to clean

their house so they're really not that

bothered about it now all of those are

perfectly good logical objections okay

and i would have used them i would have

felt smug and gone well glad jim's out

of the building and if jim had come back

and said but wait you haven't heard

about my 400 hair dryer i would have had

him escorted out of the building as an

obvious lunatic okay nespresso is a most

of these things are an act of

psychological arbitrage

they're the discovery by somebody of

psychological value in a place where

nobody else realized it existed

you know if you look at nespresso okay

piece of genius right

if you had to buy an espresso coffee in

a jar like nest cafe or maxwell house or folgers

folgers

for the equivalent amount of

caffeination it would cost about 30 for

a jar or 35 and you look at it you go

that's insane there's no way i'm paying

that right it doesn't come in a jar

comes in a pod okay now unless you work

in procurement you don't actually know

what a single cup of maxwell house costs okay

okay

so when you put that 40 cent an espresso

pod into your machine your frame of

reference isn't isn't um ness cafe it

isn't maxwell house it's starbucks

and you think well you know 40 40 cents

that would cost me 2.80 at starbucks

this machine is practically making me

money rolls royce and maserati stopped

exhibiting their cars at car shows

because they looked really expensive you

know four hundred thousand dollar car at

a car show looks like a monstrous

extravagance they went and started

showing them at plane and yacht shows

instead because if you've been looking

at learjets afternoon okay a four

hundred thousand dollar car is like an

impulse buy it's like putting the candy

next to the till i didn't buy a plane

today so i'll have a couple of those right

right

a huge number of those businesses zoom

made no sense at all you're up against

facebook you're up against microsoft

you're up against apple you're up

against all of the big tech companies it

made no sense zoom one i think because

it has superior psychology uber as i'll

explain later had superior psychology

and this is how you can play the

psychology game with time it's not the

quantity of time it's the quality

anybody here operate a call center okay

one of the great mysteries of call

centers is that live chat online takes

about three times longer than the phone

call and yet for some reason people love

it the customer satisfaction levels are

through the roof

not because it's shorter because it

feels different okay um this is

brilliant because the the time you spend

waiting for your meal to be prepared is

more enjoyable than the time you spend

waiting to tell people what you want

okay if you go to a fast food outlet the

time when you're just standing there

going i want to order a bargain bucket

and you're having to cue to wait for

that is purely negative once you've said

i want a bargain bucket you reframe the

remaining time as time devoted to the

quality preparation of my bargain bucket

and so time spent while your food's

being prepared is inordinately more

enjoyable than time spent before you've

placed your order okay

okay

and as a result what these screens do

effectively is they don't change the

duration of the weight they change the

experience of the weight uber okay

okay

now a logical person would have said we

need to i don't like waiting for a taxi

that's true people don't like waiting

for taxes new two things you could do a

predictive algorithm which means that

there are taxis hovering around

anticipating demand and reduced waiting

time maybe uber do that a bit the real

feat of genius was the map

because what the human brain hates in

that situation isn't duration it's uncertainty

uncertainty

the guy had the idea for the map

watching goldfinger by the way i don't

know if you remember goldfinger but bond

has to follow alright goldfinger through

the swiss alps

while remaining unobtrusive and

obviously if you want to follow someone

unobtrusively you choose an astronaut in

db5 don't you because

it blends in completely with your

surroundings but nonetheless he he

attaches a tracker to eric goldfinger's

car and he can follow him at a distance

and see on a scrolling map on the

dashboard where goldfinger's car is and

one of the founders of uber said that's

what should happen when a car arrives

because waiting for a taxi under

conditions of uncertainty is agony for

the human brain we hate uncertainty

with the map the duration of the weight

may be the same but you go oh look he's

stuck at those traffic lights i'll have

another pint okay completely different

nature of time there's also an element

of status with uber i don't know if

anybody does this is it just me

where you time your departure from the

building to coincide exactly with the

car drawing up because it makes you feel

like kaiser soze at the end of the usual

suspects right i mean if you think about

it walking out of a building as a car

draws up makes you feel like louis xiv

standing around in the rain going i

wonder if that's my car over there low

status behavior you know you don't get

many rappers doing that generally right

and so understanding these things is

really really vital dallas fort worth

bit of genius there's a woman there

called courtney moore who's the head of

behavioral science at dfw

fantastic airport i think most people

agree one of the things they're looking

at is that the whole experience of

waiting to board a plane is messed up by

the eight people who insist in forming a

queue too early right so instead of just

sitting there having a cup of coffee and

reading a book once the queue forms you

feel you have to join the queue for fear

of missing out which means that the last

25 minutes aren't spent in comfort and

convenience but they're spent standing

there like you know like a fool to

prevent anybody getting in front of you

their plan in dfw is to make it really

ambiguous where the plane actually boards

boards

so no one can form a cue in advance so

people will actually spend the time

waiting doing something enjoyable which

i guess is going to chick-fil-a isn't it

in dallas

right um but they'll spend their time

doing something enjoyable rather than

just standing mindlessly in a queue

again it's not changing the duration

it's changing the quality of time so i

know i know this guy founded one of your

competitors but you need a 20 bob if you

look at bob crandall the founder of the the

the

the american airlines ceo

he's still alive i think isn't he but

he's one of my heroes now to be honest

some of his ideas were absolutely nuts

and the idea of selling unlimited

lifetime first class travel on american

airlines for a quarter of a million

dollars which he did try they're a bit

short of cash

and they spent basically they spent the

next eight years

trying to identify the people who'd

bought these tickets and find a legal

loophole to get rid of them because they

were turning up basically american

american airlines first class lounges

having a five-course meal and then going

back to chicago again

they were you know they were taking

their friends to london for lunch and

back again okay mad idea but he didn't

invent the loyalty program he invented

saber he invented about five absolutely

killer ideas

and again they kind of didn't really

arise they didn't really arise out of

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

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

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

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Rory Sutherland on the Magic of Original Thinking