Today’s interview is with Rory Sutherland who is Vice-Chairman, Ogilvy & Mather UK and co-founder of #ogilvychange. The Ogilvy & Mather Group UK is made up of 10 companies that work across a range of marketing disciplines. #ogilvychange is their specialist behavioural science practice that uses the latest thinking in cognitive psychology, social psychology and behavioural economics to help their clients create behavioural change in the real world.
Rory is a leading thinker in the marketing and advertising space and a huge proponent of how the application of insights from cognitive psychology and behavioural economics can positively impact business and customers. As a result, Rory joins me today to talk about behavioural economics, psychology, customer experience, the big impact that small changes can have and what business can and should be learning and doing with these insights.
This interview follows on from my recent interview – How to enhance, extend and crowd source your in-field customer service – Interview with Manuel Grenacher of Mila – and is number 159 in the series of interviews with authors and business leaders that are doing great things, helping businesses innovate and delivering great service and experience to their customers.
Note: The interview was recorded at The Grand in Brighton and so there is some background noise. However, it doesn’t spoil the recording and you can still hear our conversation just fine. Enjoy.
Highlights of my interview with Rory:
- Rory has worked in advertising for about 27 years and started in direct marketing, which he believes is a very good place to start as it is like a self funding behavioural science experiment as you get to test different creative approaches and you see what happens.
- After ‘discovering’ economics he found that economists view of human behaviour was naive in the extreme.
- Thus, he became an early convert to and evangelist of behavioural science. He describes himself as a behavioural science impresario.
- He established #ogilvychange where they help private, public and charitable clients harness the power and insights of behavioural science.
- When people think about behavioural science these days they often think that it is all about finding ‘nudges’. But, in fact, their first job is their work is to remove ‘anti-nudges’ i.e. little things that stop people from doing certain things or feeling comfortable about taking on a new action (like the concept of ‘grit’ that I have talked about before).
- An example Rory cites is when you go to a posh hotel it is considered mandatory that even before you have checked in that someone offers to take your bags. However, most people hate this as they have just spent hours traveling on a plane and going through airports thinking ‘don’t forget my luggage, don’t lose my luggage, where’s my luggage etc etc’. So, when they are presented with a complete stranger offering to take their bags from them their unconscious brains very negatively to this. Most hotels think that this is adding service. But, to many people it is the last thing they need or want before they have even checked in or know their room number.
- Behavioural science has enormous economic value simply through creating uncertainty about conventional economics.
- The pervasiveness of assumptions and beliefs in business and economics like efficiency is the greatest god, price reduction is the best thing that you can do for a consumer and that value is intrinsic in the thing that you do and not in the perception of that thing reduces the bio-diversity in the world of business beliefs. As a result, this makes business worse as it tends to make everyone the same and reduces the number of people and businesses that strive for difference.
- Moreover, businesses can believe different things and both be right. Just look at Lidl and Waitrose.
- Dissident opinion judged by the market has very interesting outcomes. To some extent, Easyjet wouldn’t be nearly as good if it wasn’t for Ryanair and British Airways arguably needs low-cost airlines to justify high-cost flying.
- The idea that there is one-truth is something that we have to fight.
- Behavioural science, at the very least, creates debate around what people really want and how that changes over time i.e. consider what we want from an airport now and what we wanted from an airport in 1997.
- Truth varies from person to person and over time.
- Reminded me of a funny Billy Connolly sketch about demands from the women’s movement.
- Small things can very big effects. Rory cites an example of going to Wagamama, a restaurant, where as you enter the restaurant they explain what happens and why it happens. This is hugely important in setting expectations and the frame in which service is delivered. The whole experience would be completely different if this wasn’t done.
- With a bit of contextual framing you can make something that is rubbish appear brilliant.
- The addition of a tiny little nudge at the right place and time in an experience can make a huge difference.
- The Peak End Rule is worth knowing as it is a phenomena where ‘people judge an experience largely based on how they felt at its peak (i.e., its most intense point) and at its end, rather than based on the total sum or average of every moment of the experience.’
- Another phenomena that is worth paying attention to is the Von Restorff spike, which is our propensity to notice and remember anything that stands out or is unusual (good or bad) and how that influences our perception of everything else we have experienced.
- An example of these things in practice can be seen in hotels where if you have a good check-in experience you will go around looking for other evidence to corroborate your perception. The converse, of course, is true too.
- The Kano effect is another interesting phenomena that is worth paying attention to. It originates from Professor Noriaki Kano who found that different product attributes will produce no delight if present but infuriation if absent. Moreover, other features may produce insane delight but be completely tangential to the service or product being provided.
- The idea that you can improve business by completely removing human agency is deranged.
- The reasons that we do things and the reasons we react to things are not well described by the explanations we give.
- Because we don’t really understand what generates emotional stress in us then we often misrepresent the elements of the problem that annoys us.
- Thoughts are much less important than feelings when it comes to determining human behaviour.
- Feelings are probably better than rationality at synthesising multiple sources of information in different contexts.
- Mass market players like Costa Coffee, Starbucks, Travelodge etc etc have made it possible for the independent sector to do much better because they have helped eliminate the worst 50% of independent coffee shops and hotels by setting the base standard so high.
- Check out Rory’s TED talk ‘Sweat The Small Stuff’. Below is one of the diagrams he uses in his talk:
- In his talk he advocates for the creation of a new position called the Chief Detail Officer, who has lots of power and influence but no budget.
- However, one of the challenges in corporate environments is that many of the details or small things are dismissed as trivial but yet those little things could be the thing that delivers the Von Restorff spike that businesses crave and define the customer experience.
- Rory is a big fan of board level Chief Customer Officers and/or Chief Experience Officers and was delighted to see that British Airways have now appointed a Chief Experience Officer who sits on their board but also that he has come from the hotel industry and not the airline industry.
- TripAdvisor adds a lot of value to cafes and restaurants in terms of framing and positioning. For example, if a restaurant serves great food but the service is generally rated as being a bit flaky and you read a review to that effect then that sets the expectation of what to expect. Therefore, if you go and the food is great and the service is a bit flaky then the place has met your expectations. However, if the service is better than you expect then you will tend to be surprised and delighted.
- We like things that we have chosen more than things that are imposed on us. That’s why we like seat 17A on an airplane more if we have chosen it than if it was randomly allocated to us.
- Knowing these things and using them can help make people happier and not destroy value through bad framing or presentation.
- Ludwig von Mises and the Austrian School of Economics understood this best where they believed that economics should be a subordinate discipline to psychology or Praxeology, ‘the deductive study of human action’.
- We use our judgement of things we do understand as proxies to help us judge things that we do not understand.
- Satisficing is worth paying attention to too as it is a decision-making strategy that means that rather looking for the optimal solution we look through the available alternatives until some level of acceptability is reached and we choose that option.
- One of the things that rationalists, intrinsicists, intellectuals and economists get wrong is their predictions about how online retail is going to be a bigger proportion of retail in 20 years time than it will be. The reason being is that they ignore the context within which many things are bought and also how the choices that customers make really appear in the brain as opposed to how they do in a very simplified model.
- To get started learning about all of this stuff, Rory recommends reading a few books including Daniel Kahneman’s Thinking, Fast and Slow, Cass Sunstein and Richard Thaler’s Nudge as well as Ben Goldacre and Stuart Sutherland’s Irrationality and Robert Frank’s The Darwin Economy.
- Be less sure.
- Most things in human behaviour aren’t hard and fast rules. So, the best thing business can do is have a wider Overton Window of what is possible and, therefore, they should test more things.
- The thing that Rory wants to plug comes from one of their clients and is the Philips Airfryer, which, he says, is a tremendous product that cooks great food through the use of superheated air and very little to no fat. The product sells very well in Asia because in Asia ‘frying’ is synonymous with cooking. However, it doesn’t sell so well in the UK because ‘frying’ is associated with unhealthy eating and so it isn’t positioned well in the mind of customers. But, the ironic thing is that it is a very healthy way of cooking and when people buy one they love it.
- So, Rory says buy one and he’ll be amazed if you are disappointed.
- Mentally the product hasn’t been framed in the way that helps UK customers buy it.
About Rory (taken and adapted from his Ogilvy Change bio)
In 2012 Sutherland was awarded a prestigious 25th anniversary IDM Honorary Fellowship at the Institute’s flagship event, the IDM Annual Lecture. Rory received the IDM’s only 2012 Honorary Fellowship award for his outstanding contribution to the direct and digital marketing profession.
With the discovery of behavioural economics, Rory found that it was a serious academic discipline that can positively impact business.