View source for Talk:Alchemy (Book)

=== Highlights from the book ===

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

* If you are wholly predictable, people learn to hack you.

◆ The Danger of Technocratic Elites

* Perhaps a plausible ‘why’ should not be a pre-requisite in deciding a ‘what’, and the things we try should not be confined to those things whose future success we can most easily explain in retrospect. The record of science in some ways casts doubt on a scientific approach to problem solving.

◆ Context Is Everything

* you can never be fired for being logical. If your reasoning is sound and unimaginative, even if you fail, it is unlikely you will attract much blame. It is much easier to be fired for being illogical than it is for being unimaginative #ManagementIncentives

◆ Why We Should Ignore Our GPS

* The late David Ogilvy, one of the greats of the American advertising industry and the founder of the company I work for, apparently once said, ‘The trouble with market research is that people don’t think what they feel, they don’t say what they think, and they don’t do what they say.’

* For a business to be truly customer-focused, it needs to ignore what people say. Instead it needs to concentrate on what people feel.

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

* Upton Sinclair once remarked, ‘It is difficult to get a man to understand something, when his salary depends on his not understanding it.’

◆ 1.3: Psychological Moonshots

* It seems likely that the biggest progress in the next 50 years may come not from improvements in technology but in psychology and design thinking.

◆ 1.6: The Right Thing for the Wrong Reason

* In trying to encourage rational behaviour, don’t confine yourself to rational arguments.

◆ 1.7: How You Ask the Question Affects the Answer

* One of the great contributors to the profits of high-end restaurants is the fact that bottled water comes in two types, enabling waiters to ask ‘still or sparkling?’, making it rather difficult to say ‘just tap’. #SellingWell

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

* As Sir Christopher Llewellyn Smith, the former director of CERN, remarked after he had been tasked with changing the patterns of energy consumption in Britain, ‘When I ask an economist, the answer always boils down to just bribing people.’

 One of our clients at Ogilvy is an airline. I constantly remind them that asking four businessmen to pay £26 each to check in one piece of luggage is not the same as asking a married father of two to pay £104 to check in his family’s luggage. While £26 is a reasonable fee for a service, £104 is a rip-off. The way luggage pricing should work is something like this: £26 for one case, £35 for up to three. There is, after all, a reason why commuters are offered season tickets – commuting is not commutative, so 100 people will pay more to make a journey once than one person will pay to make it 100 times. In the same way, the time-saving model used to justify the UK’s current investment in the High Speed rail network assumes that 40 people saving an hour ten times a year is the same as one commuter saving an hour 400 times a year. This is obviously nonsense; the first is a convenience, while the second is a life-changer.

◆ 1.10: Recruitment and Bad Maths

* Imagine you have ten roles to fill, and you ask ten colleagues to each hire one person. Obviously each person will try to recruit the best person they can find – that’s the same as asking one person to choose the best ten hires he can find, right? Wrong. Anyone choosing a group of ten people will instinctively deploy a much wider variance than someone hiring one person. The reason for this is that with one person we look for conformity, but with ten people we look for complementarity. #BuildingTeams

* As I always advise young people, ‘Find one or two things your boss is rubbish at and be quite good at them.’ Complementary talent is far more valuable than conformist talent.

◆ 1.11: Beware of Averages

* Don’t design for average.

 Metrics, and especially averages, encourage you to focus on the middle of a market, but innovation happens at the extremes. You are more likely to come up with a good idea focusing on one outlier than on ten average users. (This relates well to the idea in Seth Godin's talk How to get your ideas to spread where he talks about marketing to the fringes - Otaku)*

◆ 1.15: Same Facts, Different Context

* Logic may be a good way to defend and explain a decision, but it is not always a good way to reach one.

◆ 1.16: Success Is Rarely Scientific – Even in Science

* A nervous and bureaucratic culture is closed-mindedly attaching more importance to the purity of the methodology than to the possible value of the solution, which leads us to ignore possible solutions not because they have been proven to be wrong, but because they have not been reached through an approved process of reasoning.

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

* As Alfred Hitchcock once said, ‘drama is just real life with the boring bits edited out’.

◆ 1.18: The Overuse of Reason

* The more data you have, the easier it is to find support for some spurious, self-serving narrative. The profusion of data in future will not settle arguments: it will make them worse.

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

* We don’t value things; we value their meaning. What they are is determined by the laws of physics, but what they mean is determined by the laws of psychology.

* Wine tastes better when poured from a heavier bottle. Painkillers are more effective when people believe they are expensive. Almost everything becomes more desirable when people believe it is in scarce supply, and possessions become more enjoyable when they have a famous brand name attached. #BrandBuilding

* All you need to do to cut 40 minutes off the journey time, I explained, is to create a mobile app that would allow you to board one of the two earlier trains whenever spare seats are available, in return for a small voluntary payment. Obviously this wouldn’t always work, as sometimes the earlier trains will be full, but most of the time it would be an easy way to allow people to cut 20–40 minutes off their time at the station. It would also have the additional benefit of increasing the capacity of the network, because otherwise empty seats would now be occupied, and the ones on the later train could be re-sold.

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

* You can therefore create (or destroy) value it in two ways – either by changing the thing or by changing minds about what it is.

◆ 2.7: The Alchemy of Design

* A knowledge of the human physique is considered essential in designing a chair, but a knowledge of human psychology is rarely considered useful, never mind a requirement, when someone is asked to design a pension scheme, a portable music player or a railway. Who is the Herman Miller of pensions, or the Steve Jobs of tax-return design?

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

* The strongest marketing approach in a business-to-business context comes not from explaining that your product is good, but from sowing fear, uncertainty and doubt (now commonly abbreviated as FUD) around the available alternatives. #SellingWell

◆ 3.8: Bees Do It

* To borrow the language of the Michelin Guide, a flower can be ‘vaut l’étape’, ‘vaut le détour’ or ‘vaut le voyage’; ‘worth stopping at’, ‘worth going out of your way for’ or ‘a destination in itself’.

◆ 3.9: Costly Signalling and Sexual Selection

* Costly signalling theory, which was first proposed by the evolutionary biologist Amotz Zahavi, is, I believe, one of the most important theories in the social sciences. #SellingWell

 The evolution of aposematism, literally a ‘stay away sign’ or ‘warning off’, surprised nineteenth-century naturalists because the conspicuous signal suggested a higher chance of predation. However, you might also argue that aposematic colouration might be explained as a form of costly signalling: ‘I’m not trying to hide, therefore there might be a good reason not to eat me.’

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

* If you want people to pay more for your product, you must make it objectively better.

◆ 5.2: (I Can’t Get No) Satisficing

* The solution being developed is to target cancer cells with a chemical that causes them to be to develop immunity to it, at the expense of their immunity to other things; at that point you hit them with a different chemical, designed to attack the Achilles heel that you have created, wiping them out second rather than first time around

◆ 5.3: We Buy Brands to Satisfice

* 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 #BrandBuilding

* We will pay a disproportionately high premium for the elimination of a small degree of uncertainty – why this matters so much is that it finally explains the brand premium that consumers pay. While a brand name is rarely a reliable guarantee that a product is the best you can buy, it is generally a reliable indicator that the product is not terrible. #BrandBuilding

* Logically you might think we should accept a 5 per cent risk of our goods not arriving in exchange for a 15 per cent reduction in cost, but the lesson proved by these statistics is that we don’t: once the possibility moves beyond a certain threshold, we seem unable to take the risk at any price. If Amazon were to try to operate in a country where 10 per cent of all posted goods were stolen or went missing, virtually no discount would be high enough for them to sell anything at all. #BrandBuilding

◆ 5.5: Satisficing: Lessons from Sport

* This jeopardy may explain why darts is an enjoyable spectator sport, while archery isn’t. In archery the scoring is concentric. You simply aim for the bullseye, which scores 10, and if you narrowly miss you get 9. Miss the 9 and you get 8, and so on. The only strategy of the game is to aim for the 10 and hope – it is a perfectly logical scoring system, but it doesn’t make for great television. The dartboard, by contrast, is not remotely logical, but it’s somehow brilliant. The 20-point sector sits between the dismal scores of 5 and 1.

◆ 6.1: Is Objectivity Overrated?

* A few years ago, the British chocolate manufacturer Cadbury’s received a large number of customer complaints, claiming that they had changed the taste of their Dairy Milk brand. They were at first baffled, because the formulation hadn’t been altered for years. However, what they had done was change the shapes of the blocks you would break off a bar, rounding their corners. And smoother shapes taste sweeter. Truly.

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

* If a tree falls in the forest and no one hears it, does it make a sound? Yes, because mechanical sensors could still record that sound. But if a car lingers too long at a green traffic light and there is no one waiting behind to get angry, is it an annoyance? No, because annoyance is a perceptual concept that is confined to living things.

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

* Perception may map neatly on to behaviour, but reality does not map neatly onto perception.

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

 Imagine if cheap airlines instead claimed: ‘We’re just as good as British Airways, but at a third of the price.’ Either nobody would believe them, or else such a claim would raise instant doubts: ‘Maybe the only reason they’re cheaper is because they don’t bother servicing the engines or training the pilots, or because the planes are scarcely airworthy.’ #BrandBuilding (You can't say we're just as good as X, but cheaper. The pitch has to be something else altogether. Maybe - we don't do random conveniences, we just get you there on time...)*

◆ 7.7: Alchemy Lesson Five: Be Unpredictable

* it is easier to get fired for being illogical than for being unimaginative.

◆ Rebel against the Arithmocracy

 In the matter of reforming things, as distinct from deforming them, there is one plain and simple principle; a principle which will probably be called a paradox. There exists in such a case a certain institution or law; let us say, for the sake of simplicity, a fence or gate erected across a road. The more modern type of reformer goes gaily up to it and says, “I don’t see the use of this; let us clear it away.” To which the more intelligent type of reformer will do well to answer: “If you don’t see the use of it, I certainly won’t let you clear it away. Go away and think. Then, when you can come back and tell me that you do see the use of it, I may allow you to destroy it. (This is Chesterton's Fence)*

* Or imagine you have two products for sale. Product A appears to offer more features than Product B, and is also offered at a lower price. To an economist, the decision is easy: with a higher utility and a lower cost, everyone should buy Product A. However, since a customer is making the decision without perfect knowledge of the two products and their reliability, they might assume that there must be a reason why the price of the ostensibly superior Product A is not higher. The most likely outcome, I suspect, would be for them to buy neither. Whatever economic logic might dictate, the manufacturer of Product A would be better off asking for a slightly higher price than the manufacturer of Product B.

◆ Always Remember to Scent the Soap

* Soap was sold on its ability to increase your attractiveness more than on its hygienic powers, and while it contained many chemicals that improved hygiene, it is worth remembering that it was also scented to make it attractive – supporting the unconscious promise of the advertising rather than the rational value of the product. The scent was not to make the soap effective, but to make it attractive to consumers. (add frills. even if they don't necessarily add to the function. but make things attractive. don't say it doesn't add value) #SellingWell