Alchemy: The Dark Art and Curious Science of Creating Magic in Brands, Business, and Life

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.

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.

‍

Introduction: Cracking the (Human) Code

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

There are often two reasons behind people’s behaviour: the ostensibly logical reason, and the real reason.

Most people spend their time at work trying to look intelligent, and for the last fifty years or more, people have tried to look intelligent by trying to look like scientists; if you ask someone to explain why something happened, they will generally give you a plausible-sounding answer that makes them seem intelligent, rational or scientific but that may or may not be the real answer. The problem here is that real life is not a conventional science–the tools which work so well when designing a Boeing 787, say, will not work so well when designing a customer experience or a tax programme.

Logic is what makes a successful engineer or mathematician, but psycho-logic is what has made us a successful breed of monkey, that has survived and flourished over time.

More data leads to better decisions. Except when it doesn’t.

The need to rely on data can also blind you to important facts that lie outside your model. It was surely relevant that Trump was filling sports halls wherever he campaigned, while Clinton was drawing sparse crowds. It’s important to remember that big data all comes from the same place–the past.

Highly educated people don’t merely use logic; it is part of their identity. When I told one economist that you can often increase the sales of a product by increasing its price, the reaction was one not of curiosity but of anger. It was as though I had insulted his dog or his favourite football team.

The Nobel Prize-winning behavioural scientist Richard Thaler said, ‘As a general rule the US Government is run by lawyers who occasionally take advice from economists. Others interested in helping the lawyers out need not apply.’

Irrational people are much more powerful than rational people, because their threats are so much more convincing.

A rational leader suggests changing course to avoid a storm. An irrational one can change the weather.

Being slightly bonkers can be a good negotiating strategy: being rational means you are predictable, and being predictable makes you weak. Hillary thinks like an economist, while Donald is a game theorist, and is able to achieve with one tweet what would take Clinton four years of congressional infighting. That’s alchemy; you may hate it, but it works.

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 depending on the context within which they are viewed. The human mouth allows you to eat, but if your nose is blocked, it also allows you to breathe.

The same is true of scientific progress. It is easy to depict a discovery, once made, as resulting from a logical, and linear process, but that does not mean that science should progress according to neat, linear and sequential rules.

There are two separate forms of scientific enquiry–the discovery of what works and the explanation and understanding of why it works.

If science did not allow for such lucky accidents,* its record would be much poorer–imagine if we forbade the use of penicillin, because its discovery was not predicted in advance? Yet policy and business decisions are overwhelmingly based on a ‘reason first, discovery later’ methodology, which seems wasteful in the extreme. Remember the bicycle.

Evolution, too, is a haphazard process that discovers what can survive in a world where some things are predictable but others aren’t. It works because each gene reaps the rewards and costs from its lucky or unlucky mistakes, but it doesn’t care a damn about reasons. It isn’t necessary for anything to make sense: if it works it survives and proliferates; if it doesn’t, it diminishes and dies. It doesn’t need to know why it works–it just needs to work.

Just because we don’t know why it works, we should not be blind to the fact that it does.*

Business, creativity and the arts are full of successful non-sense. In fact the single greatest strength of free markets is their ability to generate innovative things whose popularity makes no sense.

Almost all good advertising contains some element of non-sense.

Logical ideas often fail because logic demands universally applicable laws but humans, unlike atoms, are not consistent enough in their behaviour for such laws to hold very broadly. For example, to the despair of utilitarians, we are not remotely consistent in whom we choose to help or cooperate with.

Imagine that you get into financial trouble and ask a rich friend for a loan of £ 5,000, who patiently explains that you are a much less needy and deserving case for support than a village in Africa to which he plans to donate the same amount. Your friend is behaving perfectly rationally. Unfortunately he is no longer your friend.

‘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–from each according to his abilities, to each according to his needs.’

After all, no big business idea makes sense at first. I mean, just imagine proposing the following ideas to a group of sceptical investors: ‘What people want is a really cool vacuum cleaner.’(Dyson) ‘... and the best part of all this is that people will write the entire thing for free!’(Wikipedia) ‘... and so I confidently predict that the great enduring fashion of the next century will be a coarse, uncomfortable fabric which fades unpleasantly and which takes ages to dry. To date, it has been largely popular with indigent labourers.’(Jeans) ‘... and people will be forced to choose between three or four items.’(McDonald’s) ‘And, best of all, the drink has a taste which consumers say they hate.’(Red Bull) ‘... and just watch as perfectly sane people pay $ 5 for a drink they can make at home for a few pence.’(Starbucks)*

So there are logical problems, such as building a bridge. And there are psycho-logical ones: whether to paint the lines on the road or not. The rules for solving both are different; just as I make a distinction between nonsense and non-sense, I also use a hyphen to distinguish between logical and psycho-logical thinking.

The reason we don’t always behave in a way which corresponds with conventional ideas of rationality is not because we are silly: it is because we know more than we know we know. I did not decide to travel to the airport by back roads because I had calculated the level of variance in journey time–I did it instinctively, and was only aware of my unconscious reasoning in retrospect. ‘The heart has reasons of which reason knows nothing,’ as Pascal put it.*

In fact, my GPS goes bonkers even if I pull off the main road to fill up with fuel–‘Make a U-turn... Make a U-turn... MAKE A U-TURN!’ It has a very narrow conception of what I am trying to do. But driving down the Loire, I would attach a low priority to the speed at which I reach my destination–a GPS simply cannot understand a motivation like this. It understands time, speed and distance, but it doesn’t really have any metrics for architectural magnificence.

A fascinating theory, first proposed by the evolutionary biologist Robert Trivers and later supported by the evolutionary psychologist Robert Kurzban, explains that we do not have full access to the reasons behind our decision-making because, in evolutionary terms, we are better off not knowing; we have evolved to deceive ourselves, in order that we are better at deceiving others. Just as there are words that are best left unspoken, so there are feelings that are best left unthought.*

When a hare is being chased, it zigzags in a random pattern in an attempt to shake off the pursuer. This technique will be more reliable if it is genuinely random and not conscious, as it is better for the hare to have no foreknowledge of where it is going to jump next: if it knew where it was going to jump next, its posture might reveal clues to its pursuer. Over time, dogs would learn to anticipate these cues–with fatal consequences.Those hares with more self-awareness would tend to die out, so most modern hares are probably descended from those that had less self-knowledge.

‘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.’* Trivers

Evolution does not care about objectivity–it only cares about fitness.

However, evolution cares nothing for accuracy and objectivity: it cares about fitness. I may know rationally a snake is harmless, but instinctively I’m still unnerved by the slithery bastards.

Just as we infer a great deal about an air carrier from their on-board catering, while neglecting to care about the $ 150m aircraft or the make of the engines, we are just as likely to be unhappy with a hospital because the reception area is neglected, the magazines are out of date and the nurse didn’t spare us much time.

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

Nature cares a great deal about feelings, and feelings largely drive what we do, but they do not come with explanations attached–because we are often better off not knowing them.

The reason we do not ask basic questions is because, once our brain provides a logical answer, we stop looking for better ones; with a little alchemy, better answers can be found.

‍

1: On the Uses and Abuses of Reason

David Ogilvy’s words: ‘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.’

The broken binoculars assume that the way to improve travel is to make it faster, that the way to improve food is to make it cheaper and that the way to encourage environmentally friendly behaviour is to convert people into passionate environmentalists. All these ideas are sometimes true–but not always.

Anyone who has waited at home for five hours for an engineer knows that it’s a form of mental torture, a little like being under house arrest; you can’t have a bath or pop out for a pint of milk, because you fear that the second you do, the engineer will turn up. So you spend half the day on tenterhooks, afraid that your engineer might not show up at all. How different might the experience feel if the engineer agreed to text you half an hour before showing up at your door? Suddenly you’d be free to get on with your day almost as if it were a day off, with your only obligation being to keep an eye on your phone.* This is one of the solutions we propose to test. Is it as good as offering one-hour appointments? Not quite, but it might offer 90 per cent of the emotional and perceptual improvements, at 1 per cent of the cost. The old binoculars would not have revealed this because they would have taken customer complaints literally.

Another method is to perform what is called a thought experiment. For instance, ask yourself which message on a flight departure board would distress you more: BA 786–Frankfurt–DELAYED or BA 786–Frankfurt–DELAYED 70 minutes.

A few years ago, my colleagues produced an extraordinary intervention to reduce crime. They hypothesised that the presence of the metal shutters that shops in crime-ridden areas covered their windows with at night may in fact increase the incidence of crime, since they implicitly communicated that this was a lawless area. One of my colleagues, the brilliant Tara Austin, had seen research that suggested that ‘Disney faces’–large-eyed human faces with the proportions of young children–seemed to have a calming effect. Combining the two ideas, she created an experiment where shop shutters were painted with the faces of babies and toddlers by a local graffiti artist collective. By all measures, this seemed to reduce crime significantly; moreover, it did so at a tiny cost, and certainly by less than the cost of direct policing. Several other local authorities have since repeated the approach, though take-up is low–it is much easier to argue for larger policing budgets or for the installation of CCTV, than to approach a problem psycho-logically.

But the real story is one of professional and academic hierarchy: to an astronomer, the solution of an uneducated man whose life had been spent making clocks did not seem worthy of recognition.

If a problem is solved using a discipline other than that practised by those who believe themselves the rightful guardians of the solution, you’ll face an uphill struggle no matter how much evidence you can amass.

In 1847, when Ignaz Semmelweis decisively proved that hand-washing by doctors would cut the incidence of puerperal fever, a condition that could be fatal during childbirth, he was spurned. All too often, what matters is not whether an idea is true or effective, but whether it fits with the preconceptions of a dominant cabal.*

I had always innocently assumed that after Edward Jenner discovered a vaccination against smallpox he would have presented his findings before sitting back to enjoy the acclaim. The truth was nothing of the kind; he spent the rest of his life defending his idea against a large number of people who had profited from an earlier practice called variolation, and were reluctant to admit that anything else was better.

The question being asked seemed to be, ‘Yes I know it works in practice, but does it work in theory?’ Just as, under Maskelyne, the dominant model was astronomical rather than horological, in smoking cessation the dominant model was one of shame* rather than of accommodation.

If you have spent the last 20 years as a public health advisor promoting policies designed to create shame, alongside colleagues who all believe the same thing, the last thing you want to hear is ‘Don’t worry about that, because a bloke in China has come up with a gadget which means that the problem to which you have dedicated your life and from which your social status derives is no longer a problem any more.’

Even worse, the inventor was a businessman rather than a health professional. As with Maskelyne’s rejection of Harrison’s marine chronometer, there were vested interests at stake. Some of the funding for anti-vaping campaigns came from large pharmaceutical companies, which saw the devices as threatening their investment in less potent quitting treatments such as patches or gum.*

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

The other argument, which I found even more implausible, was that vaping might act as a gateway drug to more serious substances. Most heroin addicts may have started with cannabis, but then, most cannabis addicts probably started with tea and coffee.

One possible explanation for this is that smoking is not so much an addiction as a habit: that after a few years of smoking, it is the associations, actions and mannerisms we crave more than the drug itself. Hence, if you have not been addicted to smoking cigarettes, e-cigs simply don’t hit the spot, just as those of us who have never been heroin addicts tend not to be all that keen on needles.

A few years ago, a High Court judge was driving home from his golf club after five or six double gin and tonics when he was pulled over by the police and breathalysed. When the machine barely registered an amber light, the police let him go–at which point, he drove back to the club and demanded that the head barman be fired for watering down the drinks. Dodgy barmen have known for years that, after one proper G& T, you can sell people tonic water in a glass lightly rinsed in gin and not only will they not notice the difference, but regular drinkers may still manifest all the effects of drunkenness–slurred speech and poor coordination–even though they have consumed almost no alcohol.*

The Uber map is a psychological moonshot, because it does not reduce the waiting time for a taxi but simply makes waiting 90 per cent less frustrating. This innovation came from the founder’s flash of insight(while watching a James Bond film, no less*) that, regardless of what we say, we are much bothered by the uncertainty of waiting than by the duration of a wait.

I am willing to bet that there are ten times as many people on the planet who are currently being paid to debate why people prefer Coke or Pepsi than there are being paid to ask questions like ‘Why do people request a doctor’s appointment?’, ‘Why do people go to university?’ or ‘Why do people retire?’ The answers to these last three questions are believed to be rational and self-evident, but they are not.

My friend and mentor Jeremy Bullmore recalls a heated debate in the 1960s at the ad agency J. Walter Thompson about the reasons why people bought electric drills. ‘Well obviously you need to make a hole in something, to put up some shelves or something, and so you go out and buy a drill to perform the job,’ someone said, sensibly. Llewelyn Thomas, the copywriter son of the poet Dylan, was having none of this. ‘I don’t think it works like that at all. 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.’

‘Why do people mostly buy ice cream in the summer?’ seems a pretty facile question. ‘Duh! To cool down on a hot day!’ It certainly sounds plausible, but human behaviour tells a different story. For one thing, sunshine is a far better predictor of ice cream sales than temperature. And to confuse things further, the three countries with the highest per-capita ice cream sales in Europe? Finland, Sweden and Norway.

One possible way of looking at the question might be to ask whether people need the excuse of a special occasion to justify eating ice cream. Perhaps a sunny day is Sweden is rare enough to provide the necessary licence?

Similarly, ‘Why do people go to the doctor?’ seems like an idiotic question, until you realise that it isn’t. Is it because they are ill and want to get better? Sometimes, but there are many more motivations that lie beneath this apparently rational behaviour. Perhaps they are worried and crave reassurance? Some people just need a bit of paper to prove to their employer they were ill. A lot of people may go in search of someone to make a fuss of them. Perhaps, what people are mostly seeking is not treatment, but reassurance. The distinction matters–after all, not many people make unnecessary visits to the dentist.

Some problems might be solved over the phone, while other visits could be postponed until it was likely the person had recovered naturally. In the event of a flu outbreak, you might even leave an answerphone message detailing the symptoms and telling younger or less vulnerable people what to do if they were suffering. Once people know an illness is widespread they are less anxious about being ill, and correspondingly less eager to see a doctor for reassurance. ‘There’s a lot of it about’ is reassurance in itself.(What you don’t want your doctor to say is, ‘This is an extraordinary case–I’ve never seen anything like it in my whole professional career.’)

Whether we use logic or psycho-logic depends on whether we want to solve the problem or to simply to be seen to be trying to solve the problem.

The self-regarding delusions of people in high-status professions lie behind much of this denial of unconscious motivation. Would you prefer to think of yourself as a medical scientist pushing the frontiers of human knowledge, or as a kind of modern-day fortune teller, doling out soothing remedies to worried patients? A modern doctor is both of these things, though is probably employed more for the latter than the former.

‘Why do people clean their teeth?’ Obviously it is to maintain dental health and to prevent cavities, fillings and extractions. What possible other answer could there be? Well, in fact, if we look at adult behaviour–when we choose, buy and use toothpaste–we see patterns of consumption that entirely contradict this logical explanation. If we were really interested in minimising the risk of tooth decay, we would brush our teeth after every meal, yet almost nobody does this. In fact, the times when people are most likely to clean their teeth occur before those moments when we are most frightened of the adverse social consequences of visible stains or bad breath.

When are you more likely to clean your teeth? Be honest. After eating ice cream, or when you’re going on a date?*

If you don’t believe this, ask yourself one question: why is almost all toothpaste flavoured with mint? A recent trial proved that there were no dental-health benefits to the practice of flossing.

The reason toothpaste is an especially interesting example is because, if an unconscious motivation happens to coincide with a rational explanation, we assume that it is the rational motive which drives the action.

Imagine you came home to find a dog turd on the floor of your kitchen; you would find it repellent, and would remove it immediately. Having disposed of it, you would wipe the floor with water and detergent, and if I asked you why you were doing those things, you would answer ‘because it’s unhygienic, of course; it’s a source of germs’. But here’s the thing; an early Victorian would have experienced exactly the same emotions and performed exactly the same actions, but they didn’t know about germs. They were, technically speaking, irrational in their dislike of faeces, which was ‘purely emotional’.

Nowadays, if someone started flinging faeces around, we would describe him as a public-health hazard, while in the eighteenth century they would have called the practice ‘ungodly’ and in the fifteenth they might have burned him at the stake. So the dislike of faeces was not originally based on sound reasoning–it was rather a sound instinct the reason for which had not yet been discovered.

For the half-million or so years before medical bacteriology arose as a study in the 1870s, evolution had provided us with an emotional solution to a rational problem. You would be more likely to survive and reproduce if you had a strong aversion to poo, and so almost all of us are descended from people who disliked it. What’s interesting is that we adopted the behaviour many thousands of years before we knew the reasons for it.

Instincts are heritable, whereas reasons have to be taught; what is important is how you behave, not knowing why you do. As Nassim Nicholas Taleb remarks, ‘There is no such thing as a rational or irrational belief–there is only rational or irrational behaviour.’ And the best way for evolution to encourage or prevent a behaviour is to attach an emotion to it.

Sometimes the emotion is not appropriate–for instance, there is no reason for Brits to be afraid of spiders, since there are no poisonous spiders in the UK–but it’s still there, just in case. And why take the risk? Other than in a few specialist jobs in zoos, there’s not much to be gained from not being afraid of spiders. So, as with tooth brushing, behaviours which have a rationally beneficial outcome do not have to be driven by a rational motivation. Cleaning our teeth is good for dental health even if we do it for reasons of vanity.

You don’t need reasons to be rational.

History books are full of examples of public health or social benefits that have been driven by spiritual rather than material reasons.* Strict dietary law, in both Islam and Judaism, is a good example–and has a further benefit in the shape of social cohesion, as it forces people to eat together.

Scientifically unverified beliefs about burial norms drove rational and life-saving behaviour.

However, as I said above, we have only known about germs for a little over a hundred years, so why did towns build cemeteries away from their settlements long before this? Again it was an instinctive behaviour enshrined in a spiritual belief. In the Middle Ages, Europeans moved cemeteries from inside their fortifications to outside because of a fear that the souls of the bodies of the dead might return to haunt the living. The incidental result of this fear of ‘revenants’ was improved hygiene and protection from disease.

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

Who cares why people clean their teeth, as long as they do it? Who cares why people recycle, as long as they do it? And who cares why people don’t drink-drive, as long as they don’t do it?

How many would you like, three or four?’ We are highly social creatures and just as we find it very difficult to answer the question ‘still or sparkling?’ with ‘tap’, it is also difficult to answer the question about ‘three or four’ smoke detectors with with ‘one’. As Nassim Nicholas Taleb remarks, ‘the way a question is phrased is itself information’.

My companion, however, seemed unperturbed and sure enough, about two feet before the fence, the dog skidded to a halt on the lawn and continued its furious barking. As my friend knew, the dog was fitted with a collar that would detect the presence of a wire buried beneath the lawn boundary and administer an electric shock to the dog if it came too close. Although the fence was only two feet high, the dog was terrified to approach it. A similar constraint also applies to decision-making in business and government.

There is a narrow and tightly limited area within which economic theory allows people to act. Once they reach the edges of that area, they freeze, rather like the dog. In some influential parts of business and government, economic logic has become a limiting creed rather than a methodological tool.

‘When I ask an economist, the answer always boils down to just bribing people.’ Logic should be a tool, not a rule.

Whenever I speak to a very good mathematician, one of the first things I notice is they are often sceptical about the tools which other mathematicians are most enthused about. A typical phrase might be: ‘Yeah you could do a regression analysis, but the result is usually bollocks.’ An attendant problem is that people who are not skilled at mathematics tend to view the output of second-rate mathematicians with an high level of credulity, and attach almost mystical significance to their findings. Bad maths is the palmistry of the twenty-first century.

(For instance, it may seem conclusive to suggest that a DNA marker shared by the perpetrator and a suspect is possessed by only one in 20,000 people, but if the suspect had been identified by trawling through a DNA database of 60,000 people, you would expect to find three people who exhibited this property, of whom at least two would be completely innocent.)

Notice, though, how just a few wrong assumptions in statistics, when compounded, can lead to an intelligent man being wrong by a factor of about 100,000,000–tarot cards are rarely this dangerous.

To put it crudely, when you multiply bullshit with bullshit, you don’t get a bit more bullshit–you get bullshit squared.

The assumption was that, if you wished to know whether a bet was a good idea, you could simply imagine making it a thousand times simultaneously, add up the net winnings, and subtract the losses; if the overall outcome is positive, you should then make that bet as many times as you can. So a bet costing £ 5 which has a 50 per cent chance of paying out £ 12(including the return of your stake) is a good bet. You will win on average £ 1 every time you play, so you should play it a lot. Half the time you lose £ 5 and half the time you win £ 7. If a thousand people play the game just once, they will collectively end up with a net gain of £ 1,000. And if one person plays the game 1,000 times, he would expect to end up around £ 1,000 richer too–the parallel and series outcomes are the same. Unfortunately this principle applies only under certain conditions, and real life is not one of them. It assumes that each gamble is independent of your past performance, but in real life, your ability to bet is contingent on the success of bets you have made in the past.

The returns on these four are £ 225, £ 90, £ 90 and £ 36. There are two ways of looking at this. One is to say, ‘What a fabulous return: our collective net wealth has grown over 10 per cent, from £ 400 to £ 441, so we must all be winning.’ The more pessimistic viewpoint is to say, ‘Sure, but most of you are now poorer than when you started, and one of you is seriously broke. In fact, the person with £ 36 needs to throw three heads in a row just to recover his original stake.’

what happens on average when a thousand people do something once is not a clue to what will happen when one person does something a thousand times. In this, it seems, evolved human instinct may be a much better at statistics than modern economists.*

To explain this distinction using an extreme analogy, if you offered ten people £ 10m to play Russian roulette once, two or three people might be interested, but no one would accept £ 100m to play ten times in a row.

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.

Remember that every time you average, add or multiply something, you are losing information. Remember also that a single rogue outlier can lead to an extraordinary distortion of reality–just as Bill Gates can walk into a football stadium and raise the average level of wealth of everyone in it by $ 1m.

In maths, 10 x 1 is always the same as 1 x 10, but in real life, it rarely is. You can trick ten people once, but it’s much harder to trick one person ten times.*

For instance, our tax system assumes that ten people who earn £ 70,000 for one year of their life should be taxed the same amount as one person who earns £ 70,000 for ten consecutive years, yet I have never heard anyone question this–is it another example of bad maths?

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.

A person engaged in recruitment may think they are trying to hire the best person for the job, but their subconscious motivation is subtly different. Yes, they want to hire a candidate who is likely to be good, but they are also frightened of hiring someone who might turn out to be bad–a low variance will be as appealing to them as a high average performance. If you want low variance, it pays to hire conventionally and adhere to the status quo, while people hiring a group of employees are much more likely to take a risk on some less conventional candidates.

That’s because when you have one house, it cannot be too weak in any one dimension: it cannot be too small, too far from work, too noisy or too weird, so you’ll opt for a conventional house. On the other hand, if I were to double your budget and tell you to buy two houses, your pattern of decision-making would change. You would now be looking to buy two significantly different properties with complementary strengths–perhaps a flat in the city and a house in the countryside.

Everyone worries about declining social mobility, rising inequality and the hideous homogeneity of politicians, yet it is possible these have arisen from well-meaning attempts to make the world fairer. The quandary is that you can either create a fairer, more equitable society, with opportunities for all but where luck plays a significant role, or you can create a society which maintains the illusion of complete and non-random fairness, yet where opportunities are open to only a few–the problem is that when ‘the rules are the same for everyone’ the same boring bastards win every time.

The idea that you should therefore try making your recruitment system less fair outrages people when I suggest it, but it is worth remembering that there is an inevitable trade-off between fairness and variety.

identical criteria to everyone in the name of fairness, you end up recruiting identical people.*

At Ogilvy we now recruit creative talent through an internship scheme called ‘The Pipe’. Applicants don’t have to be graduates; they don’t have to be young; they don’t have to have any qualifications at all–in fact, we recruit them blind for the first few stages. It is too early to make any definitive judgement about the programme’s success, but the recruits seem every bit as interesting to chat to as the Oxford graduates–and more interesting, in some cases.*

Within months of our first intake joining, several of them had won an award at the Cannes Festival of Creativity for an advertising idea for Hellmann’s Mayonnaise–something some people spend a lifetime in the industry without achieving.

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.

Weird consumers drive more innovation than normal ones. By contrast, it is perfectly possible that conventional market research has, over the past fifty years, killed more good ideas than it has spawned, by obsessing with a false idea of representativeness.

As any game theorist knows, there is a virtue to making slightly random decisions that do not conform to established rules. 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.

Real excellence can come in odd packaging. Nassim Nicholas Taleb applies this rule to choosing a doctor: you don’t want the smooth, silver-haired patrician who looks straight out of central casting–you want his slightly overweight, less patrician but equally senior colleague in the ill-fitting suit. The former has become successful partly as a result of his appearance, the latter despite it.

For instance, it would be perfectly possible to improve your racial diversity figures by employing ten highly talented Nigerians. You might congratulate yourself for the admirable diversity shown by your firm, but what if you were to then find out that all ten came from the Igbo tribe and none come from the almost equally populous Yoruba tribe–would you bury this fact and remain smug about your newly diverse workforce, or would you ask whether your definition of diversity is a little heavy on weighting skin colour and a bit light on everything else?

Context is everything: strangely, the attractiveness of what we choose is affected by comparisons with what we reject. As one friend remarked, ‘Everyone likes to go to a nightclub in the company of a friend who’s slightly less attractive than them.’

Estate agents sometimes exploit this effect by showing you a decoy house, to make it easier for you to choose one of the two houses they really want to sell you. They will typically show you a totally inappropriate house and then two comparable houses, of which one is clearly better value than the other. The better value house is the one they want to sell you, while the other one is shown to you for the purpose of making the final house seem really good.

Usually someone has often already found an answer to your problem–just in a different domain.

I rewrote the brief, and tried to make a decision while disposing of the usual assumptions. I wondered what most people do when they move house, aware that if I chose a house the way most people do, I would end up competing with a lot of people for the same houses. On the other hand, I knew that if I bought a house using wildly divergent criteria from everyone else, I should find a place that was relatively undervalued. In competitive markets, it pays to have(and to cultivate) eccentric tastes.

As I said, our apartment is on the second floor, and there is no lift.* But again, I decided to look at it differently. Not having a lift is good for you, because several times a day you get guaranteed exercise. In my mind, the flat no longer suffered from the absence of a lift–it was blessed with a free gym.

The second interesting thing is that we have no real unitary measure of what is important and what is not–the same quality(such as not having a lift) can be seen as a curse or a blessing, depending on how you think of it. What you pay attention to, and how you frame it, inevitably affects your decision-making.

If you look at the history of great inventions and discoveries, sequential deductive reasoning has contributed to relatively few of them. Graphene, one of the most important discoveries of the last 30 years, was discovered by the physicist Andre Geim in Manchester,* but he created the substance by messing around with pencils and Sellotape, equipment that any of us could have bought at a branch of Staples.

Geim says of his approach to science: ‘I jump from one research subject to another every few years. I do not want to study the same stuff“from cradle to coffin”, as some academics do. To be able to do this, we often carry out what I call“hit-and-run experiments”, crazy ideas that should never work and, of course, they don’t in most cases. However, sometimes we find a pearl... This research style may sound appealing but it is very hard psychologically, mentally, physically, and in terms of research grants, too. But it is fun.’

For all we obsess about scientific methodology, Geim knows it is far more common for a mixture of luck, experimentation and instinctive guesswork to provide the decisive breakthrough; reason only comes into play afterwards.

Here is the brilliant American physicist Richard Feynman, in a Lecture in 1964, describing his method: ‘In general, we look for a new law by the following process. First, we guess it... Then we compute the consequences of the guess, to see what, if this law we guess is right, to see what it would imply and then we compare the computation results to... experience, compare it directly with observations to see if it works... In that simple statement is the key to science. It doesn’t make any difference how beautiful your guess is, it doesn’t matter how smart you are, who made the guess or what his name is... If it disagrees with the experiment, it’s wrong. That’s all there is to it.’

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

To them, the use of reason ‘looks scientific’, even if it is being used in the wrong place. After all, should we refuse to use antibiotics, X-rays, microwave ovens or pacemakers because the scientific discoveries which led to their creation were the product of lucky accidents?* You would have to be a deranged purist to adopt this view–and you would also end up hungry, bored and quite possibly dead. As with scientific progress, so too with business. The iPhone, perhaps the most successful product since the Ford Model T, was developed not in response to consumer demand or after iterative consultation with focus groups; it was the monomaniacal conception of one slightly deranged man.*

However, most valuable discoveries don’t make sense at first; if they did, somebody would have discovered them already. And ideas which people hate may be more powerful than those that people like, the popular and obvious ideas having all been tried already.

We should test counterintuitive things–because no one else will.

Imagine you are climbing a large mountain that has never been climbed before. From the bottom, it is impossible to tell which slopes are passable, because much of the terrain is hidden behind the lower foothills. Your climb involves a great deal of trial and error: routes are tried and abandoned; there is frequent backtracking and traversing. Many of the decisions you take may be based on little other than instinct or good fortune. But eventually you do make it to the summit, and once you are there, the ideal route is apparent. You can look down and see what would have been the best path to have taken, and that now becomes ‘the standard route’. When you describe the route you took to your mountaineering friends, you pretend it was the route you took all along: with the benefit of hindsight, you declare that you simply chose that route through good judgement.

We constantly rewrite the past to form a narrative which cuts out the non-critical points–and which replaces luck and random experimentation with conscious intent. For instance, a friend of mine once mentioned that he had been attracted to buy his current home partly because it was close to an excellent restaurant, forgetting that the establishment opened after he had moved in. In reality, almost everything is more evolutionary than we care to admit. For a long time working in the advertising industry, I was conscious that in every proposal we made we presented post-rationalisations as though they had been rational all along.

But in coming up with anything genuinely new, unconscious instinct, luck and simple random experimentation play a far greater part in the problem-solving process than we ever admit. I used to feel bad about presenting ideas as though they were the product of pure inductive logic, until I realised that, in reality, everything in life works this way. Business. Evolution by natural selection. Even science.

‘There are two key steps that a mathematician uses. He uses intuition to guess the right problem and the right solution and then logic to prove it.’

He further contends that our tendency to attribute our successes to a planned and scientific approach and to play down the part of accidental and unplanned factors in our success is misleading and possibly even limits our scope for innovative work.

What is reason actually for? This may seem absurd, but in evolutionary terms it is far from trivial. After all, as far as we know, every other organism on the planet survives perfectly well without such a capacity. It is true that reason seems to have given us remarkable advantages over other animals–and it is unlikely that we could have produced many of our technological and cultural successes without it. But, in evolutionary terms, these must be a by-product, because evolution does not do long-term planning.*

One astonishing possible explanation for the function of reason only emerged about ten years ago: the argumentative hypothesis* suggests reason arose in the human brain not to inform our actions and beliefs, but to explain and defend them to others. In other words, it is an adaptation necessitated by our being a highly social species. We may use reason to detect lying in others, to resolve disputes, to attempt to influence other people or to explain our actions in retrospect, but it seems not to play the decisive role in individual decision-making.

In this model, reason is not as Descartes thought, the brain’s science and research and development function–it is the brain’s legal and PR department.

In the physical sciences, cause and effect map neatly; in behavioural sciences it is far more complex. Cause, context, meaning, emotion, effect.

As with ‘GPS logic’ it is possible to construct a plausible reason for any course of action, by cherry-picking the data you choose to include in your model and ignoring inconvenient facts. As I said earlier, the people who lost the Brexit referendum in the UK, and the Democrats who lost to Donald Trump in the US, both feel that their respective campaigns had the better arguments, but you would have to be a very committed Remainer or Democrat not to notice that the field in which they were prepared to argue in both cases was spectacularly narrow.

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.

The ‘doorman fallacy’, as I call it, is what happens when your strategy becomes synonymous with cost-saving and efficiency; 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.

I rang a company’s call centre the other day, and the experience was exemplary: helpful, knowledgeable and charming. The firm was a client of ours, so I asked them what they did to make their telephone operators so good. The response was unexpected: ‘To be perfectly honest, we probably overpay them.’

The call centre was 20 miles from a large city; local staff, rather than travelling for an hour each day to find reasonably paid work, stayed for decades and became highly proficient. Training and recruitment costs were negligible, and customer satisfaction was astoundingly high. The staff weren’t regarded as a ‘cost’–they were a significant reason for the company’s success.

It is a never-mentioned, slightly embarrassing but nevertheless essential facet of free market capitalism that it does not care about reasons–in fact it will often reward lucky idiots. You can be a certifiable lunatic with an IQ of 80, but if you stumble blindly on an underserved market niche at the right moment, you will be handsomely rewarded. Equally you can have all the MBAs money can buy and, if you launch your genius idea a year too late(or too early), you will fail.

Evolutionary progress, after all, is the product of lucky accidents. Similarly, a system of business that kept empty restaurants, say, open through subsidy, simply because there seemed to be some good reasons for their continued existence, would not lead to happy outcomes.

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

This was a false assumption, because you don’t need to tinker with atomic structure to make lead as valuable as gold–all you need to do is to tinker with human psychology so that it feels as valuable as gold. At which point, who cares that it isn’t actually gold?

2.7: The Alchemy of Design

Even when you are designing for the able-bodied, it is a good principle to assume that the user is operating under constraints. This is why a door handle is better than a door knob: it allows you to open a door with your elbow—either because you do not have any hands, or because your hands are holding cups of tea. The provision of wheelchair ramps at airports may benefit the owners of rolling suitcases almost as much as wheelchair users. Subtitles meant for the ‘hard of hearing’ are likewise useful if you want to watch television in a bar or airport, or while your children are asleep.*

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

When affordances are taken advantage of, the user knows what todo just by looking: no picture, label, or instruction needed.

It is always possible to add functionality to something, but while it makes the new thing more versatile, it also reduces the clarity of its affordance, making it less pleasurable to use and quite possibly more difficult to justify buying.

The Walkman also exploits a clear psychological heuristic, or rule of thumb—‘the jack-of-all-trades-heuristic’, whereby we naturally assume that something that only does one thing is better than something that claims to do many things.

3.2: A Few Notes on Game Theory

Many things which do not make sense in a logical context suddenly make perfect sense if you consider what they mean rather than what they are.For instance, an engagement ring serves no practical purpose as an object. However, the object—and its expense—make it highly redolent with meaning; an expensive ring is a costly bet by a man in his belief that he believes—and intends—his marriage to last.

If you wish to make an UltimatumGame work so that everybody would cooperate, allow me to propose a simple mechanism: you simply demand that, before anyone is allowed to play, they are required to memorise 25,000 streets and 20,000 landmarks in London. This will take four years of their life. At that point, all you need is a simple mechanism to ensure that cheaters can be expelled from the game. Under such circumstances no one will wish to cheat, since it would place them at risk of being thrown out of the game before they have recouped the effort they invested in gaining entry in the first place.

3.3: Continuity Probability Signalling: Another Word for Trust

There is the ‘tourist restaurant’ approach, where you try to make as much money from people in a single visit. And then there is the ‘local pub’ approach, where you may make less money from people on each visit, but where you will profit more over time by encouraging them to come back.The second type of business is much more likely to generate trust than the first.

This theory, if true, also explains some counter intuitive findings in customer behaviour: it has long surprised observers that, if a customer has a problem and a brand resolves it in a satisfactory manner, the customer becomes a more loyal customer than if the fault had not occurred in the first place. Odd, until you realise that solving a problem for a customer at your own expense is a good way of signalling your commitment to a future relationship.

3.4: Why Signalling Has to Be Costly

Bits deliver information, but costliness carries meaning. We do not invite people to our weddings by sending out an email. We put the information (all of which would fit on an email-or even a text message) on a gilt embossed card, which costs a fortune. Imagine you receive two wedding invitations on the same day, one of which comes in an expensive envelope with gilt edges and embossing, and the other (which contains exactly the same information) in an email. Be honest-you're probably going to go to the first wedding, aren’t you?

‍3.5 Efficiency, Logic and Meaning: Pick Any Two

We notice and attach significance and meaning to those things that deviate from narrow, economic common sense, precisely because they deviate from it. The result of this is that the pursuit of narrow economic rationalism will produce a world rich in goods, but deficient in meaning. In architecture this has produced modernism, a style with a marked absence of decoration or ‘spurious’ detail, and a corresponding loss of‘ meaning’.* My secret hope is that, with the 3D-printing of buildings becoming possible, a certain Gaudí-ness may reappear in twenty-first-century buildings.

3.6: Creativity as Costly Signalling

A handmade birthday card can be cheaper and yet still more moving than an expensive bought one—but it has to involve a level of effort.* A video recording of a self-composed song as a wedding invitation could, with enough talent and tolerable production values, be sent by email, but a straightforward and factual unfunny email invitation just isn’t the same—it has no creativity and is just a statement of fact.

Bravery and wit can be a form of costly signalling.

Effective communication will always require some degree of irrationality inits creation because if it’s perfectly rational it becomes, like water, entirely lacking in flavour.

This explains why working with an advertising agency can be frustrating:it is difficult to produce good advertising, but good advertising is only good because it is difficult to produce.

Quite simply, all 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.

One of the most important ideas in this book is that 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.If rationality were valuable in evolutionary terms, accountants would be sexy.

3.7: Advertising Does Not Always Look like Advertising

Relatively small businesses that might not be able to afford to advertise in any conventional sense, could transform their fortunes by paying a little attention to the workings of psycho-logic. The trick involves simply understanding the wider behavioural system within which they operate. Cafés could boost sales by improving their menu design. Many small shops are inadequately lit, and so passers-by assume they are closed—how much business do they lose as a result?* Pubs are often needlessly intimidating because their windows are made of frosted glass, preventing people from looking inside before entering. Pizza delivery firms could differentiate themselves in a crowded market by agreeing to deliver tea, coffee, milk and toilet paper alongside a pizza. Restaurants might increase sales by allowing the kerbside collection of take-away meals—or by adding a sign which says ‘parking at rear’

‘I knew the coffee was going to be good because of the chairs,’ sounds like a very silly sentence, but hold on a moment—maybe, using psycho-logic and a bit of social intelligence, we can identify a connection. For a start, someone who invests in new chairs and goes to the trouble of placing them on the pavement every day is not lazy, and has also invested in their business. Furthermore, they seem to expect their business to be a success—had they not, they would not have undertaken the expense. The chairs don’t promise perfection, but they are a reliable indicator of at least reasonable quality. The business owner who buys the windbreak and the chairs has probably also invested in a decent Gaggia machine, proper milk and coffee beans—and in training his staff. It suggests the owner, rather than playing the short game of immediate profit maximisation, is playing the long game, building a reputation and a loyal customer base—which will mean a cappuccino that is palatable at the very least.

4: Subconscious Hacking: Signalling to Ourselves

In the words of Jonathan Haidt: ‘The conscious mind thinks it’s the Oval Office, when in reality it’s the press office.’ By this, he means that we believe we are issuing executive orders, while most of the time we are actually engaged in hastily constructing plausible post-rationalisations to explain decisions taken somewhere else, for reasons we do not understand.

I often construct fake advertising slogans for various products—in particular the slogans that they would adopt if they could afford to be completely honest about why people bought them. ‘Flowers—the inexpensive alternative to prostitution’—that kind of thing. They are rather like the slogans that appear throughout the film *The Invention of Lying* (2009),* which is set in a world in which everyone initially tells the truth about everything. ‘Pepsi—for when they don't have Coke’.*

The main value of a dishwasher, I would argue, is not that it washes dirty dishes, but that it provides you with an out-of-sight place to put them. The main value of having a swimming pool at home is not that you swim in it, but that it allows you to walk around your garden in a bathing costume without feeling like an idiot.

A friend who had been invited to spend a week on a luxury yacht explained why they are so popular with megalomaniacs: ‘You can invite your friends to join you on holiday, then spend the week treating them like you are Captain Bligh.’ If you have the most magnificent villa in the world, there is still the risk that your friends and rivals might hire a car and wander off on their own; on a megayacht, however, they are your captives.*

One problem (of many) with Soviet-style command economies is that they can only work if people know what they want and need, and can define and express their wants adequately. But this is impossible, because not only do people not know what they want, they don’t even know why they like the things they buy. The only way you can discover what people really want (their ‘revealed preferences’, in economic parlance) is through seeing what they actually pay for under a variety of different conditions, in a variety of contexts. This requires trial and error—which requires competitive markets and marketing.

4.9: The Red Bull Placebo‍

The most plausible explanation for the incredible success of Red Bull lies in a kind of placebo effect. After all, it shares many of the features of a great placebo: it’s expensive, it tastes weird and it comes in a ‘restricted dose’. In its early days, Red Bull also benefited from repeated rumours that its active ingredient, taurine, was about to be banned. In addition to the price and the taste, the small can is particularly potent. You might expect a new soft drink to be distributed in a standard, Coke-sized can; perhaps we notice the small tin in which Red Bull is sold and unconsciously infer, ‘That must be really potent stuff: they have to sell it in a small can because if you drank the full 330ml, you’d probably go doolally’.

‍

### 5: Satisficing

### 6: Psychophysics

### 7: How to Be an Alchemist

### Conclusion: On Being a Little Less Logical

### About the Publisher

‍