Rory Sutherland on why marketing is the answer to economic growth

0:06Ladies and gentlemen, welcome back to the Uncensored CMO. Now we've got an absolute legend of the marketing world coming back on Unscented CMO this week, none other than Rory Sutherland. Now this was recorded in front of a live audience of CMOs and we cover some amazing topics. For example, why does AO drop off a teddy bear at every delivery? Why is fame such a big multiplier when it comes to luck? Why do ad agencies act like pandas? And why should you be benchmarking the worst aspects of your competitors rather than the best? These are just a few of the fascinating conversations and insights that come up in this episode in my conversation with Rory Sutherland.

0:43Rory, thanks for being here. It's brilliant to have you. Thank you so much for doing this. The theme for tonight is going to be the economy and are we looking in the wrong place? And where I wanted to start with the conversation is, at the moment, the government's trying to save money, you know, in the US and America, US and over here. We all seem to be cost cutting and looking for kind of ways to save money. AI is making our jobs more efficient, supposedly. Are we looking in the wrong place when it comes to where we get growth from, do you think? It's certainly possible. One of the things I think deserves further investigation is whether the extraordinary rates of economic growth you tend to get in the United States are partly down to their veneration of salesmanship and marketing.

1:25Now, nobody's ever looked at that as a possible explanation, but it seems to me fundamentally possible. OK, if you look at actually the great inventors, you know, from Edison to Colonel Sanders, OK, to Steve Jobs, they're all marketing people, really. I mean, history remembers them as inventors, but their real supreme talent was the ability to actually persuade the public to do something differently. And in the case of Steve Jobs, the techie people at Apple never liked him. I mean, they said, I don't get what Steve even does, like he can't even code. and I've always just wondered if and I also ask the question if you go back in further history was it really an industrial revolution or rather would it have worked if there weren't an accompanying marketing revolution because it's all very well being able to produce sort of wedgewood plates in huge quantities but if you haven't worked out new ways to sell them to a large audience you just end up with a load of warehouses full of plates right okay so I've always wondered about this the extent to which marketing is always placed downstream of decision making and viewed as kind of icing on the cake rather than as fundamental to economic growth strikes me as a fundamental now fortunately there is an economist deirdre mccloskey who said who says the same thing uh she makes the point that um she actually says that about 30 to 40 percent of the economy is kind of sweet talk it's persuading people to do things differently persuading people to do new things and i think the extent to which we never look to marketing as a source of economic growth we see it as and that comes from mainstream economics i think is a fundamental mistake i think there are i'll give you an example i think there's a marketing solution to the uh you know to the property crisis to the housing crisis um just just if you're interested okay i've done this experiment which you you go to any audience they have to be over 45 because otherwise the concept of home ownership is completely alien to them um that's because my generation stole all the money okay but you ask people how many people have your house on the market and typically about four or five hands go up and then you say how many people would actually move house if you just received a an attractive offer out of the blue and about four times as many hands go up it's typically a ratio of four to one i've tried it in canada i've tried I've tried it in Ireland.

3:51I've tried it in the UK. Now, what that suggests is that there are a lot of people who would sell their house, downsize perhaps, or move elsewhere or move out of London, freeing up housing stock. But they don't want to put their house on the market. So if you created a mechanism where effectively everybody's house was technically on the market and there was a system where people could put in offers, i would argue you could probably accelerate you know movement of people to more appropriate accommodation by what appears to be a factor of four by the way this sounds psychologically weird but everybody understands it in the field of dating right that there's a difference between putting yourself on the market and being approached okay that most people would say no no no i'm extremely attached but if they were suddenly approached and chatted up by george clooney or jessica chastain they might rethink their living arrangements okay right and so we understand it in the concept of dating that these things it's not the same thing to be willing to sell your house and be willing to put your house on the market now there is a company now ostrich.co.uk just started an estate agency in north london which works exactly this way with off-market homes so you basically make your home available for perusal without actually going for the full palaver of pictures in estate agents windows and the risk of rejection and all that kind of thing but i mean i genuinely think that there are these psychological solutions actually to be honest i think that most really significant uh new innovative businesses are as much the result of tapping into a psychological um discovery as a technological one yeah i mean talk about dating you've got the whole concept of speed dating and it feels like ai is doing that to marketing isn't and it's like speed marketing.

5:39Yeah. Everything's very fast. But you put a case together to say we should slow down our approach, shouldn't you? Something that Jeremy Bulmore, the late Jeremy Bulmore, said, which is that the most valuable thing about advertising may actually be the process you go through to produce an advertisement rather than the advertisement itself. And it's quite an interesting thought, which is the questions you've got to ask, what I think in cybernetics is called business philosophy, what are you for? What purpose do you serve? What makes you different from other people? You know, quite deep strategic questions which generally remain unasked until you have to produce an ad.

6:18And so the only concern for me is that if you shortcut the process to arrive very quickly at a cheap and adequate end result, that's fine unless it's the process that's valuable rather than the end result. So the example I always give is a parallel of that, OK, is that all of you, if you went to university and you wrote essays at university, OK, you may have kept them. You probably didn't. You probably threw them away the second you graduated, to be honest. But if you have kept your undergraduate essays, they're totally worthless, to be absolutely honest, OK? You know, it's extremely unlikely, unless you're some sort of genius, that there's anything of any value in them.

6:58But the value was in having to write them. and so there is this issue which is we tend to assume that the end product is is the thing of value not the journey but sometimes that isn't true actually that actually the shortcuts are really dangerous i mean i always think it was a terrible mistake for agencies to charge by the hour because it meant clients got hold of us really really late okay because the meter's running when we were on commission you brought the agency in day one right because they were free okay and And so, you know, actually asking a load of, I mean, a lot of people think this, that actually the most valuable thing you do in advertising may be the really silly questions you ask at the beginning of the process, where you just actually probably the most successful thing you can do is probably to rewrite the question or redefine the problem.

7:48And I think we're jumping towards execution too hastily. I also think by the way for consumers there's a value to slow AI because we don't want to make optimal decisions instantaneously if I'm if I'm going to go on holiday okay I want that to be a sort of two month or three month period of exploration because we refine our preferences in the act of searching for things you know when you go shopping or for that matter when you choose a holiday or when you choose a house okay if you talk to estate agents they say everybody comes long they all have a list of criteria for their perfect home and they always end up buying a house that meets few or sometimes none of those initial criteria probably true the people you've married as well to be absolutely honest if we're a bit you know if we're and that's because we actually refine our preferences by the act of searching for what we want in other words we're refining what we want as part of the process of looking for it yeah okay and i think you know there's a danger that the assumption in all tech people is that free is better than expensive and instantaneous is better than slow well i think the lesson of email is that no actually when you make something free everybody gets over communicated to and when you make it instantaneous uh you know actually there's a downside to that do you think we can get too obsessed with the data because i think so much this is making decisions based on data but as you say very well we're irrational people we don't make decisions in the logical way that the algorithm expects us to who is really keen on like police work detective fiction you know real life serial killer stuff yeah you all are aren't you yeah okay no no i mean i think i think it's really interesting because one of the weird discoveries i made by writing the book is the market for marketing is inordinately bigger than we think it is okay that people in venture capital are fascinated by psychological solutions uh you know there are people you know ceos are weirdly you know finance people can be there's actually a much bigger market for marketing than we've envisaged and so one of the weirdest sort of people i go and talk to occasionally are the police and it strikes me that the police have make a very important distinction if you're trying to solve a crime which is between the investigative phase and the evidential phase okay eventually you have to prove your case okay now however what would happen if someone's murdered the police are very similar to marketers by the way detective work um uh that wonderful guy greg han who runs the agency oh yeah okay he's also obsessed with crime fiction and true life crime and you start off you find someone it's very similar to marketing because not everybody's telling us the truth they're not necessarily deliberately lying but they're not giving us the full story and we're having to deal with imperfect information okay and the information that's evidential may not be valuable and the information that's valuable may not be evidential okay so let's take this example what you do as a cop is you find a dead body somewhere and uh you basically you'll go door to door around the neighbors and you'll ask an incredibly open question like did anybody notice anything unusual on the evening of you know thursday the 17th okay and someone will say something again purely anecdotal well a funny a guy in a white van drove back and forth five times i thought it was a bit weird now no evidential value purely anecdotal but it tells you what to investigate next tells you where to direct your attention next and then you may get some cctv footage up and you see oh look this is the white van the person mentioned and then you look at the license plate number and you see if the person driving it's a bit dodgy or has any previous right and you proceed from there now eventually you have to arrive at a position of certainty because you can't you can't obviously imprison someone for 35 years for driving a white van in a funny way you eventually have to get evidential information but you shouldn't start with the assumption that only the evident only hard data has anything to tell you and i think you know i always joke about this which is there was tons and tons of really reliable data um that said in 1912 that icebergs weren't found that far south in the atlantic but one anecdotal piece of information which is iceberg dead ahead okay effectively renders all of that other information completely irrelevant if you're on the bridge of the titanic okay arrived a bit late as it happened but in the police case i mean i always find it fascinating because you know Peter Sutcliffe was partly caught because he he was in the Bradford Red Light District and he parked his car in a funny way okay which is most people handy tip as I said you know if you want to you know know the etiquette of the Bradford Red Light District one day apparently you park with your windscreen facing the wall because then people can't see what's happening on the back seat but Sutcliffe had parked facing outwards as if to make a quick getaway with after killing his victim and that was one of the things that caused the cops just to pay a bit of attention, go back to the point of the arrest and find that he'd secreted his weaponry in the nettles where he'd gone for a piss.

13:04Okay, now again, this is the distinction between anecdotal and evidential. And I also think it's incredibly disturbing if we start privileging things that we call data above things that other forms of information. A, because all big data comes from the same place the past okay there is no data about the future i thought there was a load of bollocks around coronavirus because people kept talking about the science right but it's a novel coronavirus okay which means it's not like other coronaviruses so therefore by definition there isn't any science yet okay and it was actually airborne not spread by contact and it seemed to take them about eight you know it seemed to take them about 10 months to figure this out okay i actually bought one of those phillips air filters got widely abused online for for buying it and it turned out i was right okay because i thought i thought okay postman aren't getting ill so it seems unlikely that it's spread by physical contact okay i was basically keeping an eye on the local sorting office mortality figures you know for a clue as that's what i call the investigative phase okay and i think this weird obsession okay so anybody who's the a fan of roger l martin in the room anybody ah brilliant there's one at least excellent wonderful toronto canadian business guy kind of the air to peter drucker and he makes this point that business okay business is probabilistic but everybody wants to pretend it's deterministic okay they want to pretend that you can be definite and sure and know know the future in advance the reality is that you're placing a bet on one particular version of the future it's i would argue that marketing is a casino with pretty good odds but it's still a casino at some level and what we did as marketers is we got enthralled to all the techie people and said no no this can be just as exact a science to say logistics or engineering or newtonian physics and actually since we deal fundamentally with the future and we deal with human psychology which is immensely complex that idea that you can actually have all the data you need to make a robust decision as if the context isn't going to change or the future isn't going to be different from the past is just completely unsafe.

15:20And I think it comes from actually not... It comes from the urge to look scientific, not from the urge to be scientific. It's a bit like in corporate life. People would rather be confidently wrong than probably right. It seems to reward certainty. They love a bit of incremental certainty, don't they? But actually, if you think about it, most business incentivises people for being incrementalists, doesn't it? If you can grow things by 3%, 4 % a year, you tend to get promoted okay if you grow things by 10 a year for three years and then mess up okay you're out on your air so undoubtedly there's this tendency in business people effectively they would prefer to have a very certain predictable and uninteresting gain i mean this is one of the weirdest things we discovered running a behavioral science practice which is every now and then as we would predict i'm not suggesting this happens every time but every now and then you have a complete breakthrough discovery okay so with one client an airline very early client we basically did a little change to their website which cost 25 000 quid and they paid us 25 000 quid for the advice and it made them 10 million pounds in extra revenue that year and every year thereafter that's amazing and so we thought okay that's it basically job done they never came back okay and then i realized that maybe they don't want to do that all that often maybe it maybe it's because actually that whenever anything spectacular happens the finance people or the logistics people just claim all the credit.

16:45Because the marketers never really get the credit, do they, for a breakthrough. You've probably set the bar too high, haven't you? How do we repeat that? How do we repeat that? I mean, maybe there is something like that. But also, I admit the process is imperfect and it has to be experimental. But, I mean, we've done that about, you know, we've done it just recently, actually, with a cinema chain where we literally multiplied the number of people who pre-order food with their tickets by a factor of 27. Okay? you can achieve these complete butterfly effects and it seems weird that we spend very little time butterfly hunting because we'd rather do something and this is why you know when the finance director becomes the ceo yeah it's always that little death rattle for a business right okay and that's because finance people are deterministic and they adore predictability and as saint roger martin says you must read this guy he's fantastic right roger martin says fundamentally the job of the CEO is you have to accept that business is probabilistic.

17:42Interesting which of the behavioral science insights you think have got the most ability to transform business or marketing that we're not talking about going back to your airline example. That's a perfect example of what I'd call context okay so the most interesting finding in psychology is we make decision according to context. By the way there was another discovery that simply changing the button the booking button from find flights to find my flights that increased sales by about five percent as well by the way amazon does this all the time i mean nick stuff from amazon basically if in doubt um but context context has a huge effect on behavior okay simple very simply by the way that's why a lot of behavioral economics experiments don't replicate because if you change the context even slightly people behave in a totally different way and it's obvious why our brains are wired that way if you're walking down a busy street you don't really notice footsteps whereas if you're walking down a dark alley at night and you hear footsteps you react completely differently okay and one of my arguments is look actually often in marketing we think gosh to get people to do this we've got to change the minds of a million people and our argument will be well maybe it's easier just to change one context if you're easy jet people used to book flights i'm old enough to remember where you needed to fly somewhere you went to a travel agent okay and then what you do is you're easy jet and you put the phone number it was a phone number before it was a web address i'm that old seriously okay you put the phone number on the side of the plane and the whole thing is if you want to fly somewhere you phone easy jet if you change fundamentally the channel or whatever through which people do things their behavior changes automatically because they're making a decision in a different place and so that's you know that's probably the behavioral science thing which for example has manifested itself in 90 of people now having some sort of pension because it was changed from opt-in to opt-out you know there are these absolutely monumental effects i'm not by the way i'm not making a huge promise that you can do it every time but shit it's worth looking isn't it you know yeah i'm fascinated by a concept you came up the other day called reverse benchmarking We're all obsessed, aren't we, with competition and how do we match the competition?

19:55But you came up with a kind of a counter idea to that, which I thought was quite interesting. I nicked this from a guy called Will Godara, who has written a book called Unreasonable Hospitality. So if there's anybody there who has any kind of service component to your business, Will Godara's book, it's like Jeremy Bulmore said, the best books about advertising aren't about advertising. And Will Godara's book is about how he took a restaurant from number 50 in the world. It was 11 Madison Park in New York. It was in some restaurant awards, number 50 in the world, and he took it to number one. And this is a great story because he's a natural kind of game theorist.

20:31And what Will did was he said, OK, we're number 50 in the world. He took his team, mixture of people from the kitchen, from front of house, etc., to dinner in the best restaurant in the world, the restaurant that had scored number one last time around. obviously as he said it was really really good you know you'd kind of expect that wouldn't you okay and his team were going god that's really really good let's copy that and oh look they did that really well you know oh my napkins in the shape of a swan let's do that i'm making that up i'm sure they don't do that but you know okay but oh that's good let's copy that and will said no there's no point in bench i mean benchmarking is actually also mckinsey and people make a fortune selling this bullshit but it's just a way of making you more similar to your immediate competitors really and it's bad for the consumer because it reduces choice and variety and it makes competing businesses more and more similar so they tend to end up in a very crowded space and then head into that kind of death spiral will guitar said no i'm not interested in the things they did well i'm not surprised they did things well said what are the things they actually did weirdly badly because we're going to double down on those things and they came up with two things the coffee was nothing special you could kind of have decaf or regular coffee but there was no choice of beans there was nothing special there and also the three or four people in the party who'd wanted to drink beer not wine had been kind of treated like second-class citizens you know it's kind of like we've got Carlsberg and Heineken on draft nothing wrong with those beers by the way but it's not remotely equivalent to the kind of experience you get if you were discussing the wine list okay and he said okay those are the two weak spots and he took two people from his staff one of them was i think in the kitchen and was obsessed with single origin coffee and he said from now on you're the coffee sommelier and he took another guy who was i think front of house who was obsessed with craft beers and he said you're now the beer sommelier so when he went into his restaurant three months later and you said actually what beers do you have the guy would come over with a beer menu and actually do food pairings say well you're having fish so this citrus ipa from you know the napa valley is particularly appropriate okay now the great thing about that is okay being good in the same way as everybody else is good benchmarking yourself doesn't really attract attention whereas if you're a beer drinker in a fancy restaurant you're used to being treated like shit relatively speaking OK, so when they suddenly take your preference for beer over wine really seriously, it also turned out that these craft brewers were so flattered that a really top class restaurant was taking their beer seriously that they're practically sending them the stuff for free.

23:15So it was it was quite lucrative as well. But I quite often you quite often stay at a hotel and they say after our 200 million dollar renovation program to make your hotel room look like every other fucking hotel room you've ever stayed in. and the clever thing there is reverse benchmarking it's don't take what your competition are doing well and copy it take what your competition are doing badly and double down on it and i think i think i think as an exercise i mean will i think invented the practice with his natural game theory mentality he's a great believer in look you know merely being as good as someone else is a bit pointless if you want people to really notice and there's a whole theory of psychology which you you in fact have done haven't you that the things we pay attention to the things we find interesting are the things we didn't expect totally yeah surprise i mean surprise surprise is hugely important because it it lodges in your memory you know you remember what you're surprised about there's a um a slightly random uh piece of work did extraordinary costa dull actually murray s davis in 1972 did did a bit of work on what makes things interesting and it turns out that that denying an assumption of your audience is what makes something interesting yes which is perfect behavioral science it's like you think it's this but actually it's that you know it kind of pulls the rug from under you which i think is what makes it it's it's funny enough it's sort of quite closely linked to comedy because comedians often play the same trick don't they they take something which is quite often a joke involves rapid recontextualization you're assuming one thing and then it suddenly flips okay and that that works i think in exactly the same way i mean there is a whole theory of brain science i won't get into the free energy principle not least because i don't understand it myself um but um which says that effectively most of what we perceive as a prediction and we use the limited bandwidth in our optic nerves and our ears to correct for prediction error funnily enough it's exactly the same kind of computational process that your uh your tv uses so the reason your sky dish isn't 15 feet across or something is because Because most pixels on a TV, it's how JPEGs work or MPEGs, okay?

25:27There's an expectation value for every pixel, and the data is only used to correct when the expectation value is wrong. So rather than having to describe every pixel in intricate detail, going it's a brown one, it's a brown one, it's a brown one, they might use much less data by going brown pixel, and then 15 pixels exactly as you'd expect. Ooh, there's an unusual pixel. And consequently, you need much less data, okay, to form a picture and it looks as if the human brain has bizarrely come up with exactly the same process as samsung okay albeit over a longer period which is basically the inter the brain develops an expectation and what we notice is the thing that we weren't expecting which probably explains why a lot of good ads have that you know peculiar element of the you know very similar to a joke where there's a flip somewhere in the ad yeah 100 i want to talk to you about tiktok and your your recent tick tock fame yeah which um has been amazing to watch um what and you said something the other day which was quite interesting about how going back to probabilistic idea that the more well-known you are the more chance there is of kind of good things good things happening and i think that's something that's i mean greg khan says this in mischief which is a brilliant quote which is fame is a luck multiplier yeah i think i think i think one of the problems we probably make is that when we do advertising and we invest in becoming famous first of all it's compounding effect okay so the more famous you are already the more easy it is to get more famous okay that there is it's a bit like your pension you know it's very slow and boring at first and then by the time you're 55 you go where did all this money come from you know it works a bit like that so it's not a linear thing and so i think we often measure investment in marketing as if it's linear and then if we're disappointed by the early results rather like for the first five years i had a pension i Why didn't I spend this down the pub?

27:19Right. And, you know, if you expect linear results, you might be disappointed early on. And I think I think we've got Les Bonette in the audience. OK. There's a hell of a lot to be said for persistence, for keeping going, because the returns come late, but they come big. OK. So it's compounding. The second thing I think that's really interesting is that it doesn't really work in the. So the main value of fame, Greg calls it, Greg Hunt calls it a luck multiplier. Nassim Taleb, who I know quite well, would say that the purpose of being famous is to increase your surface area exposure to positive upside optionality.

28:00It's not that being famous, and I'm not talking about myself here, I'm talking about brands. It's not that being famous helps you necessarily achieve something you intended to achieve. it makes it much more likely you'll become lucky in ways you didn't expect okay so let's say okay you know because i'm on tiktok i now get requests to speak from companies i didn't even know existed okay that's the point okay now i think if you look at the value of a company being famous rather than obscure okay i think it manifests itself in so many different ways it's impossible actually to put a value on it so okay if you're the chief executive of rolls royce aero engines okay if you phone anybody in the world apart from kind of you know a few presidents they'll return your call okay people come and work for you for less money they stay for longer okay people come and ask you to supply things whose existence you were previously unaware of you get exposed to options and possibilities which you could never discover for yourself but because you're famous magnetically they come to you and so i would argue that actually what fame does it's a luck it increases your odds in the casino of life now my kids when they were teenagers okay i i they were very annoying having teenage kids because they're obsessed with going to parties on saturday night okay rather than doing what any healthy person would do which is sitting there watching youtube documentaries about traction engines which is what you do at the age of 59 you know but it suddenly occurred to me that they're being completely rational they don't do a cost benefit analysis for every party they attend okay they don't kind of have a party strategy but what they know is that if you go to a lot of parties you might get lucky and if you don't go to any parties you won't and when i say get lucky i don't specifically mean sexually although it can include that okay it could be sexually lucky romantically lucky you get invited on holiday with someone you get invited to another party that's even better but there's simply a value to just maximizing your surface area okay because more opportunities then are presented to you and the great thing about an opportunity is you can choose to take it or ignore it but i think i think the way we look at things is in the way we look at marketing investment particularly long-term marketing investment is ridiculously kind of newtonian it's as if there's this you know kind of linear relationship between input and output which you get in a very very crude machine but an awful lot of this i mean actually the best reason to be famous is that stuff happens to you which you may not have planned for i mean to what extent our lives are actually planned they obviously are in retrospect we all pretend that where we are now is where we intended to be it's not really like that at all is it i mean you know in fact most people's lives probably are overwhelmingly determined by six or seven really lucky accidents and so the great book by the way and brian class book called fluke which is really really interesting on this which points out that actually the biggest things that happen in the world world war one was down to the fact that actually a chauffeur took took a wrong turn in sarajevo okay the guy who tried to assassinate the archduke couldn't find him and given up so he went to a cafe to have a coffee and smoke a cigarette and suddenly the chauffeur of the car takes a wrong turn down a one-way street it's a car that apparently is incredibly difficult to get into reverse okay because it's 19 whatever it is 14 or 13 and you know the rest is history but actually the actual events that created it are incredibly small and so that business of just improving your odds seems to be a perfectly good, you know, reason to advertise.

31:50But we've come into this weird idea where everything has to be attributable. And the trouble is that the best things, you know, aren't really always attributable, are they? You know, there are people who, I mean, I've got people who are really good friends of mine, and I've got no idea how we met, okay, genuinely. And I think this obsession with attribution is a false god. Because, I mean, physics went through it with Laplace's demon, the idea that if you only knew what every atom was doing, you could completely predict the future of the universe okay meteorology went through it and abandoned it when it realized you know butterfly effects okay um economics you know there's a whole book attacking ricardo economics calls this the ricardian vice which is the idea that complex things can be reduced to a formula and i think we've just i think the whole marketing industry has just gone through the same fundamentally pursuit of a of a kind of a false trail really yeah would that be in the case and how do we create the environment or the culture to operate like that because where everything's pushing us down the data entrepreneurs are really interesting and founders because they never demand that stuff i mean john roberts who founded ao is the largest buyer of bears in the uk i mean toy bears obviously otherwise to be weird and he has very simple they deliver their own uh washing machines and appliances and they deliver them themselves and He says, well, that gives us an advantage because most people don't deliver their own stuff.

33:14So since we're delivering our own stuff, we'll have a box of these little green branded merch bears in the back of the van. And if the household we're delivering to has kids, we'll give each of the kids a branded bear. Right. As John says, he goes, look, how do I prove that works? Well, you could prove it works. OK, if you're anally retentive, you can have a control sample to whom you don't give a bear. You can even have a more extreme cell where you go, look, children, here's a bear, which I'm not going to give to you. Which is the bastard cell. And you can compare their repeat purchase over 15 years and you might have some reliable data to tell you what the ROI is on the bears.

33:55But John just goes, look, if it's a good idea, some things are just a good idea, you can't necessarily prove them to within three decimal places, but you still do them. and you know i think it's true that nearly all you know entrepreneurs and founders are perfectly happy doing things and making subjective decisions but we've created such a paranoid atmosphere in business that most of our work nowadays isn't actually making decisions it's winning arguments okay so anybody in the room let's be honest you can make any decision at all without consulting someone else like hr or compliance is there anybody who can make an individual decision i can't you know nobody can hire anybody nobody can fire anybody nobody can give anybody a pay rise it always involves dealing with these vast growing weird like it's almost like corporate oncology the growth of like hr and finance right okay because you know i'm kind of going i mean it's white collar welfare basically isn't it hr you know if we're being brutal about it it's not a proper job but also it should be our job deciding who you know you know deciding the fate of people should be decided by people close to those people themselves well it's a bit like the pr department isn't it like there to tell you what not to say you know stop me saying what you think there's a great phrase which comes from anybody read dan davis's book the unaccountability machine i know antonis has seriously read this book he's written three books one about financial booms one about this theory of unaccountability traps in business that we try and create these spaces where nobody's responsible and the third book's a history of the brompton bicycle company so he's quite broad but it's he quotes this phrase from cybernetics which by the way cybernetics was a really really interesting area of business investigation which is about the flow of information within companies which was completely ruined by the fact that two or three years after it got big Doctor Who created the Cyberman and so nobody took it seriously.

36:00It's a bit like nuclear power. It's a really good idea with a really bad branding problem. And the great phrase from cybernetics is the purpose of the system is what it does. And we notice that press offices are so paranoid about bad publicity and they demand that everybody only says things of incredibly boring boilerplate kind of anodyne content to the press, which means that no journalist ever contacts you ever again. So the net effect of a press office is to keep you really, really obscure. And so I think it's a really useful thing, which is don't ignore what the ostensible purpose of any business function is.

36:40Say, what's the ultimate effect? because the the purpose might be entirely you know benign and worthy but the net effect may just be it slows everything down impossibly so that nobody can do anything or it makes people absurdly risk averse which i think one thing that worries me just in general okay is in this atmosphere where you can create a scandal out of anything okay i really worry that a large number of companies have just lost the appetite for communicating because they simply go look keep your heads down stay behind the parapet because anything you say might be used against you okay so let's not communicate anymore it's talking of risk aversion i thought it's quite amusing that the chancellor was asking the regulators to come up with ideas for boosting the economy which is just hilarious it's hilarious if you took a behavioral science approach to our economy what what would you do to boost growth uh one really interesting area is well i'll bring back the coi for a start you don't know what that is do you it used to be a thing called the central office of information which did government advertising and it would basically it was a way that government could communicate to citizens uh at the moment people go there's no need for that because we can use the press okay to communicate now the press is a massive distorting lens with a huge negativity bias whenever it comes regardless of the government you have in place okay there are also massive asymmetries in information which i find really really interesting so one of the interesting problems i noticed is it doesn't matter how good the nhs is it will always say it's in a terrible state okay now if you're an american hospital right you make money from patients got it right so it's in your interest to pretend you're a better hospital than you really are because then you get more patients right and consequently if you work for the mayo clinic and you went on tv and said look frankly the mayo clinic is shit you know their patients lined up we haven't got enough cat scanners their people lined up in the corridors none of your colleagues would ever talk to you ever again right because you'd basically diss their source of revenue okay now the nhs it's the opposite because you get money from government so it's in your interest to keep saying how shit everything is so you can get more money and if you if you imagine this okay imagine you're an nhs consultant dermatologist right and you appeared on this morning and you said frankly the nhs is fine i've got all the ointments i need i go home early on fridays I've got a really nice office with a swivel chair and I make 200 grand a year right I don't know what people are complaining about your career will be over in the NHS because you committed the unforgivable sin of saying that things are quite good okay so I'm not suggesting by the way the NHS isn't beleaguered I'm saying that even if it isn't it will still pretend that it is and therefore there's a big bias going on there so I bring back the COI said that there was a way of government communicating to citizens including some good news i'd also look at things which i find really fascinating which is because we always work this really pisses me off about ad agencies okay ad agencies are like panda bears they only eat bamboo right and you know what i mean and ad agencies even though we haven't been paid on commission since like 1992 they only eat brand communication budgets you know they go is there a media budget over there and they all go down to can and they all try and impress the same 150 people who all have big media budgets and what annoys me about this is there are loads and loads of problems which don't have a media budget attached where you could still bring real value creativity particularly okay and one of the biggest examples of that is category problems so two people have approached me really fascinating good good ideas share them okay one guy is the head of the civil aviation authority now i don't know what he wants to talk to me about but i suspect it's how do you get public acceptance of drones okay because the problem you have with drones is that if you have drone delivery the hundred moped accidents you avoid are invisible whereas the one person whose pekinese is wounded by a falling pines baked beans is the front of the daily mail okay so you have this fundamental problem with new technology that quite often the negatives are really really salient but the positives are invisible and a new thing that frightens us is much much scarier than the absence of an old thing that used to frighten us which we'd become acclimatized to and so so you know i think there's some really really interesting opportunities for marketing people to look at category problems the one i always talk about by the way is electric cars right okay there's range anxiety i've said this repeatedly sorry to be a bore about it range anxiety has two components range and anxiety now lots and lots of scientists are spending billions and billions of dollars trying to increase range by increasing the energy density of batteries right it's a lot cheaper to reduce anxiety right just reassure people that it'll be really easy to charge their car for one thing when you look at if you've gone electric you're not poisoning the planet no no how many of you gone electric by the way would any of you go back to petrol just for interest nobody now the interesting thing there okay a very similar behavioral parallel here i call this an air fryer effect which is there are things that nobody wants until you have one at which point you never go back okay japanese toilets mattress toppers air fryers okay okay once you've got one okay you know someone wants to buy my wife was resisting the air fryer she protects like kitchen surface space like it's the fucking somme you have to fight over every bloody two feet okay and i finally got the air fryer in no going back right and the electric car there was a similar thing with brits by the way with automatic transmission right all brits came up with utterly bullshit arguments against driving an automatic which is no no no i'd hate the loss of control i really enjoy the i really enjoy double g clutching when i'm stuck in traffic on the west way okay what what happens is nobody who ever bought an automatic car ever went back to a manual car and i think only i think 97 percent of people who go electric basically stay electric now by the way range anxiety isn't irrelevant in the u.s right big distances very cold weather your mum lives in boise idaho which is 600 miles away range is an issue britain's tiny you know netherlands britain belgium okay there's no need for your your car energy gauge your battery to say 87 percent and then you drive a bit and go down to 86 and you start getting a bit anxious like your mobile phone right i'm married to someone who who allow her mobile phone to go down to like single digits i start hyperventilating below 50 okay and um the the crazy thing there is just say 80 plus and then eventually say 70 plus now obviously when you're at 11 or 5 you need individual digits but your petrol gauge never gave you an individual percentage level did it yeah right okay just said three quarters full half full quarter full eight full shit the lights come on it's i'm the opposite to you i play the game of can i get to the petrol station with one percent left you know like actually actually i mean you could reduce anxiety now the problem with the problem with increasing range rather than reducing anxiety is a lot of electric cars are probably heavier than they need to be more expensive than they need to be there are fewer batteries available because an awful lot of kilowattage is just sitting unused because 95 of the time you know i mean the worst people are londoners who go oh no it's terrible can't get an electric car because there's no way of charging at home you know you know because i haven't got a garage or a drive you go you live in london you twat you can only drive at 20 miles an hour and it's an unusual day where you go more than five miles right yeah okay and so people it's exactly like automatic transmission i think if you could accelerate adoption in the populace by doing category advertising and we used to do category advertising and advertising a lot what happened is you know the ad campaign if you want to get ahead get a hat the way that worked in 1930 okay it was people noticed in 1930 or 1940 that people weren't wearing hats very much And so the Hat Makers Federation of the UK would impose a 1 % levy on all their members, and they'd use it to fund an advertising campaign for the category of hat wearing.

45:03OK. Now, the Milk Marketing Board was presumably kind of that kind of thing. OK. OK. There are a load of dairies. There are a load of people who will promote milk centrally as a drink rather than having lots of competing dairies. Now, what we have in electric cars, we have lots of competing car brands all competing on the basis of range, which is emphasizing a negative. OK, we're less negative than the other electric car. When someone should be saying, you know, I think basically they're just a better car, aren't they? OK, it's just nicer to drive. It's quieter. You know, it's more comfortable in every respect.

45:38And the performance is better when you need it. OK. And nobody's doing that job because you've got a load of competing interests. We don't have the equivalent of the Hat Makers Federation. I think why that fell apart was probably globalization. Because, you know, at the time those campaigns worked, nearly all the hats sold in the UK were probably made in the UK. Now, if you did a category campaign, well, there'd be a free rider problem with lots of Chinese hat manufacturers picking up most of the gains, OK, who hadn't paid in. but i do think there's scope for you know one of the tragedies of marketing is that there aren't budgets for category campaigns um you know i think there are a lot of problems you could solve but maybe maybe it isn't an advertising problem maybe you don't need a media budget here what i've talked about with drones is look if you can you know if you can say that all drone delivery services have to prioritize emergencies like delivering a defibrillator okay then what you've arguably done is you've created a really reliable fast 24-hour network for delivery of essential things and it's funded by the people who are ordering a coffee from starbucks maybe you could get people to accept it uh in that way i don't know you know maybe there's some cunning little way we can reframe things now we've managed to get through 45 minutes really quickly which seems like time warp um very another question which is my biggest regret i do well because I asked LinkedIn to give me some questions for you and Scott, and we got about 180 of them, which is amazing.

47:09The most voted for question was from Tom Goodwin, and he said, what issue have you been profoundly wrong about and why? There's a very amusing one, which was, I've been wrong about a hell of a lot, by the way, and I think you should be wrong about quite a bit, on the same grounds that if you're never wrong about anything, it's that old phrase that if you've never missed a plane, and you've spent too much of your life at airports. You know what I mean? OK, you're being too cautious, effectively. But one of the weird things I was wrong about very early on, it must have been shortly after the iPod came out, never mind the iPhone, I actually met the guy who named the podcast.

47:46Wow. And I remember thinking, this will never take off, ironically. In fairness, I was a bit more measured than that. I thought I could see that it would work in the United States where they didn't have Radio 4 and you had a lot of drive time. but I thought in the UK I thought but if you think about it okay I think I don't know if Scott's arrived already to contradict me on this but he always says that all the ideas I've invented I've invested in have been stupid until they aren't you know now imagine okay you're someone in Britain and the Coca-Cola company wants to come to the UK you could come up with unbelievably plausible reasons why it's a dumb idea right which is one a lot of Brits drink a lot of alcohol so we're perfectly well lubricated thanks very much we're a we've got a shit climate ice is treated like a luxury good uh we drink tons of tea and coffee okay so we're already kept hydrated that way frankly we can't see any market for coca-cola in the uk you know yeah and that would have been perfectly rational all perfectly sensible and you know so just because you you can win an argument doesn't mean you're right just because what you say makes sense doesn't mean you're right and i think all my arguments against podcasting were perfectly sensible but turns out they were completely wrong thankfully thankfully wrong then somebody asked the question what am i most ashamed of i think and it's very simple one of the things i thought was most admirable it's an age before it was part of a plc david ogilvie was flying down to it might have been atlanta actually i can't remember he was flying down on a plane to pitch to a client and as they were both going to basically pitched to the same client david ogilvy said to the other agency i don't know which one it was go on let's show it show each other's work okay and david looked at their work and said that's actually better than our work and he got on the plane and went straight home he didn't bother presenting his own work okay now that's that's mensch behavior okay the second example is i was involved in a pitch to replace the line the fourth emergency service and i'm to my eternal but i wasn't in control of the decision and we have a fiduciary duty to pretend we think we should do this advertising campaign i really really wish david ogilvy would have refused okay david ogilvy would have said that's an act of brandicide there is no good reason to get rid of such an incredibly valuable property and interestingly what was so funny working on this is all the creative department basically couldn't do any work for the first week because they said we don't understand why we're doing this we think it's stupid okay and actually probably you know that's one of my great regrets is that nobody ever had the balls to say, look, let's just walk away from this.

50:20Actually, it would have saved us a fortune because we didn't win the pitch anyway. Okay. But actually, that was one of the examples, you know, where it was just an act of brand vandalism, to be absolutely honest. Well, there's one person in the audience, I know, wherever Rupert is, who actually founded the agency that came up with that. So big kudos to Rupert, wherever you are. Right. Rory, you've been amazing. Thank you so much. And big round of applause for Rory. Thank you. Oh, thank you. Thank you very much for listening or watching Uncensored CMO. I hope you enjoyed that. If you did, please do hit the subscribe button wherever you get your podcasts.

50:55If you're watching, hit subscribe there as well. I'd also love to get a review. Reviews make a big difference on other people discovering the show. So please do leave a review wherever you get your podcasts. If you want to contact me, you can do. I'm over on x at Uncensored CMO or on LinkedIn, where I'm under my own name, John Evans. Thanks for listening and watching. I'll see you next time.