Alchemy Read online

  Contents

  Cover

  Title Page

  Rory’s Rules of Alchemy

  Prologue: Challenging Coca-Cola

  The Case for Magic

  Introduction: Cracking the (Human) Code

  Introducing Psycho-Logic

  Some Things Are Dishwasher-Proof, Others Are Reason-Proof

  Crime, Fiction and Post-Rationalism: Or Why Reality Isn’t Nearly as Logical as We Think

  The Danger of Technocratic Elites

  On Nonsense and Non-Sense

  The Opposite of a Good Idea Can Be a Good Idea

  Context Is Everything

  The Four S-es

  Why We Should Ignore Our GPS

  1: On the Uses and Abuses of Reason

  1.1: The Broken Binoculars

  1.2: I Know It Works in Practice, but Does It Work in Theory? On John Harrison, Semmelweis and the Electronic Cigarette

  1.3: Psychological Moonshots

  1.4: In Search of the ‘Real Why?’ Uncovering Our Unconscious Motivations

  1.5: The Real Reason We Clean Our Teeth

  1.6: The Right Thing for the Wrong Reason

  1.7: How You Ask the Question Affects the Answer

  1.8: ‘A Change in Perspective Is Worth 80 IQ Points’

  1.9: Be Careful with Maths: Or Why the Need to Look Rational Can Make You Act Dumb

  1.10: Recruitment and Bad Maths

  1.11: Beware of Averages

  1.12: What Gets Mismeasured Gets Mismanaged

  1.13: Biased about Bias

  1.14: We Don’t Make Choices as Rationally as We Think

  1.15: Same Facts, Different Context

  1.16: Success Is Rarely Scientific – Even in Science

  1.17: The View Back Down the Mountain: The Reasons We Supply for Our Experimental Successes

  1.18: The Overuse of Reason

  1.19: An Automatic Door Does Not Replace a Doorman: Why Efficiency Doesn’t Always Pay

  2: An Alchemist’s Tale (Or Why Magic Really Still Exists)

  2.1: The Great Upside of Abandoning Logic – You Get Magic

  2.2: Turning Lead into Gold: Value Is in the Mind and Heart of the Valuer

  2.3: Turning Iron and Potatoes into Gold: Lessons from Prussia

  2.4: The Modern-Day Alchemy of Semantics

  2.5: Benign Bullshit – and Hacking the Unconscious

  2.6: How Colombians Re-Imagined Lionfish (With a Little Help from Ogilvy and the Church)

  2.7: The Alchemy of Design

  2.8: Psycho-Logical Design: Why Less Is Sometimes More

  3: Signalling

  3.1: Prince Albert and Black Cabs

  3.2: A Few Notes on Game Theory

  3.3: Continuity Probability Signalling: Another Name for Trust

  3.4: Why Signalling Has to Be Costly

  3.5: Efficiency, Logic and Meaning: Pick Any Two

  3.6: Creativity as Costly Signalling

  3.7: Advertising Does Not Always Look Like Advertising: The Chairs on the Pavement

  3.8: Bees Do It

  3.9: Costly Signalling and Sexual Selection

  3.10: Necessary Waste

  3.11: On the Importance of Identity

  3.12: Hoverboards and Chocolate: Why Distinctiveness Matters

  4: Subconscious Hacking: Signalling to Ourselves

  4.1: The Placebo Effect

  4.2: Why Aspirin Should Be Reassuringly Expensive

  4.3: How We Can ‘Hack’ What We Can’t Control

  4.4: ‘The Conscious Mind Thinks It’s the Oval Office, When in Reality It’s the Press Office’

  4.5: How Placebos Help Us Recalibrate for More Benign Conditions

  4.6: The Hidden Purposes Behind Our Behaviour: Why We Buy Clothes, Flowers or Yachts

  4.7: On Self-Placebbing

  4.8: What Makes an Effective Placebo?

  4.9: The Red Bull Placebo

  4.10: Why Hacking Often Involves Things That Don’t Quite Make Sense

  5: Satisficing

  5.1: Why It’s Better to Be Vaguely Right than Precisely Wrong

  5.2: (I Can’t Get No) Satisficing

  5.3: We Buy Brands to Satisfice

  5.4: He’s Not Stupid, He’s Satisficing

  5.5: Satisficing: Lessons from Sport

  5.6: JFK vs EWR: Why the Best Is Not Always the Least Worst

  6: Psychophysics

  6.1: Is Objectivity Overrated?

  6.2: How to Buy a Television for Your Pet Monkey

  6.3: Lost and Gained in Translation: Reality and Perception as Two Different Languages

  6.4: Mokusatsu: The A-Bomb, the H-Bomb and the C-Bomb

  6.5: Nothing New under the Sun

  6.6: When It Pays to Be Objective – and When It Doesn’t

  6.7: How Words Change the Taste of Biscuits

  6.8: The Map Is Not the Territory, but the Packaging Is the Product

  6.9: The Focusing Illusion

  6.10: Bias, Illusion and Survival

  6.11: How to Get a New Car for £50

  6.12: Psychophysics to Save the World

  6.13: The Ikea Effect: Why It Doesn’t Pay to Make Things Too Easy

  6.14: Getting People to Do the Right Thing Sometimes Means Giving Them the Wrong Reason

  7: How to Be an Alchemist

  7.1: The Bad News and the Good News

  7.2: Alchemy Lesson One: Given Enough Material to Work On, People Often Try to Be Optimistic

  7.3: Sour Grapes, Sweet Lemons and Minimising Regret

  7.4: Alchemy Lesson Two: What Works at a Small Scale Works at a Large Scale

  7.5: Alchemy Lesson Three: Find Different Expressions for the Same Thing

  7.6: Alchemy Lesson Four: Create Gratuitous Choices

  7.7: Alchemy Lesson Five: Be Unpredictable

  7.8: Alchemy Lesson Six: Dare to Be Trivial

  7.9: Alchemy Lesson Seven: In Defence of Trivia

  Conclusion: On Being a Little Less Logical

  Solving Problems Using Rationality Is Like Playing Golf With Only One Club

  Finding the Real Why: We Need to Talk about Unconscious Motivations

  Rebel against the Arithmocracy

  Always Remember to Scent the Soap

  Back to the Galapagos

  Endnotes

  About the Author

  Copyright

  About the Publisher

  Rory’s Rules of Alchemy

  The opposite of a good idea can also be a good idea.

  Don’t design for average.

  It doesn’t pay to be logical if everyone else is being logical.

  The nature of our attention affects the nature of our experience.

  A flower is simply a weed with an advertising budget.

  The problem with logic is that it kills off magic.

  A good guess which stands up to observation is still science. So is a lucky accident.

  Test counterintuitive things only because no one else will.

  Solving problems using rationality is like playing golf with only one club.

  Dare to be trivial.

  If there were a logical answer, we would have found it.

  Prologue: Challenging Coca-Cola

  Imagine that you are sitting in the boardroom of a major global drinks company, charged with producing a new product that will rival the position of Coca-Cola as the world’s second most popular cold non-alcoholic drink.*

  What do you say? How would you respond? Well, the first thing I would say, unless I were in a particularly mischievous mood, is something like this: ‘We need to produce a drink that tastes nicer than Coke, that costs less than Coke, and that comes in a really big bottle so people get great value for money.’ What I’m fairly sure nobody would say is this: ‘Hey, let’s try marketing a really expensive drink, t
hat comes in a tiny can . . . and that tastes kind of disgusting.’ Yet that is exactly what one company did. And by doing so they launched a soft drinks brand that would indeed go on to be a worthy rival to Coca-Cola: that drink was Red Bull.

  When I say that Red Bull ‘tastes kind of disgusting’, this is not a subjective opinion.* No, that was the opinion of a wide cross-section of the public. Before Red Bull launched outside of Thailand, where it had originated, it’s widely rumoured that the licensee approached a research agency to see what the international consumer reaction would be to the drink’s taste; the agency, a specialist in researching the flavouring of carbonated drinks, had never seen a worse reaction to any proposed new product.

  Normally in consumer trials of new drinks, unenthusiastic respondents might phrase their dislike diffidently: ‘It’s not really my thing’; ‘It’s slightly cloying’; ‘It’s more a drink for kids’ – that kind of thing. In the case of Red Bull, the criticism was almost angry: ‘I wouldn’t drink this piss if you paid me to,’ was one refrain. And yet no one can deny that the drink has been wildly successful – after all, profits from the six billion cans sold annually are sufficient to fund a Formula 1 team on the side.

  The Case for Magic

  There is a simple premise to this book: that while the modern world often turns its back on this kind of illogic, it is at times uniquely powerful. Alongside the inarguably valuable products of science and logic, there are also hundreds of seemingly irrational solutions to human problems just waiting to be discovered, if only we dare to abandon standard-issue, naïve logic in the search for answers.

  Unfortunately, because reductionist logic has proved so reliable in the physical sciences, we now believe it must be applicable everywhere – even in the much messier field of human affairs. The models that dominate all human decision-making today are duly heavy on simplistic logic, and light on magic – a spreadsheet leaves no room for miracles. But what if this approach is wrong? What if, in our quest to recreate the certainty of the laws of physics, we are now too eager to impose the same consistency and certainty in fields where it has no place?

  Take work and holidays, for example. Some 68 per cent of Americans would pay to have two weeks more holiday than the meagre two weeks most enjoy at present – they would accept a 4 per cent pay cut in return for double the amount of vacation time.

  But what if there were no cost whatsoever to increasing everyone’s vacation allowance? What if we discovered that greater leisure time would benefit the US economy, both in terms of money spent on leisure goods and also in greater productivity? Perhaps people with more vacation time might be prepared to work for longer in life, rather than retiring to a Florida golf course as soon as it became affordable? Or perhaps they might simply be better at their jobs if they were reasonably rested and inspired by travel and leisure? Besides, it is now plausible that, for many jobs, recent advances in technology mean there is little difference in the contribution you make to your workplace, whether you are in a cubicle in Boise, Idaho or on a beach in Barbados.

  There is an abundance of supporting evidence for these magical outcomes: the French are astonishingly productive on the rare occasion they are not on holiday; the German economy is successful, despite six weeks of annual leave being commonplace. But there is no model of the world that allows for America to contemplate, let alone trial, this possibly magical solution. In the left-brain, logical model of the world, productivity is proportional to hours worked, and a doubling of holiday time must lead to a corresponding 4 per cent fall in salary.

  The technocratic mind models the economy as though it were a machine: if the machine is left idle for a greater amount of time, then it must be less valuable. But the economy is not a machine – it is a highly complex system. Machines don’t allow for magic, but complex systems do.

  Engineering doesn’t allow for magic. Psychology does.

  In our addiction to naïve logic, we have created a magic-free world of neat economic models, business case studies and narrow technological ideas, which together give us a wonderfully reassuring sense of mastery over a complex world. Often these models are useful, but sometimes they are inaccurate or misleading. And occasionally they are highly dangerous.

  We should never forget that our need for logic and certainty brings costs as well as benefits. The need to appear scientific in our methodology may prevent us from considering other, less logical and more magical solutions, which can be cheap, fast-acting and effective. The mythical ‘butterfly effect’ does exist, but we don’t spend enough time butterfly hunting. Here are some recent butterfly effect discoveries, from my own experience:

  A website adds a single extra option to its checkout procedure – and increases sales by $300m per year.

  An airline changes the way in which flights are presented – and sells £8m more of premium seating per year.

  A software company makes a seemingly inconsequential change to call-centre procedure – and retains business worth several million pounds.

  A publisher adds four trivial words to a call-centre script – and doubles the rate of conversion to sales.

  A fast-food outlet increases sales of a product by putting the price . . . up.

  All these disproportionate successes were, to an economist, entirely illogical. All of them worked. And all of them, apart from the first, were produced by a division of my advertising agency, Ogilvy, which I founded to look for counter-intuitive solutions to problems. We discovered that problems almost always have a plethora of seemingly irrational solutions waiting to be discovered, but that nobody is looking for them; everyone is too preoccupied with logic to look anywhere else. We also found, rather annoyingly, that the success of this approach did not always guarantee repeat business; it is difficult for a company, or indeed a government, to request a budget for the pursuit of such magical solutions, because a business case has to look logical.

  It’s true that logic is usually the best way to succeed in an argument, but if you want to succeed in life it is not necessarily all that useful; entrepreneurs are disproportionately valuable precisely because they are not confined to doing only those things that make sense to a committee. Interestingly, the likes of Steve Jobs, James Dyson, Elon Musk and Peter Thiel often seem certifiably bonkers; Henry Ford famously despised accountants – the Ford Motor Company was never audited while he had control of it.

  When you demand logic, you pay a hidden price: you destroy magic. And the modern world, oversupplied as it is with economists, technocrats, managers, analysts, spreadsheet-tweakers and algorithm designers, is becoming a more and more difficult place to practise magic – or even to experiment with it. In what follows, I hope to remind everyone that magic should have a place in our lives – it is never too late to discover your inner alchemist.

  Introduction: Cracking the (Human) Code

  I am writing this book with two screens in front of me, one of which is displaying a series of recent results from a test that my colleagues have just performed to try to increase the effectiveness of charity fundraising.

  Once a year, volunteers for our client charity drop printed envelopes through millions of doors, and return a few weeks later to collect people’s donations. This year the envelopes contained a hurricane relief appeal, but some of these envelopes were randomly different from the rest: 100,000 of them announced that the envelopes had been delivered by volunteers; 100,000 encouraged people to complete a form which meant their donation would be boosted by a 25 per cent tax rebate; 100,000 were in better-quality envelopes; and 100,000 were in portrait format (so the flap of the envelope was along the short side rather than the long one).

  If you were an economist you would look at the results of this experiment and immediately conclude that people are completely insane. Logically, the only one of these changes that should affect whether people give is the one that reminds you that, for every £1 you donate, the government will give a further 25p. The other three tests are seemingly irrelevant; the paper q
uality, the orientation of the envelope and the fact that it was hand-delivered by a volunteer add nothing to the rational reasons to donate.

  However, the results tell a different story. The ‘rational’ envelope in fact reduces donations by over 30 per cent compared to the plain control, while the other three tests increase donations by over 10 per cent. The higher-quality paper also attracts a significantly higher number of more significant donations of £100 or more. I hope that, by the time you finish reading this book, you might better understand why these crazy-sounding results may make a strange kind of sense.

  The human mind does not run on logic any more than a horse runs on petrol.

  What are the possible explanations for these results? Well, perhaps it feels more natural to put notes or cheques in an envelope with the flap on a shorter edge. Putting a cheque for £100 into a thick envelope feels more agreeable than putting it into one made of cheap paper. And a volunteer’s effort of hand-delivering the envelope may prompt the urge to reciprocate: we appreciate the effort they have made. Perhaps the mention of a 25 per cent ‘bonus’ on their donation reduces the amount that people feel they need to give? Stranger still, it also reduced the proportion of people who gave anything at all; I’ll be honest with you – I have no idea why this should be.

  Here’s the thing. To a logical person, there would have been no point in testing three of these variables, but they are the three that actually work. This is an important metaphor for the contents of this book: if we allow the world to be run by logical people, we will only discover logical things. But in real life, most things aren’t logical – they are psycho-logical.

  There are often two reasons behind people’s behaviour: the ostensibly logical reason, and the real reason. I have worked in advertising and marketing for the last 30 years. I tell people I do it to make money, to build brands and to solve business problems; none of these are things I dislike, but, truthfully, I do it because I am nosy.

  Modern consumerism is the best-funded social science experiment in the world, the Galapagos Islands of human weirdness. More important still, an ad agency is one of the few remaining safe spaces for weird or eccentric people in the worlds of business and government. In ad agencies, mercifully, maverick opinion is still broadly encouraged or at least tolerated. You can ask stupid questions or make silly suggestions – and still get promoted. This freedom is much more valuable than we realise, because to reach intelligent answers, you often need to ask really dumb questions.