Harnessing Emotional Efficiency

Interview Transcript —

MK: You’re listening to an audio edition of ZINE, the Webby-Awarding Winning publication making sense of our current cultural moment, relationship with tech and one another, and what may come next.

My name is Matt Klein and I am a digital anthropologist, cultural theorist, strategist and writer, researching overlooked social shifts. I’m also currently the Head of Global Foresight at Reddit.

If we’re to author our preferred futures, we first have to be proficient in our zeitgeist. In other words, we can’t write culture if we first don’t know how to read it.

And today’s chat is an attempt at exactly that.

Celebrated as “one of the leading minds in the world of branding” by NPR and "the don of modern advertising" by The Times, Rory Sutherland is the Vice Chairman of Ogilvy U.K. He’s also the founder of their behavioral science practice. Rory writes the Spectator's 'Wiki Man' column and presents series for BBC Radio 4.

His TED talks about reframing perspective, and re-prioritizing details have racked up millions and millions and millions of views. He’s also the author of Alchemy: The Dark Art and Curious Science of Creating Magic in Brands, Business, and Life, which was published in 2019, and is an absolute must read.

Rory decodes human behavior and blends scientific research, absurdly entertaining storytelling, and deep psychological insight, which makes him, in my eyes, one of the most important and influential thinkers of our time.

In college, I first came across Rory’s talk, “Life lessons from an ad man” where he makes it clear that advertising simply adds value to a product by changing our perception, not the product itself. Yet such reframes can be applied to all elements of our life. He let me see that marketing isn’t simply about slinging crap that people don’t need, but rather is a practice in helping solutions be adopted by those who need them most.

Rory discusses how the Eurostar could have spent its budget not trying to increase the speed and decrease the time of its trains, but instead could have spent only a fraction of its budget on models and alcohol, and passengers would request the train ride to be longer, not shorter.

These are examples of simply reframing existing problems and solutions, recognizing innate value. In my eyes, strategies to dial up humanity and empathy, and resist the urge to reinvent wheels and spend unnecessarily.

And it’s these stories that wanted me to start working in communications and strategy.

I’ve been following Rory ever since, and find that his best, most insight interviews are the ones where he just goes off. I’m excited that this, was one of those experiences.

As a significant personal influence, here is my chat with Rory Sutherland.

MK: I am endlessly fascinated in making sense of culture. More specifically, what's overlooked? What are people not paying enough attention to? And I cannot think of a better person to help answer those questions than yourself. I have a laundry list of questions, but maybe we'll, we'll start simple. What's on your mind?

What are you thinking about? What's exciting you? What's worrying you? What are you thinking about in culture right now?

RS: I think that question, by the way, is the right question to ask, which is — what we're talking about quite often is the product of a kind of media feedback loop where effectively every news publication and to some extent social media, but actually I think social media is less guilty in some ways than the mainstream media is — effectively decides what's important based on what other people are reporting.

And it's been a facet of mainstream media for ages where there's this kind of effective echo chamber where people in the newspapers watch 24-hour TV news, and people on 24-hour TV news read the newspapers to decide what's actually worth talking about.

And I think it leads to this complete imbalance where certain things get discussed far too much or ignored for far too long, and other things get ludicrously over-publicized.

And this leads to the problem, because I was just writing about this actually — Daniel Kahneman's observation, he died last month, great man, and his, one of his most famous sort of dictums was:

“Nothing is as important as you think it is while you are thinking about it.”

In other words, what determines our sense of priority and our sense of importance is often our attention.

And our attention, although not beyond our control, is often quite arbitrary. And as a consequence, I think, what happens is because things garner people's attention, they then deem those things to be important. They talk about them more, which then spreads the degree of attention they get elsewhere. And, you know, I'm not necessarily, well, I am actually supporting those people who, you know, there are various scientists who said, look, we give far too little attention to the risk of a meteorite strike or a really major earthquake. There are certain potential catastrophes against which possibility we spend almost nothing, not because they're unimportant, they're monumentally important, indeed they could be cataclysmic sort of extinction events, but because they're unlikely.

And I think those people had a point, which is that, look, at the very least, you know, the odds of a meteorite strike are relatively low, we don't seem to have had a real, really biggie since the dinosaurs got eliminated, unless you include, what is it, the Tunguska event in northern Siberia.

But nonetheless, the consequences of such an event would be so immense that we should at least give it, you know, what you might call a few million dollars a year of scientific attention.

And the same thing, by the way, happens in business where certain trends become absurdly over-dominant. I would argue that offshoring and globalization and actually, also, the replacement of human beings with technology have become almost just self-replicating activities where you know, you don't even have to — nobody even makes the contrary case — they've just been assumed to be true.

You manufacture something in a low cost economy. You optimize around a single supply chain with whichever suppliers cheapest, regardless of the risk that might pose to resilience. And there were certain business behaviors, which achieve that kind of weird escape velocity, where if you suggest doing them, no one — investing enormously in AI — no one even makes the contrary case. It's become so fashionable that effectively everybody just nods along with you for fear of looking stupid, and it's it — I don't know if you know Chris Williamson well, you might have met him in Austin for all I know, but he talks a lot about the Abilene paradox or the Abilene Effect where people don't really believe things they just pretend to believe them in order to fit in and go along with what they think is prevailing opinion and at moments of sublime absurdity.

With the Abilene Paradox, you literally get a group of people agreeing to do something, which no one individual in the group wants to do at all, simply because they've misread the room and they assume that everybody else is in favor of what's being proposed and that to raise a doubt would make them look awkward and, you know, feel silly and therefore people stay quiet.

One of the things I think we don't talk about nearly enough is the importance of — particularly post-COVI — the importance of the widespread adoption of video conferencing, indeed of technologies such that we are using now, because I think it's actually very, very important and should have major economic effects. And I also think many, many businesses and many organizations have the opportunity to reinvent themselves around this technology. Everything from remote medicine to remote psychology to remote financial advice. And I think the technology is much, much more important than people give it credit for.

The reason it doesn't get much attention is because the technology itself is old.

I mean, you know, you had video conferencing on Star Trek. Okay. You had technology like that on Star Trek. You then had Skype in the late nineties. There's nothing remotely new about it as a technological possibility. What is new about it is the widespread adoption and normalization of it.

And many, many technologies only really deliver the goods 20 to 30 years after they're invented. That was true of electrification of manufacturing. True of, actually, the internal combustion engine. You might argue the electric car — the electric car, as distinct from the electric motor, which was being pioneered in the Edwardian era, you know, has only finally come into its own with the invention of better batteries more than a hundred years later.

The fact that a technology is not new does not make it unimportant, but it does make it much less talk-able, simply because you feel stupid talking about something that's been kicking around for 50 years.

And there used to be a comedy sketch in the U.K. called The Fast Show. And there was a character there who was — it was a kind of character sketch of, “Isn't X brilliant?” And he'd go around going, “Electricity, brilliant!” Right?

And he'd get excited about things that it was, somehow socially ridiculous to be excited about. And you know, if I go, “Isn't video conferencing fantastic?” I look like a bit of a twat.

By the way, that's the British use of the word, which is not very offensive. I will make that point to American listeners — in Britain the T-word is a slightly strengthened word of the word ‘Twit.' It's not particularly rude.

But you feel a bit of an idiot if you get excited about a 20 year old technology. It's rather like getting excited about running water.

Now, the fact that running water is new doesn't mean it's not important.

I had a kind of early epiphany, bizarrely, with video conferencing before the pandemic. Actually, in the summer, in the August before the pandemic in August 2019, I had a meeting with the marketing director of Zoom and we were discussing what it is that is slowing the adoption — the much wider adoption of remote working and, in particular, video conferencing.

And as she was leaving — much to my horror, looking back — I remember saying, “Of course, what you really need is a massive transport strike or a minor pandemic.”

In other words, you know, if you have one of those kind of sudden external, exogenous shocks to the system that accelerates behavioral change really significantly.

And sure enough, it turned out to be a — well, not a major pandemic, but a pretty severe pandemic — and it did actually do the job, and it normalized it so that you're now expected to be able to use the technology, and you're not made to feel weird by proposing its use.

But my earlier kind of epiphany was when I was supposed to be going to Chicago to give a talk and something cropped up, which meant I couldn't go.

And so the talk was very largely, not exclusively to some people from Microsoft. And I said, “Well, look, I can't go, I can't make this trip, but given that you're Microsoft, you probably have pretty good video conferencing technology. So why don't I give the talk from London?”

But because that change was made quite late, all the other stuff was still in my diary. You know, travel to Heathrow airport, flight so and so to Chicago, travel to hotel, go to hotel, all the hotel bookings, check out of hotel, travel back to O'Hare, fly back to London, taxi from Heathrow.

It was still in my diary. And so in the event, what I did is I did what I had to do. I went into London, there was a 10 minute tech rehearsal. I gave an hour's talk. And then I went back home on the train and was home in time for dinner. But meanwhile, my diary still contained the imprint of what had been the original planned trip.

And I suddenly looked at that, and I thought, “Good God. This technology has given me three additional days to my life.”

But just to explain the importance of video conferencing, I'd like to reframe it very quickly.

There's a chart, I can never remember where I first saw it, and I've looked for a copy online without success. But it's a very simple chart. It effectively has distances from nought to 500 yards to 1,000 yards to a mile. To you know, two miles, five miles, 10 miles, 15 miles, 100 miles, 200 miles, all the way up to 1,000 miles. And it has little inverted U's, which shows the suitability of different modes of transport for covering that distance.

So, typically nought to 500 yards, maybe nought to 1,000 yards, walking is probably the optimal mode. And then assuming it's on a flat surface and it's not raining and you're reasonably athletic, cycling kicks in around about the kind of, you know, cycling takes over from walking around about the sort of 800 yards, 1,000 yards mark, maybe a bit further on, and reaches a peak of optimality around the sort of two mile, three mile distance, and then you'd obviously have, as you went on, you could have the train, you could have the bus. Ultimately, you end up with the airplane for distances of, let's say 800 miles or more.

And arcing over all that is the car.

Now, if you think about it before the car was invented, you had trains and ships, which could take you from New York to San Francisco, and you had horses, which could take you probably, you know, realistically 10 or 15 miles in a day if you really wanted to.

And you did have the bicycle. And you did have obviously the ability to walk, but what the car did was fill this massive gulf in the middle for which there was no really appropriate mode of transport, which was like a journey of 30 miles, 20 miles, 90 miles, 150. And it filled this huge gulf, which ultimately made it the dominant mode of transport wherever anybody in the world can afford a car, they try and buy one or gain access to one because without it, a particular kind of journey, particularly, at certain times of day when certain types of weather, is basically impossible or unendurable.

And I'd like to sort of parallel that graph by looking at modes of communication, and we have loads and loads of modes of communication.

If you have an X-axis, which is degree of kind of intimacy and engagement, okay? You have loads and loads of these new forms of communication, whether it be, you know, Slack or Twitter or email, clustered along the left hand side, where there isn't much intimacy or engagement, there's not much interaction, but you can get a message to somebody.

Then you have a kind of, a little bit of gap, and there's the phone call which is at least synchronous and immediate and conveys tone of voice and a few other things.

And then you have this massive gap all the way over to the face-to face-meeting. And in between the phone call, which is heavily skewed to the left, I would argue, and the face-to-face meeting, there's nothing until video conferencing came along.

So you have this absurdly bifurcated choice, which is you either do something totally impersonal that isn't very motivating, persuasive, or interactive. Phone call’s, alright. You know, you can sell over the telephone. That's why there's a big telemarketing industry, but it's not really that great.

And the alternative is someone travels to see somebody else. Now that adds probably more travel time than there is meeting time. Immense waste of time, immense amount of effort, and also an immense social obligation.

Now let's say I'd cancelled this event now, it's virtual, it's 11 o'clock in New York, it's four o'clock in London when we started. Okay, you would have thought I'm a bit of a pain in the ass, but you wouldn't have been livid. Okay, if you traveled from New York to see me and I'd cancelled, you would have been rightly kind of apoplectic.

And so, the video conference sits in this middle between silly kind of invented forms of either asynchronous or impersonal communication on the left, with the telephone being a little bit of an outlier. And then nothing all the way to let's meet in person.

Now meeting in person is a huge commitment. It often requires permission from other people in the business world because they're a fairly significant cost entailed — the likelihood that we would have met now — I'm sure we would have met eventually, because, I go to New York about once a year. You probably go to London about once a year. There'd be a 30% chance one of us would be free to meet the other on one of those occasions, but it would, it would take six months. And it might take a year and a half.

Now it can happen tomorrow.

Now, it seems to me that if you believe there's a value to serendipity, and what's ironic is that all the people who are demanding that everybody comes back in the office are saying, “It's the value of serendipity.”

Well, in the office, you are serendipitously meeting people, but they're the very limited subset of people who work with you already.

There's also a value of serendipity from having conversations with people whom you otherwise wouldn't have met face-to-face.

And it seems to me the value of video conferencing in that, in terms of the exchange of information, but also in terms of the exercise of persuasion is really, really important.

Now I'll give you a category, which is fascinating, which is personal investment or financial advisors discovered quite quickly that what their clients really want, in many cases, is a Zoom call.

And the reason is, if you've got a financial advisor — occasionally your financial advisor has got to say something like, “You really need to pay off your mortgage, you need to liquidate this asset and pay off your mortgage.” Or, “You need to double the contribution to your pension over the next five years” or whatever it may be.

It's too much for a phone call, but you don't want your financial advisor coming into your home. You've got to put on a tie, you've got to get biscuits, make sure you and your wife are both home simultaneously. You know, you can't be late because the financial advisor's coming to your home. It's a big bloody hassle. Meeting your financial advisor is too much of a pain. Having a phone call with your financial advisor probably isn't motivating or intense enough to actually persuade you to do anything. And also he can't present charts and spreadsheets and graphs and all the other stuff.

And for something like that, for that kind of transaction, the one occasion I've actually had it used, and it was very impressive, you've probably heard of this thing called a Quooker, have you? Which is a tap that dispenses boiling water.

Do you know it?

MK: No.

RS: If you ever have your kitchen refitted, it costs about a thousand bucks. It's spelt Q-U-O-O-K-E-R, as in cooker with a QU. And basically it's a tap that it does the job of a completely normal tap, but if you bling it up at a cost of about a thousand bucks, it can dispense completely boiling water.

More important for us than for you 'cause we're tea drinkers.

MK: Oh, I’ve seen this.

RS: You can put spaghetti in if you're making pasta, maybe poaching an egg you know, and actually you can also upgrade it even further, so it dispenses sparkling cold water and filtered chilled, still water as well. So it's kind of everything tap for water.

And I expressed a bit of interest and they said, “Oh, we can do a presentation in our showroom.”

And I said, “Well, where's your showroom?”

And they said, “Manchester.”

And I went, “Well, you know, I love your product and I'm desperate. We're certainly going to buy one, mate, but I'm not sure I'm going to spend a day traveling to Manchester for someone to demonstrate a tap.”

And they said, “No, no, mate, you're not understanding this. We've got a virtual showroom. It's in Manchester.”

But you effectively go to Zoom or Teams or something. “You go on Zoom. And we'll talk you through it. You can ask questions. We'll show you the various tap designs.”

That was absolutely perfect for selling a product, which was too expensive to buy over the phone, too much of a commitment. It required a degree of interaction. I wanted to see the thing.

We actually got chatting and they were able to tell the story, which is actually quite a funny story, which is the two founders were working for Unilever perfecting powdered soup. Sometime in the 60s, I think. And when they finished, they came up with quite a good pilot soup design.

And one of the people said, “Right, what do we do next?” “I'll move on to ice cream or something.” And the other guy said, “No, no, no, we haven't finished this problem because you've still got to boil a kettle. What I want is soup that's absolutely instantaneous.”

And so the guy left Unilever in Holland to go and reinvent the kettle.

So what it is, it's effectively a vacuum flask underneath the sink where water's kept at just below boiling point, very little energy costs — a penny or two a day to keep the thing warm because it's very well insulated — and then when you want boiling water, it knocks it up from sort of 95 degrees to a hundred and blitzes it out of the tap in a very clever way.

Actually, it's slightly aerated so you can't burn yourself. It's actually quite an ingenious product and it's by the way, it's much more useful than you think before you have it.

It's one of those things that economists call an “Experience Good.” You only really understand the value of it when you've experienced it.

I've got a Japanese toilet exactly the same — air fryers — nobody really wants one. But once they have one they, you know, they become evangelists. And it's very much like that. But that was a perfect example of the kind of conversation, I think. But I mean, we can extend this to medicine. We can extend it to education. We can extend it to psychiatry and psychology. We can extend it to a large part of B2B marketing — could be massively improved by companies that got really professional at doing remote presentations. I know I've made this first 20 minutes an absolute peon to video conferencing, but I really think it's important.

I mean, there's a big movement called Just Stop Oil, and the movement I want to join is Just Stop Travel, which is, you know, never mind oil. There are too many journeys made by people that don't need to be journeys.

And those journeys are often journeys of obligation. They're not fun, they're not social, they're, you know, it's commuting, it's showing your face, it's being present somewhere.

And there are far too many of those journeys.

MK: There are.

Here's the pattern that I'm seeing based upon everything we've discussed and, and even your, your own work prior to this, this video call.

It goes back to that paradox you had mentioned as well. Attempting to identify existing value where it already exists, rather than trying to create net-new value or net-new products or hyping things for the sake of hype.

I think of Shreddies, which I have you to thank or to blame for getting me into marketing.

Shreddies, the cereal — square shape rebranded to diamonds... That absolutely blew my mind in your talk. That to me is, right, creating values that already exist.

RS: You are creating value if, if you accept the Austrian belief that the only form of value is perceived value, because if you don't perceive something as valuable, it is not valuable.

You could imagine a parallel universe where we thought diamonds were a worthless curiosity. You know, you can imagine a parallel universe — in fact, it was a marketing campaign by De Beers, which really took diamonds from being the accompaniment to an emerald or ruby on a ring to being the centerpiece of the ring before De Beers marketed it that way. Diamonds were mainly used as a kind of accessory device to other forms of of precious stone.

So perceived value is the only form of value. Therefore, if you make something more valuable by changing the way people perceive it, you are creating value every bit as much as if you're working in a factory or manufacturing something or producing something.

People feel uncomfortable with it because it seems to sort of break the rules of physics. In other words, it's something from nothing, but it is nonetheless true, if you accept that basic economic premise, which is that value is a perceptual function, it's not an absolute function.

MK: So my question to you is, have you noticed, are we getting better at creating that perceived value or are we just stuck on that treadmill?

We can't buy less, we can maybe buy better. But we seem as if we're struggling, even within organizations themselves, that it has to be the net-new thing?

RS: There are books like Happy Money by Michael Norton, and I'm sure that you could improve wellbeing in the population by changing consumption patterns.

In that, I think, certain patterns of consumption are probably akin to addiction. Yeah, we probably acknowledge that certain forms of addiction, gambling addiction, alcohol addiction are net-negative.

We probably agree with that point that it, you know, and I think there are other forms of consumption, retail therapy, clothes shopping, perhaps, which can become compulsion, and actually don't add nearly as much value as they cost. And therefore, yes, you could make people richer while spending less by simply allowing them to spend differently by thinking about their purchase decision differently.

It is interesting by the way, because as you get older...

One of the reasons you spend less as you get older, I think, is that you kind of know what makes you happy a bit better.

I think when you're a young person, you're in that mode where you try everything.

I was noticing this when we go on holiday, we less and less go on holiday as a family because my children are now — one of them's at university, one of them's, effectively, about to start work.

They always want to go somewhere they've never been before — “I want to go to South America.” And I want to go to somewhere I've been before, because I knew it was pretty good, and I liked it. And they regard this as absolutely ridiculous and evidence of their fuddy duddy dad.

One of the odd things — there is a sort of truth that you never regret your extravagances. That if you buy something disproportionately good, like a disproportionately good pair of shoes, which has enduring value — in other words, it's fashion proof, which is easier for men than for women. I think those things do quite often deliver quite a lot of value.

You know, the little learnings I had, which took me until I was, you know, sort of 50 before I realized that — my dad always said at 60, the three worst things about living in Britain are January, February and March, and that it's stupid to go on holiday in August, you should go on holiday in February, go to the Canary Islands, or if you can afford it, I guess the Caribbean. But don't go on holiday in August, Britain's really nice in August, go on holiday when it's shit. And it's dark and shit as well. It's not just shit.

Okay. My dad said, I wish I realized that when I was 30, rather than realizing it when I was 65.

I also realized something, which is that I can't generalize about any of the holidays I've taken, except to say that I think all the holidays where I rented a car were better than the holidays where I didn't.

Now, okay, there were city breaks like Rome where you wouldn't want to rent a car because driving in Rome is slightly terrifying. You know, there are city breaks. I'm not saying I never, I should never have gone to Rome because I didn't hire a car there.

But in those holidays where you could explore, you discovered things, you know, you go to Rome. You don't have a car. You might discover a few good restaurants on TripAdvisor and the old, good museum, but you'll also do the Colosseum, you know, Pantheon and so forth, you know, and you'll kind of do what you expected.

You don't get quite the same level of upside surprise. Well, driving around the United States, for example, a lot. Driving around Italy last year where I as an act of kind of bravado, I rented an electric car from Hertz and bizarrely in the process of having to charge it, we discovered a little cafe on the outskirts of Florence. I mean no one's ever going to write it up — no one's ever going to review it for the New York Times. It's just a fantastic cafe and that kind of serendipity I think is driven — Also, if you have a rental car even if your hotel's a bit shit, you know, even if other, even if you're, you're disappointed with where you end up — the likelihood that there's nothing of interest within 25 miles is quite low — unless you’re in the middle of the desert.

Well, I quite like deserts actually, but I mean... I'm driving actually from Toronto to — Probably the best tourist visit I've ever made in my life, a drive from Toronto to Washington DC. And I looked at the map and I went, hold on, it's only a 50 mile detour to see Falling Water, The Frank Lloyd Wright building in River Run, Pennsylvania, Western Pennsylvania.

Probably the best visit, you know, probably, the best thing I've visited in my life, I think. And the odds that I'd ever have been there — otherwise, you know, I'm never going to combine a business trip to New York with a flight to Western Pennsylvania. So that that's the kind of thing which, you know, and you start, you do start to, I think, get a bit better at consumption, a bit better, you learn a little bit more what makes you happy.

But I noticed my kids, their, in fairness, their consumption of evenings out became a hell of a lot more sophisticated between the ages of, trust me, between the ages of 14 and 22.

You know, when they were 14, “Oh, I want to do this. I want to do that. I want to do everything.” And by the time they got to, what are they now — 23, no, 22, still just — they did actually acquire some reasonable degree of discernment in terms of things they liked doing and things, which they actually thought were overrated or a bit shit.

It is a very interesting question. The whole question of psychological value creation is really important because if you take an economic viewpoint on a behavior or the absence of a behavior, economics assumes perfect information and it optimizes for the average.

Economics is probably the worst mechanism for understanding human behavior from the point of view of a marketing person, because it commits several heinous crimes. It assumes that everybody knows what the product is, and how much it would be worth — how much utility they derive from buying.

Well, that's obviously antithetical. That's like the opposite of marketing, which is what can we tell these people about the product, which would cause them to value it more highly.

But now in economic terms, you assume perfect information. You assume perfect trust. Which is again, absolute nonsense because one of the biggest obstacles to people doing things, maybe fear doubt or uncertainty rather than the putative value of the utility they derive from the product. And the third thing it assumes actually, is the single representative agent.

Now, all of those three things, if you wanted to be a really shit marketer, you know, I got you into marketing, you claim...

If you want to be a really shit marketer, read about economics and take it literally, because you'll become useless because you'll believe in the single representative agent, which means that the average of the whole is representative of the whole.

Now, one of the vital things that marketing can do is it can solve the same problem for different people in different ways.

Because people are different, their mindsets are different, their obstacles are different, their circumstances are different, their context is different, their mindsets are different, their evolved psychology is different in some cases.

So one of the things a marketer can do is spot an underserved market, which is simply what you might call, at some distance from what you might call the sweet spot or the epicenter of consumer demand. That's the single representative agent. Then you assume that everybody trusts you completely and you assume they know exactly what your product's worth.

Well, if you believe those three things, what can you do? You take the average customer and the average product, and you say, let's make this product either better or cheaper. What else can we do? Well, according to this economic theory, there's nothing else we can do, because they already know the utility of the product, and their perception of its utility is based entirely on what the product is objectively, and the only other thing that matters to them is price, and they trust us completely already, so there's no doubt or fear there, okay?

So those are the only two things we can do.

And as a result, it's the biggest, what you might call...

It's the biggest constraint on creativity you could possibly imagine is believing that economics is true.

And those, those axiomatic assumptions which are made simply in order to make the maths work in economics. The single representative agent is just a mathematical kind of convention, you know, in order to make the maths effectively tractable.

And all of those things are totally ludicrous assumptions.

Now, I'll tell you a really interesting story about this, which I only heard today. Actually, it was late last night. But it really interested me. I'll tell you two stories, actually. Both of which — the benefit of people who listen to a lot of my podcasts are actually miraculously new, because I am conscious of the fact that I have to tell the same bloody stories again and again, which is fine for the, you know, the audience who's never seen me before, but it must be a royal pain to the 10% of people who actually follow me.

So here, here are two totally new stories.

There's an article in today's Telegraph in the U.K., where someone simply wrote a piece saying they'd moved to Lichfield in Derbyshire, in the kind of North Midlands of the U.K., and they couldn't find a house they wanted to buy. They went around all the realtors and estate agents, and they couldn't find a single house that appealed to them.

So they were like, what do we do now? And what they did is they chose a street they really liked, and they went down the street, they looked at Zoopla, so they could tell what Zoopla — I don't know if you have this in the U.S., it's a property it's — there must be an American company. It basically estimates the value of every property according to when it last sold and what the likely increase in value would be.

And they went to Zoopla and they ruled out the properties they couldn't afford. And they went to the properties they liked and could afford and wrote them a letter saying, “If you are thinking of selling, let us know.”

They got I think if I'm right from 15 letters — they got five responses and three people showed them — five people showed them around the house and three people were willing to sell.

Now that's interesting because none of those homes were on the market previously. Now what that suggests is there's a psychological difference between putting your house on the market and responding to an invitation to sell your house.

I don't know what that means, but it suggests to me behaviorally there's an opportunity to reinvent the entire real estate business by doing it backwards.

Where instead of saying here are some houses people want to sell, you simply say here are 10 houses I'd really love to buy — “I've put you in my top 20. If ever you feel like selling let me know” and that process will be considerably — you're obviously you'd obviously have to limit people to the number of houses to which they made offers, otherwise some people would get bombarded and some people would game the system by just offering ludicrously low prices. Nevertheless, there's something there that's a really interesting insight just as I've long believed.

Only Amazon does this, but on Amazon, if you have a problem with Amazon or something doesn't arrive, you go to a webpage and there's a button there that says, chat to us or request a call back. And if you click the button that says, request a call back, about seven seconds later, your phone rings and goes, “Hello, it's Amazon here. Can you tell me what the problem is?”

I'm convinced that in terms of customer satisfaction, that's inordinately preferable to making the call yourself. I can't fully explain it, but I'm saying that if you're put on hold and you have to wait to have your call answered, you have to explain all over again, what your problem is, there's probably a degree of feeling like a supplicant feeling that you're not being trusted — whereas if they ring you, you feel like a valued customer.

And that although the nature and the most of the content of the telephone call is going to be identical in both instances, the feelings generated by the phone call are totally different. And in the same way, I think that if someone writes to you and says, “Actually, I'm really interested in buying your house,” it raises the question of “Should we actually sell this place?” in a way that wouldn't happen otherwise, most of the time.

Now, I'll give you an example of this. You work in marketing. You probably want a reasonably sane life. I'm willing to say that in the next year, you probably won't apply to work at Goldman Sachs, right?

MK: Probably not.

RS: But if Goldman Sachs wrote you a letter and said, we're really interested in you, Matt, and we've got a job going, which we think might be right up your street...

You go, right?

Simple as that.

Now the economic assumption that we actually pursue the things we want — by the way, the quality of politicians would go up by a factor of about 50%. If political parties actually went to people and said, “You would make a good politician.”

Funnily enough, you know, if either of the two parties said, “Are you interested in standing?”

I go, well, I don't know, to be honest, I'm 58. I'm more thinking of kind of, actually throttling back than actually adding a new dimension of stress to my life, but I at least have the conversation. Whereas there's no way I'm going to apply out of the blue to stand as a parliamentary candidate.

So these little things, what I'm saying is that the thing as defined objectively is very similar. It's an outbound phone call versus an inbound phone call, but the emotion it generates and the emotional by product of the activity can be totally different.

Now here's a third one, which is another recent story.

So good news for my more regular listeners...

I'm sorry, because I have to tell the Eurostar story in every bloody podcast, because people go, you've got to tell the joke of the supermodels on the Eurostar, because basically they said, if you don't do that, it's like going to see the Eagles and they don't play “Hotel California.”

MK: It’s the greatest hits!

RS: So it's like, you know, you've got to, you've got to repeat the greatest hits.

But this thing I only read last night, and it's that the fact that in the Netherlands and in Germany, people have started erecting solar panels as fences.

So in other words, they need to replace a fence, or they need to build a fence, and they all, rather than just buying a fence, will buy solar panels, and we'll put them up, and we'll plug them in.

Now, if you think about it, that's a suboptimal efficient use — sub-optimally efficient use — because solar panels should really be angled as far as possible towards the sun, which would mean, depending on your, your latitude, it would mean you should be on a sloped surface facing south, not on a bloody fence.

Okay, I get the fact that half the fence probably is facing south or west or something, but it's not optimal.

And the person who shared this information had exactly the right insight. Not sure it would have occurred to me, but they spotted something, which is they said:

If people are prepared to pay for solar panels, and then install them in a way that doesn't deliver on their full efficiency, what that suggests to us is that the obstacle to people buying solar panels now is no longer price or efficiency, which are the two things which everybody's been trying to optimize to date. It's actually the pain in the ass nature of installing them on your roof.

And actually we're trying to tackle the wrong problem. We're trying to make solar panels even more efficient and even less expensive to buy so that more and more people will see the economic case. But the fact that people are actually putting them as up as fences in a suboptimal position suggests it isn't price or efficiency that's the problem. It's actually the business of, you know, having had a load of guys crawling all over your roof, breaking tiles, you know, and by the way, also the fact that they're totally unremovable, I guess, on the roof, or it's very difficult to remove them if you're going to move house.

Now, what that tells me is the next innovation we need is a box in my garden, right? A bit like one of those satellites on a, you know, those satellites on James Bond films, which kind of unfurl their solar panels. We actually need to sell a box in the garden, which I can plug in. Ideally, I'd plug it straight into my electric car, actually, and trickle charge it. Okay? Put a box in the garden which unfurls itself whenever the, whenever the sunlight reaches a certain level and then closes itself up.

And where, if I want to have a garden party, I can say, okay, let's just take the hit and close the solar panels because they're a pain in the ass. But that's a really, really interesting insight, which suggests that what we're now — they were quite right, but don't get me wrong, in 1980 and 1990 and 2004, they were right to try and make solar panels cheaper and more efficient. And they should continue to do so, but that is no longer the barrier.

In the same way I would argue that once an electric car reaches a range of okay, it's going to be slightly different in the U.S., although in New York, I mean, to be honest, you can have an electric car with a range of 60 miles, right?

Cause you're going to be stuck in traffic anyway. And you never, you never leave New York anyway, do you? Cause you, you actually have, you start hyperventilating. Yeah, exactly. You know, if there's not a Korean restaurant within five feet, you start hyperventilating. So in New York, electric cars could have a range of like 60 miles, really.

I’m only half jokingly, but then you probably need a range of a hundred in the U.S. particularly if you live somewhere, you know, more remote, you probably need a range of 200 miles. Okay. Maybe a bit more, but actually... At some point, we've got to stop necessarily optimizing range, or at least making cars heavier and more expensive than they need to be by attaching enormous batteries to them. And we've got to say, actually, the problem with range anxiety is no longer the range, it's the anxiety.

The problem with roof mounted solar panels is no longer the solar panels, it's the roof mounting. The problem with range anxiety — let's stop focusing exclusively on range, and let's start to tackle anxiety.

And it suddenly occurred to me that a large part of the anxiety is caused — it's not really range anxiety at all. I've had two electric cars in the household. My wife's got one. I've got one. My wife's car is a Mini. It only has a range of about a hundred miles, it’s an electric Mini. In what is a total of a combined total of five years of owning those cars, I've experienced actual anxiety about range — and then only mildly — on one occasion. And that was because I went to charge somewhere late at night and they went and locked the car park. So, I had to go and find somewhere else to charge where I didn't expect to have to do so.

But the main reason for the anxiety is that people don't know how many chargers there are because they're not very visible.

Compared to a gas station. Now, you may not have a car because you're in New York. I mean, I know you people. Londoners are the same, right? But you probably know where there are five gas stations within 20 blocks of your house because you've seen them.

If you don't have an electric car, you won't have any idea where the car charges are because they're not a massive great thing that takes up half a city block. They're a stick, right?

And the other thing is, of course, is that gas stations were located typically decades before sat nav was invented. So you had to put a gas station in a really prominent position on a major busy road because otherwise you wouldn't sell any gas. Because people didn't have the means of going, “Shit. I'm running low on fuel. Sat nav, tell me where to go. Oh, look, there's a gas station hidden down this back street around the corner.”

The gas station had to be on a major thoroughfare because otherwise you weren't selling a nearly enough gas because people wouldn't even be aware you existed.

Now, of course, a lot, an awful lot of electric chargers, including the ones in people's homes, are completely invisible.

And so — I'm in front of my local supermarket, Sainsbury's, has had four high speed 150 kilowatt chargers for the last four months. But for some reason, they plonked them around the corner in a car park, in an area of the car park where I never park. And I had no idea they existed until I went online and said, “What the hell are those?”

There's a kind of online web app called, and a webpage called Zap Maps in the U.K. and it basically goes and tells you all the charges are, whether they're operational and so on.

But actually, one of the ways you can reduce range anxiety is not by making the battery bigger, it's by going to Google and Apple CarPlay, specifically, and Android Auto and saying, which they don't currently do — When I've got my — I've got the Mustang Mach-E. So you, I've got an Android phone so it uses Android Auto, when I turned up at that supermarket, Google Maps, by which I mean Google Maps on Apple — I'm, sorry an Android Auto — should have said, “By the way if you've got any time to spare, they're 450 kilowatt chargers, 50 yards away.”

And if I drive down a road and there's some new chargers, it should, even if I don't need to charge or I'm at 70%, it should say, “Hey, by the way, some, you know, there's some chargers just two miles to the left and three of them are free and there's a cafe nearby.”

If you introduced what you might call the proactive — the proactive kind of reassurance of the abundance of car chargers, you'd actually be driving through London going, “Shit, these things are all over the bloody place,” but you wouldn't know.

And so, you know, and there's another thing by the way, which is quite interesting if you ever get an electric car, which is that it also simply requires a change in mentality because everybody who's had a gasoline car treats fuel purchase as a distressed purchase.

You wait until the light comes on. You wait until you're down to an eighth of a tank, and then depending on how blinged up you are, you either just fill the whole tank or you put in 10 quid or $20 or whatever. And that's how we've always bought petrol.

And the mentality with an electric car is sometimes the mnemonic is A.B.C. Always be charging.

If you're at 57%, you're not planning to go anywhere, but you're going into a shop or a cafe or a restaurant, there's the opportunity to charge, you might as well charge. And so, you know, and then once you have, once you have car charging at home, the whole problem basically goes away completely.

But it's very interesting because range anxiety is exactly the case where you get —

Engineers get billions of pounds to increase range, but marketers don't get any money to reduce anxiety. And it would be inordinately cheaper to reduce anxiety than to increase range.

MK: What is that incentive? What are those incentives? What are the signals in culture that support, there are alternatives to how we're already thinking about things?

RS: This is the question that preoccupies me, which is, “What is it that causes this bias towards changing objective measurable reality, rather than the much cheaper and more efficient?”

We don't have a phrase in English.

I Google’d it once, “Emotional Efficiency.”

And I put the little curly quotes and searched for the use of a phrase, “Emotional Efficiency.” And it virtually, on the whole of the web, it features like three times or something, probably in Surrealist French poetry or something. And literally those two words are never used together.

The most inefficient thing you can do in the world is produce something brilliant and then fail to actually generate sufficient emotional appeal for people to see why it is brilliant.

I mean, you realize, when you realize, you go back over the scientific history, you look at Jenner who invented vaccination, Fleming who invented penicillin, okay?

We all assume, when we look back in hindsight, that they go, “Oh, I've just invented vaccination.” Everybody goes, “Fucking hell, Ted! Brilliant.” Right. We're going to give up variolation. We're going to give up, you know, having people die of smallpox and be generally defaced.

“Hey everybody, it's vaccination time.” No, it wasn't like that.

He had to spend his whole life arguing and re-arguing his case.

Anything new, even if it's a proven 24-carat lifesaver for millions. But if you go to Spain, for example, you know, there are loads of places. Avenida del Doctor Fleming, because, you know, if you consider the kind of outbreaks you would have had in Spain in, you know, pre-, well, during the civil you know you know, up until the end of World War II and shortly afterwards, the level of death through infection would have been absolutely hideous. And so, you know, he's a kind of saint in Spain.

And yet it was years and years of battling to get this thing adopted. And so —

There are really great ideas that are produced where what their need is greater emotional efficiency to gain traction faster, sooner, and more widely.

And yet not nearly the same attention is paid to this because we don't have a concept of emotional efficiency.

This product is manufactured efficiently, but we haven't found a way to communicate it in a way that's emotionally efficient.

And that that's one thing — the other thing which fascinates me — and there's another new story here, you see — Another new story...

I'm driving down the road. Okay, and it's near — my father died a few weeks ago so I was down in Wales — and he was 93, but it was, it was a pretty, you know, still weirdly a shock, you know, it was, it's you know, I was pretty gutted for weeks afterwards.

And I'm driving in a road and there's a motorway service station, you know, and all the lights are switched off. There's a big kind of BP sign. There's a big sign — Burger King sign. All the lights are off. Okay. And it looks closed. And you know, I mean the Bates Motel looks more welcoming than this place. There was not a single light on the road.

I said to my wife, cause we actually wanted to buy something there. I said, “I'm sure we went there once on Christmas day. I think it's open 24 hours. Let's go in and try anyway even though it looks closed.” Sure enough, the whole place was open. We were the only customer, unsurprisingly, because everybody else thought it was closed.

And I said to them, “Look I thought it was closed.”

“Oh yeah, yeah, we forgot to turn the light on.”

Now, a failure in marketing is like a sin of omission.

Now what, what amused me so much is he probably by not, and nor did he go and say, “Shit, I'll go and turn the light on now. That's terrible, right?”

“I think they might've forgotten to turn the light on the last shift or something might've turned...”

This is costing you a thousand pounds in passing traffic because every single person who doesn't know this place intimately will assume it's shut, and you're staying here on the night shift and you're going to sell one chocolate bar in five hours, right?

Now it suddenly occurred me, if that guy had stolen a chocolate bar, there'd be hell to pay, right?

Now, he was costing the business by not turning the light on, literally, you know, a hundred times more money to the business than if he'd nicked a can of Coke and a chocolate bar from off the shelves.

But weirdly, we see the sin of commission, which is doing something which is illogical or bad or illegal or whatever. We're very, very laser focused on that. But we don't really punish people and people don't get punished for the ideas they don't have and the things they fail to do.

And so this leads to, I think, an appalling culture in business where people effectively are laser focused on the things they can get bollocked for.

And it's much, much easier to get bollocked for being illogical than it is to get bollocked for being unimaginative.

And so people in a corporate environment tend to default towards the unimaginative logical. But that's as close as I've got so far in explaining your conundrum.

MK: But that's a perfect ending because that's — right how we started.

It was hype for hype's sake and businesses being unimaginative, lack of imagination and hiding behind data.

RS: There's something that — in other words...

You can't bollock someone for being unimaginative, but you can bollock someone for being illegal, illogical, or whatever.

And because a large part of our motivation is the avoidance of getting bollocked, we go, well, look, the safe career path is just to tick boxes. And it's not to look for extra boxes to tick.

And yet quite often, you know — so I noticed that these companies will proceed from beginning to end with something, and at no point have they kind of said, “Actually for two days, let's just switch off the process and ask ourselves, for example, ‘Are we trying to answer the wrong question here?’”

You know, nobody building that high speed railway line to Manchester said actually we're defining this in terms of capacity and speed. But the purpose of a railway line is to get people off their, out of their cars. And the real question we should be asking is: “How do we make this journey from London to Manchester by train so enjoyable and rewarding that people feel stupid driving?”

That was the question you should have asked. Now that question is not an engineering question in a way, it's a design question. It's a Johnny Ives question. You know, and I actually said if you gave 20 million pounds from the HS2 budget and you went and gave it to Johnny Ives and his mate, Marc Newson, the Australian designer, who produced, actually among other things, the Qantas business class seat, which is I think is probably the best airline seat I've come across.

You know, you went and you went and got those two and you said, here's 20 million quid. Come on. Just sort this out. You'd come out, albeit in sketch form, because I don't imagine you get a lot from Johnny anyway, but you would come up with something truly insightful and different. I don't know what it would be.

That's the point. That's why you pay them.

But at the same time, if you'd simply said, okay, we're going to have, we're going to make the trains not all that fast because actually in some ways, a two hour train journey is more enjoyable than a one hour train journey. You actually get to get some shit done.

We're going to have little offices and we're going to have really good Wi-Fi and we're going to have video conferencing pods on the train. So you can actually have a meeting while you're on the train. You know, if you did all that shit, you know, or you went really wild and said, we'll make it a steam railway, and people will just, you know, because people — I mean, look, if you ever go on YouTube, there was a locomotive produced in the United States, the most powerful steam locomotive ever made in about 1942 called the Union Pacific Big Boy.

It's a just an enormous thing. And you know, one of the great YouTube videos is some people who drove through the night for 11 hours to see this train. Now, I’d do that actually. So now for the budget you had for high speed too, you could produce replicas of the world's greatest steam locomotives. And tourists who didn't want to go to Manchester would still take the trip.

And actually there's a sort of engineering cast of people who think that creating psychological value is cheating.

You literally meet engineers who will say something like, “Well it's ridiculous that people choose a computer by the brand, they should choose it by the specification and the price.”

And you go, okay, there really is no hope.

I mean, people who are sort of highly tech people. Now, admittedly, there is a, there is a section of the market that buys like that, but, it's a tiny part of the market. And what they don't understand is that most people with social intelligence use a brand as a heuristic guide to non crap-ness.

In other words, something with a famous name is much less likely to be crap, because if you've got a famous name, you have much more to lose from trying to flog a dud product.

MK: My perception is more sinister in that there are people within the industry itself that are, are off and they're supposed to be the ones on the same team. And that to me is the difference.

RS: If you look at mainstream economics, it took about seven wrong turns. It created this idea of utility, which the Austrian school rejects. They simply say you have a preference for one thing over another. The idea of utility is a kind of linear scale, it's ordinal, not cardinal or whatever they say.

The single representative agent, the idea of perfect trust, which because it's why signaling came as such a surprise to the economics fraternity.

So in every case to achieve mathematical simplicity, it's actually rejected what it — or rather set to zero the most interesting variables that are actually going on.

MK: I appreciate that. I can go for another hour, but I’m mindful of your time and I want to let you go. On that note.

RS: Pleasure.

MK: Rory, this has been absolutely incredible. Thank you. Thank you.

RS: What a joy. Thank you very much indeed.

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