Rory Sutherland on Leadership, Courage & Unconventional Thinking

0:00Rory, would you ever see yourself as a leader? I would like to have influence. I don't really like telling people what to do, I like telling people where to look. Rory Sutherland is one of the sharpest minds in behavioural science and advertising, who's spent decades at Ogilvy shaping how brands think and decide. So does your brain ever stop? I've just monetised ADHD, to be absolutely honest. We go beyond the theories into how he really thinks and sees the world in a way you've probably never heard before. I basically have two modes, which is if I'm in a non-serious car crash, I'm weirdly calm.

0:33But if I'm in a ****, I go absolutely bananas. I learned a chunk of my creativity from the mathematician. They realized that reframing the question isn't cheating. Well, I work with a lot of leadership teams, and you can just see everyone, even within a team, have become a silo. You should only measure productivity really at the level of a team, not at the level of an individual. If I followed you around for a week, what would surprise me to know about what your week is like? Will I get cancelled if I say... Rory, welcome to the show. Thank you so much for giving us your time. I'd like to dive straight in with a big question.

1:11Where have you in your life had the courage to change? I'll be honestly honest, I'm not a very good case study in this. I worked for Ogilvy since 1988. I joined as a graduate trainee and I've been there ever since. Now, in my defense, I've done about five or six other jobs. And there's a reason I've stuck around there for so long, one of which was cultural fit, the very, very agreeable place to work. The other reason is I'm just pretty naturally curious. And an advertising agency is, you know, consumer capitalism as a whole, but as an advertising agency is a bit like the Galapagos Islands for observing human behavior.

1:49You know, all the anomalies are there, all the weird patterns are there. And I'm, broadly speaking, my approach to everything, as far as it's possible, is everybody's trying to be like Newton and you need to try to be like Darwin. Okay. Everybody's trying to find a theory of everything. They're trying to make the world look like physics. The only correct response to a complex world is observation, in many cases, observation of anomalies and peculiarities. And one of the weird elements of bravery, which sounds very strange, and it's not very brave, it's not brave like betting your house on something, is when we founded the behavioral science practice, one of our little mantras was dare to be trivial.

2:46Now, it's very uncomfortable for people who have a kind of standard Harvard Business School mindset to acknowledge the fact that success or failure isn't always down to the big things like supply chain management or whatever. It can be down to a trivial psychological effect which for some reason you just effectively hit paydirt. You know, you get lucky. Now, I always joke slightly unkindly, I think, because it's a magnificent company, but whenever I meet Greg Jackson at Octopus Energy, I slightly tease him by saying, if you'd gone with the original name, Green Tech Energy, and you hadn't had a pink octopus as your logo, you'd still have 50 ,000 customers.

3:32and that, you know, fundamentally, the consumer brain doesn't have a sense of proportion. It doesn't make kind of absolutely evaluative comparative decisions between things. It uses all manner of arbitrary heuristics. One of the most valuable things you can have in business is just being gratuitously noticeable by doing things which to the financial mindset seem absurdly trivial. But we've got an I can give you an example of an advertisement where a single word created a multimillion dollar company, where adding a single word to the headline, which didn't seem all that material in the scheme of things, multiply the response rate about 7%.

4:14Sorry, by seven times or something. Not 7%. Multiply the response rate by about seven times. and the headline ran successfully for about 30 years. Amazing. Okay. Now, the point I'm making is I learned this in direct marketing where we realized because we did randomized control trials, basically tests, that sometimes something absurdly tangential, seemingly irrelevant to the economic mindset, was absolutely decisive in what people would do. Okay. And, you know, you see that time and time again, where my argument was always that Uber, you could write the whole economic story of Uber and, you know, the fact that it's a double facing business with drivers and customers and, you know, efficiencies and so forth.

5:01The decisive thing I always maintain was the map, which is you could see where your car was when it was arriving, which was a much less stressful experience than if you'd called for a minicab previously. and a very large part of consumer adoption of that technology was down to psychological reassurance, not, you know, price or utility or any of those standard measures. And so that's one area where one of the most important forms of bravery, I would argue, is the willingness to make yourself appear ridiculous in serious or scientific circles. And how is that in terms of for you? How have you then applied?

5:39Have you applied that to yourself? Well, I'll give you an example. I was in a meeting with an enormous multinational yesterday. And I said, they wanted a name for something. I can't give away the details because it's obviously secret. And I said, I really hate to say this. I said, I can only say this because I'm 60 years old. but don't completely underestimate the importance of completely gratuitous bullshit that you just put something on there like you know you invent a name and you just brandish it everywhere and people will assume it's important now no if okay if i'm being brutal about it no one knows what sourdough bread is i mean okay professional bakers do and real bread enthusiasts do but sourdough has just become as synonymous with posh bread okay i think it's ludicrously over um actually i think it's it's it's proliferated too much to be absolutely honest nobody knew what organic meant did they no okay but somehow a word just takes on a meaning and significance which is almost completely bereft of its real meaning obviously legally you have to maintain that standard and probably people took it to mean produced to a higher standard or artisan What does artisan mean for a vaccine?

6:55It sounds good, though. It sounds so good. You know, the reason nobody will say this normally, and the reason I have to do this is because nobody in a business setting will want to say this because they want to pretend that the world is serious. And I hate to break into people, but genuinely, large amounts of economic activity can only be described as ridiculous. Yep. um and um so i'll give you i'll tell you people said oh they want to know more about rory and where he came from my dad was an entrepreneur property developer very interesting business property development because it's a creative business it's not looking at what is it's looking looking at what could be yes okay so it's a fundamentally an imaginative creative business the other weird thing which i didn't realize until more recently was although i was a classicist at university and i preferred doing humanities and art subjects most not most but probably half my friends were mathematicians um by the way there's a funny reason for that in a way which is that among science students mathematicians are the only ones with much free time because actually you can either do it or you can't.

8:14In other subjects, putting in the hours makes the difference between a 2, 1 and a 1. To be absolutely honest among mathematicians, you can either do it in three hours a day or you can't do it at all. And mathematicians, I was totally in favour of Rishi Sunak's proposal to continue teaching maths in the sixth form regardless of what subject people did. I think you should also teach philosophy, by the way. I think you should also teach thinking skills, decision-making skills. But it suddenly occurred to me that maths is actually valuable for a reason that's nothing to do with its numerical components.

8:56There's actually a book called, I think it's called As Mathematica or something by a French mathematician, which has just come out. What mathematicians do is to solve a problem, you redefine it or you reframe it or you rethink it or you change your frame of comparison. There are whole examples in geometry where the problem is completely insoluble and then you draw two parallel lines on top and the solution is completely obvious. And I think maths is more valuable for its encouragement of problem solving skills than it is for its teaching of numerical skills, which, you know, to some extent, you know, computation, you know, computers have taken over a large part of this.

9:36But the problem solving skills you develop, I think, are really priceless. I'll give you an example of this because we were talking earlier about the cost of living crisis. and the only point i made about the cost of living crisis is nobody has any clue what's expensive or cheap compared to anything else we tend to get very upset about price increases in things we have no choice but to buy yeah and therefore we attach no value to things we have to buy where we might attach immense value to something like a luxury watch or an item of jewellery or a candle you know as a scented candle i've done that even though i mean if i'm really brutal okay nearly all presents that women buy for other women are utterly and irredeemably useless flowers scented candles but they're beautiful i'm not disputing the emotional value i'm saying i'm just saying they don't you know they're not making much they're not used It's massively useful.

10:38And, you know, so there's this whole female-to-female Oliver Bonas gift economy, which doesn't need to be there at all, if I'm being absolutely brutal. But doesn't it drive connection, though, isn't it? No, no, no. It has anthropological value. It's all anthropological. Maybe it has to be useless to have meaning. I don't know. I mean, this is one of my questions. It's an interesting question. If you bought a female friend, like, a leather man or a set of Allen keys, they'd be completely wrong-footed, wouldn't they they probably think it wasn't very thoughtful or they think it was a veiled insult i think yeah yeah why why you look at it baffled yeah actually my friend nicholas gruen who's an economist makes this point that more and more of the economy we're not talking about people on the breadline people you know significantly below median income but more and more of the economy is directed towards effectively performative expenditure okay uh you know status goods um or status signaling or signaling something or other.

11:37In other words, it's expenditure as a form of communication, not expenditure as an answer to need. And economists need to have an answer to this because my brother being a mathematician, this is bringing me back to math. So he was at the same college as me at university. It was about 180 miles from home. And at the beginning of term, he was two years above me. I think at the time he was doing a PhD or something fancy Dan and we loaded all our luggage into the car and we drove 180 miles with a load of heavy trunks and things and then went into the college car park and started unloading and my brother said to me the petrol for that journey now bear in mind it's 180 miles going through the Cotswolds uphills downhills you know round corners the petrol for that journey bear in mind this is like 1987 cost something like£14.50.

12:30What's funny about that is you'd pay someone£14.50 just to carry all these trunks and luggage up to your room. So you have an 180-mile journey by car where the energy cost in petrol is£14.50, transporting that same luggage up three flights of stairs to a second-floor room. There were no lifts. You would have paid actually the same amount of money for human labour, which was covering a distance of 250 yards, not 180 miles. And so when we're burbling on, now I totally accept the fact that high energy costs have knock-on cost for food, for almost everything else. But it's absolutely clear that economics makes the assumption that every form of expenditure is optimised towards utility.

13:19but actually when we get pissy about some one form of expenditure and are perfectly happy about another form of expenditure we're not really comparing anything to do with utility at all all i'm saying is what fascinates me is we economics treats human behavior as though we have this extraordinarily well calibrated utilometer which goes that was worth it that wasn't worth it. Yeah. We don't at all. In every single case, our conception of value is basically based on some arbitrary anchoring point. Just a quick reminder, if you haven't already, to please hit the like button and subscribe to the channel.

14:01It's a small action that makes a big difference. You'll be the first to know when new episodes drop and your support helps us create meaningful content for leaders like you. I'd also love to hear from you so if you have any thoughts, questions or ideas pop them into the comments and if you're curious about how my leadership coaching or training could support you or your team just drop me a DM and we'll set up a call. Thanks so much, now let's get back to the episode. So can I bring you back to leadership? Yeah of course. Because if I bring this back into if I say leadership as an industry. I don't really like telling people what to do.

14:37I like telling people where to look. So would you ever see yourself as a leader? Well, I mean, I would like to have influence in that I think one of the most interesting things you can do is find convenient. It's very similar to teaching, actually, which is what a good teacher does is they find ingenious representations of things which make things suddenly comprehensible or salient or memorable. Yeah. And it's, you know, great teachers are obviously great leaders in that respect. I mean, the best teachers I had at school, you know, have an absolutely lasting influence. And incidentally, the power to make something interesting is really, really important.

15:22I mean, the number of people who would put their, you know, a decisive moment in their life down to it's usually in fairness it's usually a parent or a significant individual or family member or friend i was lucky hugely privileged uh growing up in a household where my dad was self-employed yeah and you know one of the things i argue about the hospitality industry if you can work in the hospitality industry it's like a free mba you know if you can why on earth we deride jobs in hospitality when actually what you learn there is more valuable than what you'll learn, you know, in a management consulting firm or something of that kind.

16:03Because you see a whole business in the round. Yeah, I was a waitress for like eight years from the age of 12 to on before I did anything. And from then on, you understand. You understand people, you understand business. You understand marketing, you understand supply chains, you understand finance. You also understand the fact that, you know, you get people in on the food, you make money on the wine. and da-da-da-da-da. You know, you understand the business as an ecosystem. I hate to use the word ecosystem because it's so overused. But you get to understand the business as a system, not the business as a formula.

16:35I mean, actually, one of the advantages, I always wonder if America enjoys a completely unfair business advantage because so many people work their way through college doing some sort of hospitality work. Yeah. Because my dad was self-employed. And I think if you grew up in a shop, I think it's similar, by the way. I think, you know, if your parents run a shop, it fundamentally teaches you something which you won't learn if your dad's a civil servant. One of them is, of course, a certain kind of paranoia, which is you don't have money coming in reliably every month. So that everything you spend comes with an opportunity cost in a way.

17:20and I used to think to be honest I used to think my dad was a bit stingy and then I realized that every pound he spent on something inessential was something you couldn't invest for the future I mean one one of the most interesting thought experiments I'd love to do is if you gave we were discussing this with a few politicians actually if you said to young people your student loan is yours to spend on anything you like including but not confined to higher education you can start a business you can buy a van you know you can go and travel the world if you want to uh what i would recommend though is that every or what would what i would mandate is that everybody holds back a lump sum of four or five thousand pounds in reserve uh just to cope with as a shock absorber for the unexpected yeah in other words if you can absorb shocks without getting into additional credit card debt it makes an enormous difference to the rest of your life um but if um but but that one of the other most interesting things i think you could do as an experiment is that if you actually gave every 21 year old a business in their own name and said what you earn for yourself in addition to whatever job you do goes into this business account where you don't have to pay tax on it until you pay it to yourself yeah um i think the mere mental so having started a business of my own the extraordinary framing effect it has on my own behavior in terms of where I spend money okay and and how I think about money and time and futurity how do you think about time well at the age of 60 obviously you slightly compress things to a degree um I do have children so you have that uh which comes into comes into play people apparently when you ask people to ask questions of me they said we want to know more about him and his own emotional state I basically have two modes which is chill or very angry oh okay and I also have two modes which is generally relaxed or very impatient so there are so not all of it not all of this is desirable the anger thing is very very peculiar so one of the things I would probably say has made me quite alert to things like UX design, signage, you know, fundamentally customer experience questions, is that bizarrely, if I'm in a non-serious car crash, I'm weirdly quite calm.

19:58But if I'm at an airport, and the gate is badly signed, I go absolutely bananas because I see the one as something which everybody was trying to avoid, which unfortunately happened. The other one is just avoidable pain. It's just pay. I mean, the whole airport experience is absolutely rife with things like that, which is a degree of emotional pain and stress, which is effectively imposed on people unnecessarily. And so I tend to react you know so my my children find my own behavior in this really peculiar because really really trivial things like taking a laptop out of the bag as it were will drive me absolutely nuts whereas when quite serious things happen if i have a bad medical diagnosis because i see that as unavoidable i react much more calmly have you always been like that yeah Now, I've also got a slight, one of the other things that unfortunately complexity theory does for you is it does make you a bit neurotic because you're conscious of the fact that one small thing going wrong can lead to effectively a catalogue of errors.

21:13You know, for want of a nail or shoe was lost. And so one of the things that is a downside of actually studying complexity is that my wife is one of those people who let her phone battery go down to 7%. Now, I just regard that as batshit insane. Now, the reason is that if you're very, very conscious of the spiraling error problem, you become probably too alert to the fact that one small thing going wrong can snowball into it. I mean, this comes when you study plane crashes and when you study, you know, oil rig disasters. What generally happens is not that there's a single disaster. it's that two or three bad things happen in an unlikely combination which then leads to effectively a kind of massive feedback loop and then to catastrophe.

22:13So there are certain things about which I'm like if my phone gets down to 37%. By the way, there are a lot of people like me. And by the way, I think they're right. I will leave for the airport unnecessarily early. I've heard you say that before. Yeah. My argument is, my brother, there is an argument. The counter argument is if you've never missed a plane, you've spent too much of your life at airports. My counter argument to that is any moment spent in a state of uncertainty, which is will I make this flight or not, is unpleasant. We don't enjoy it. It means that the journey to the airport is now fraught rather than something you can enjoy.

22:55My second argument is actually, I think, quite a good counter argument, which is in 1993 that was absolutely true because all you could do at the airport is sit there, read the newspaper and go to a vending machine. My argument is if you now have one and a half hours in the airport, it's useful time. You can actually get something done, exactly what you would have been doing at home quite likely. If you have 25 minutes going through an airport, it's completely useless the entire time spent in just rushing and panicking and doing things. So my argument is actually, if you think about it, An hour and a half in an airport lounge is useful.

23:3025 minutes in an airport lounge is pointless. So why not just go early? Yeah. So time isn't really wasted except to the extent that you're prevented from doing something you and others. This is my great argument against sort of high-speed rail, which is if you put Wi-Fi on trains and people on the train are doing what they would be doing if they were at home, then speed isn't the same priority as it was with a Concorde passenger in 1973, for the same reason, you're not that, as I always say, you're not that bothered about how fast your dishwasher or your washing machine is because while it's doing its work, obviously you don't want a dishwasher that takes 14 hours, but while it's doing its work, you're getting on with something else.

24:15Yes. Now, if you had to watch your washing machine, you know, and stare at it going round. Then we're going to the anger bit. Exactly. You know, if you're compelled to watch your washing machine for as long as it was in operation, then speed in a washing machine would be really important. But to the extent that a washing machine doesn't prevent you from going to the shops. By the way, tip to your listeners, don't leave the house with a tumble dryer on. Don't do that. At a fire risk. Washing machine, you know, assuming you're on a major flood risk on the fifth floor, washing machine, dishwasher, generally okay.

24:48Don't do that with a tumble dryer. I just thought I'd help your readers out there. I've taken that one. So what I'm hearing here is a lot of logic and reason and rationality in terms of being prepared? Why would you cause yourself uncertainty if you don't need to? So for you, because I know when I'm in uncertainty, that's the minute I know I start going into overwhelm, I don't think properly, I go quite quiet. How would people know that you're in an uncertain place? What are the signs? Okay, there's a really important counter to this, which is a lot of uncertainty I really hate and it stresses me out when it's needless.

25:23there's a completely creative and valuable state of uncertainty where what I realized was that people are calibrated differently. And one of the most important things in any form of creativity, and this is where probably, to be honest, I learned a chunk of my creativity from the mathematicians, I think, is actually being comfortable in a state of not yet knowing what you have to do. And I wonder if that's what just... So John Cleese cites this very interesting research done at Berkeley in the 1950s, research into creativity by a psychologist. And it's not a huge set, but it was interesting for one reason.

26:09The actual test group wasn't huge. He took 10 very good, very creative architects. and he also found 10 pretty work a day unremarkable uninteresting architects and not as i said not a huge sample but nonetheless he then spent a load of time analyzing their working patterns and of course everybody's different okay some of the good architects some of the shit architects would be um obviously they didn't tell the shit architects they were they didn't tell any of these architects why they'd been chosen as far as they were concerned they were the only person being studied and they didn't say you've been nominated as a particularly boring and untalented architect do you mind if we study it and they obviously you know some of them were night owls some of them were larks you know all these things differed but there was one thing that was an absolute divider in that all 10 indifferent architects were one side of the line all 10 talented architects were the other side of the line the indifferent architects all started work straight away they They got a drawing board out and they started doing things.

27:15The talented architects spent time in a state of not knowing, in a state of doodling, playing around, waiting for inspiration to strike, maybe re-asking the question. In an extreme architectural case study of Falling Water and Frank Lloyd Wright, I think he was past the deadline for the Kaufman family. They'd asked for a house next to their favorite waterfall. and at the last minute Frank Lloyd Wright said why does the house need to be next to the waterfall? It could be over the waterfall. Wow. Okay, so that's a question of, you know. One of the interesting things I think that the good mathematicians do and I think that the creative people do in general is they realise that reframing the question isn't cheating.

28:04Yes. Most people are taught at school, understandably, that rewriting the question is cheating. Most entrepreneurs, I think, are successful because they've actually, not because they've answered a question better than their competitors, I think they're successful because they've asked a different question or they've asked the question in a completely different way. Yes. Okay, so, you know, my Uber example there just as a sort of call back to that is it's not about what your taxi journey is like. It's not about how long you have to wait for a taxi. It's about what it feels like to wait for a taxi.

28:37And I think you can take practically every really disruptive business and you can boil it down to someone actually asking, either asking a completely different question or framing a question in a completely new and original way. So I'm telling you, when my brain's gone, if we think about what's going on at the moment, and I'm putting myself in the shoes of a CEO, let's say for an agency, I've got agency background, within an agency, CEO and agency right now. And if they're thinking, okay, so what sort of questions should I be asking right now? And we know the right hot topic at the moment is AI.

29:13And there's probably some very just logical questions being asked at the moment. By the way, we have to actually accept two things at the same time, which is that AI is important and there's a bubble. Yes. Okay. And this is what I'd like to know your view. So just because you're right doesn't mean you're not in the grip of collective insanity. What do you mean by that? No. So, okay. You can be individually right but collectively wrong. Wrong. Right. Okay. Okay. And that's one of the most important things to understand, that, in other words, some things, some things are logical in and of themselves but they stop being logical when everybody else does them now the example i always give there is a kind of trivial story is airportonomics and when i was a kid as i said all the rich kids at school had been somewhere like skip all airport which at the time was vastly more modern and bigger than other airports it's a single terminal oh it's incredible i bought walkman for so many guilders amazing there's shops there restaurants and cafes and everything it's amazing you know right and then they went to you know then it was changi then it was dubai or wherever it may be okay and then suddenly every airport became a bloody shopping mall and you've got people going have you been to london city airport it's brilliant there are hardly any shops you get to the plane in five minutes so what i'm saying is that there There are things which are – business is a large amount of game theory.

30:39One of the most important contextual factors in business is not within your control. Two of them are within your control. What your customers do and what your competitors do are not within your direct control, but they're the most important things for the future of your business. So what businesses do is they concentrate on the things they can control because it's all very reassuring and measurable, and you've got all the data, so you think. But the things that really matter – Now, it is perfectly possible, just as we saw young people returning to vinyl, that in 10 to 15 years time, the best business to be is one which proudly declares that it's an entirely human business where your call will be answered by a human being.

31:22Because I'll give you an example of things that are rational at the individual level, but dangerous at the collective level, would be two-factor authentication. yep now in every case someone at an online retailer has been told we've got a problem with fraud and da da da da we need you to solve it they impose two-factor authentication their fraud rates go down in the short term their sales don't go down all that much then what happens is every single fucking retailer streaming service and everything else introduces two-factor authentication that's a particular bugbear of mine because i try as far as as possible to spend my time at home without my phone in the same room okay okay because it's a needless sort of attention seeking distraction and i put it on charge in the kitchen it's there if i need it now i might be using a tablet or a or a large you know desktop computer laptop okay elsewhere And now I need to have the phone with me every time I do anything because there's some bloody Octaverify thing.

32:33Now, the point I'm making is at some point, if every single online transaction involves two-factor authentication, people will just stop using online in general. So it's a cat. OK, it looks like a wonderful thing for your individual business. It's actually a category risk for online retail collectively. Got it. I'll give you a perfect example of this. every single business online loves the subscription model. Consumers have a finite appetite for how many subscriptions they're prepared to have at any one time before they feel they're completely losing control of their finances. So at an individual level, yes, it'd be wonderful if you could be Netflix and be one of those subscriptions that people basically won't cancel very much.

33:18Okay. However, there's a category problem, which is entirely different from the individual brand problem. And there's also a brand problem, which is completely different from the individual silo problem. So if you okay, you so everything's nested, okay, you have a business category, then you have a business within that category, then you have a department within that business. The department within the business doesn't care about the category, doesn't give a shit about that, doesn't care that much about the brand, but it massively can tell. Okay, this is what I mean by being like Darwin. And the example I give is Marks and Spencer's in Sevenoaks.