Alchemy - by Rory Sutherland

Don’t design for average.

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

If everyone else is being logical, don’t be logical
If there were a logical answer, we would have found it.

Logic kills magic.

A flower is a weed with advertising.

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

Dare to be trivial.

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.

Allow for magic.
Psychology problems almost always have a plethora of seemingly irrational solutions but nobody is looking for them.
Everyone is too preoccupied with logic to look anywhere else.

When you demand logic, you pay a hidden price: you destroy magic.

Most things aren’t logical – they are psycho-logical.

Consumerism is the best-funded social science experiment
I am nosy.

In theory, you can’t be too logical, but in practice, you can.

The worst thing in a criminal investigation is for everyone involved to become fixated on the same theory.
“Privileging the hypothesis.”

Do we look at things from a single perspective, where you do one thing to achieve another, or do we accept that complex things are different?

In a designed system, such as a machine, one thing does serve one narrow purpose.
But in an evolved or complex system, or in human behaviour, things can have multiple uses.

Economics sould be a subdiscipline of psychology.

Imagine you are a company whose product is not selling well. Which of the following proposals would be easier to make in a board meeting called to resolve the problem?
a) ‘We should reduce the price’
b) ‘We should feature more ducks in our advertising’.
The first, of course – and yet the second could, in fact, be much more profitable.

Logical ideas often fail because logic demands universally applicable laws but humans are not consistent.

Jeremy Bentham, the father of utilitarianism, was one of the strangest and most anti-social people who ever lived.

Context is often the most important thing in determining how people think.

To form universal laws, naïve rationalists have to pretend that context doesn’t matter.

Depending on context, I have entirely different preferences.
At the federal level I am a Libertarian.
At the state level, I am a Republican.
At the town level, I am a Democrat.
In my family I am a socialist.
And with my dog I am a Marxist.

You see an electric drill in a shop and decide you want it.
Then you take it home and wander around your house looking for excuses to drill holes in things.

Stripy toothpaste:
Psychologically, the stripes serve as a signal: a claim that a toothpaste performed more than one function.
More convincing if the toothpaste contained three visibly separate active ingredients.

If an unconscious motivation happens to coincide with a rational explanation, we assume that it is the rational motive which drives the action.

The sandwich was not invented by an average eater.
The Earl of Sandwich was an obsessive gambler, and demanded food in a form that would not require him to leave the card table while he ate.
Weird consumers drive more innovation than normal ones.

In a competitive setting such as recruitment, an unconventional rule for spotting talent that nobody else uses may be far better than a ‘better’ rule which is in common use, because it will allow you to find talent that is undervalued by everyone else.

First you define a hotel doorman’s role as ‘opening the door’, then you replace his role with an automatic door-opening mechanism.
The problem arises because opening the door is only the notional role of a doorman.
His other, less-definable sources of value lie in a multiplicity of other functions, in addition to door-opening: taxi-hailing, security, vagrant discouragement, customer recognition, as well as in signalling the status of the hotel.
The doorman may actually increase what you can charge for a night’s stay in your hotel.

Here are two identical 25-cent coins. Sell me the one on the right.
* take the right-hand coin and dip it in Marilyn Monroe’s bag
* sell as “genuine 25-cent coin as owned by Marilyn Monroe.’

Wine tastes better when poured from a heavier bottle.

Everything becomes more desirable when people believe it is in scarce supply, and possessions become more enjoyable

Frederick the Great wanted Prussian peasants to cultivate and eat the potato because he hoped that they would be less at risk of famine.
The peasants weren’t keen on potatoes. They simply showed no interest in eating them.
So Frederick established a royal potato patch in the grounds of his palace, and declared that it was to be a royal vegetable, that could only be consumed by members of the royal household.
If you declare something highly exclusive and out of reach, it makes us all want it much more.
Frederick posted guards around his potato patch to protect his crop, but gave them secret instructions not to guard the patch too closely.
Curious Prussians found they could sneak into the royal potato patch and could steal, eat and even cultivate this fabulously exclusive vegetable for themselves.

All of us are disabled some of the time.
If you are carrying heavy luggage, staircases are almost unusable.
If you are carrying a cup of coffee, you have effectively lost the use of a hand.
If you wear glasses but do not have them on, you are visually impaired.
Assume that the user is operating under constraints.
This is why a door handle is better than a door knob. Ramps, subtitles.
A telephone for the visually impaired with enormous buttons became their bestselling product.

Traditional architecture is user-friendly.

It's easier to buy things that serve a single purpose.
Don't offer people a Swiss Army knife, something that claims to do lots of things.

I enter a shop in a town I have never previously visited.
Above the door is a notice that reads ‘Established 1958’.
He would not have survived in business for several decades if his business depended on ripping off the local population.
The loss of his reputation will be far more costly than whatever he might gain by refusing to honour our exchange, which allows me to derive trust.

Reputation is a form of skin in the game: it takes far longer to acquire a reputation than to lose one.
You can signal that you are an honest business by showing that your business model relies on repeat business.

Behaviour which is costly in the short term and which will only pay off, if at all, in the long term.
Acting on the basis of long-term self-interest rather than short-term expediency.
In game theory, this prospect of repetition is known as ‘continuation probability’.

Tourist restaurant approach: make as much money from people in a single visit.
Local pub approach: make less money from people on each visit, but profit more over time by encouraging them to come back.

Solving a problem for a customer at your own expense is a good way of signalling your commitment to a future relationship.

Hanging over every human interaction is an unspoken question:
“I know what I want from this transaction. But what’s your interest in this exchange?”

A company which is willing to spend time after you have bought and paid for a product - to make sure you are not disappointed with it - is more likely to be trustworthy.
Being polite and effortful convey that we care about their opinion – and about our reputation.

Why water doesn’t taste of anything?
The human taste mechanism has been calibrated not to notice the taste of water, so it is optimally attuned to the taste of anything that might be polluting it.
Water ‘tastes of nothing’, so we notice the smallest thing which deviates from this.

Powerful messages must contain an element of absurdity, illogicality, costliness, disproportion, inefficiency, scarcity, difficulty or extravagance – because rational behaviour and talk, for all their strengths, convey no meaning.

It is only by deviating from a narrow, short-term self-interest that we can generate anything more than cheap talk.
It is therefore impossible to generate trust, affection, respect, reputation, status, loyalty, generosity or sexual opportunity by simply pursuing the dictates of rational economic theory.

Promoting a drug as a cure for a narrowly defined condition increases placebo power.

Some phrases that people never say:
* ‘I chose not to be angry.’
* ‘From that moment on, she determined no longer to be afraid of heights.’
* ‘He decided to like spiders and snakes.’
These are not under our direct control, but are rather the product of instinctive and automatic emotions.
But you can ‘hack’ them by deliberately contriving the conditions that will generate the automatic response you want.

People do not choose Brand A over Brand B because they think Brand A is better, but because they are more certain that it is good.
They prefer Brand A because the odds of its being disastrously bad are only 1 per cent, whereas the risk with Brand B might be 2.8 per cent.
We look not only for the expected average outcome – we also seek to minimise the possible variance.

The more reputational capital a seller stands to lose, the more confident I am in their quality control.

Nothing is as important as we think it is while we are thinking about it.
Marketers exploit the focusing illusion.
When people are induced to believe that they “must have” a good, they greatly exaggerate the difference that this good might make to the quality of their life.

Products are easier to sell if they offer one quality that the others do not.
By highlighting a unique attribute, you amplify the sense of loss a buyer might feel if they buy a competing product.

Cake mixes included all the dry ingredients, including milk and eggs.
All you needed to do was add water, mix and stick the pan in the oven.
It did not sell well.
They revised the instructions on the packaging to make baking less convenient: adding ‘a real egg’ to the ingredients.
Relaunched the range with the slogan ‘Just Add an Egg’, sales shot up.
Doing a little more work, making just enough effort to give the sense of having contributed to the cake’s creation.

As you are closing a sale, the admission of a downside oddly adds persuasive power:
‘Yes, it is expensive, but you’ll soon find it’s worth it,’ is strangely persuasive.
Explicitly mentioning a product’s weakness enables people to downplay its importance and accept the trade-off, rather than endlessly worrying about the potential downside.

First-time shoppers did mind registering.
They resented having to register when they encountered the page.
As one shopper told us, “I’m not here to enter into a relationship. I just want to buy something.”
They replaced the ‘Register’ button with a ‘Continue’ button and this text:
‘You do not need to create an account to make purchases on our site. Simply click Continue to proceed to checkout. To make your future purchases even faster, you can create an account during checkout.’
The number of customers completing purchases increased by 45 per cent almost immediately.
90% who chose to ‘continue as guest’ were subsequently happy to register as customers once they had made their purchase.
The very people who had baulked at registering beforecompleting the purchase were only too happy to leave their details and create an account at the end of the process.
This shows that what mattered was not the actions we asked them to perform, but the order in which they were asked to make them.

Go very deeply into the surface of things.