In the next ten years some of the biggest advances in business and government will come from new insights into human psychology and behaviour.
This was the hook for a Cardiff Business School lecture by Rory Sutherland, Vice Chairman of Ogilvy Group UK, an enormous advertising group.
Having had the pleasure of seeing Sutherland speak at a couple of different events during my time in London, I was pleased to see notice of this lecture. One of those people who appears born to wear tweed, Rory (as I will call him from here on, for ease rather than any familiarity) has a loquacious energy and inherently amusing manner of delivery. In a wonderfully compelling way, I find he sort of personifies Toad of Toad Hall from Kenneth Grahame’s novel The Wind in the Willows.
The lecture’s promotional spiel told us Rory has worked on accounts for Amex, BT, Compaq, Microsoft, IBM, BUPA, easyJet, Unilever, winning a few awards along the way. He was appointed Creative Director of OgilvyOne in 1997 and ECD in 1998. In 2005 he was appointed Vice Chairman on the Ogilvy Group in the UK.
A stormy European election evening was perhaps partly responsible for the disappointing turnout, which was exaggerated by a large Business School lecture theatre and curious lighting that illuminated the audience but not the man giving the lecture. He remained in the shadows, lit only in violent blasts of the photographer’s flash.
We were first invited to ponder that evolutionary biology is much more helpful than most business and advertising books to understanding human behaviour. Although there would be no need for marketing or advertising in a world of perfect trust, economics is equally manipulative in pretending to explain human behaviour as rational.
Karl Popper claimed that with complexity, everything is between a cloud and a clock. Like an engine, the mechanics of a clock are technically understandable and knowable. Whereas a cloud is not knowable. It is flexible, changeable and unpredictable. Like human behaviour.
Finance functions of organisations often want to believe everything is a clock, rather than a cloud. This observation chimed with me. Anyone who has ever worked in a middle marketing management position is likely to have come up against such challenges. Much of marketing and advertising is cloud-like and unknowable. It is based on informed guesswork, creativity, intuition and a basic level of intelligence. It is not a knowable science. Popper claimed that it is the worst mistake to treat cloud like things as clocks.
- Really big business tends to fail because of really simple things – there is nothing objectively better about Google over Bing. It’s just habit.
- We buy dry toilet paper out of a herd instinct, when moist toilet paper would work better.
- We obey our own ‘elephant’ unconsciousness, which we ride and believe we control.
- This ‘elephant’ is largely responsible for making decisions and making unconscious bets.
Elaborating on the latter ‘elephant’ theory, Rory explained how we process cues from our environment in order to make bets because our unconsciousness makes faster decisions, and he cited reactions to restaurants as an example. Tables and chairs positioned outside an Indian restaurant explicitly tell us an Indian restaurant serves at lunchtime, unlike most Indian restaurants. Restaurants in Milan are less inviting than restaurants in Rome, forcing customers to approach and enter buildings which look dark and closed, but are in fact open for business.
- What we see overrides what we hear
- The brain makes mistakes but most often makes good bets
- Evolution is not bothered by the difference between good and very good
- One big part in the success of McDonald’s is human tendency to minimise risk and go with what is reliable and knowable. (I would add to this Irish pubs when overseas).
- Trust is driven by our ‘elephant’ in choosing a partner, or returning like salmon to our small hometown to buy a first car from an acquaintance of our Dad.
Choices and a sense of automony makes people happy: tea or coffee, red wine or white wine, still or sparkling water. Rory believes that the NHS could make progress in allowing patients to choose between two slightly different treatments, enabling them to be their own author. Some choice is better than none because it gives a sense of control.
The lecture was a little light on firm conclusions or forecasts as it sped to an end. Not much was said about this revolution or the existing real-world application of learnings in wider human evolution. That said, I did go home from the lecture and read about the current furore caused by two of the cited independent taxi companies, Uber and Hailo. These have developed traction across Europe via smartphone location-enabled applications despite not being officially licensed. Rory cited them as smart companies working at the intersection between technology, psychology and economy.
Clearly psychological developments will progress in synchronicity with technological developments, but in my opinion the former is always likely to follow the latter. This is because, however compelling the cases, people tend to struggle with listening to and computing radically new ways of thinking, and new ways of thinking about thinking – at least in the professional world of my experience. Tiny incremental changes are an acceptable compromise. But it is easiest and safest and most comfortable to carry on doing what has always been done.
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