Alchemy: The Dark Art and Curious Science of Creating Magic in Brands, Business, and Life
Last read May 26, 2021
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Highlights
113 highlights.
The human mind does not run on logic any more than a horse runs on petrol.
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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.
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we now unfortunately fetishise logic to such an extent that we are increasingly blind to its failings.
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Our business consultants, accountants, policy-makers and think-tank pundits are all selected and rewarded for their ability to display impressive flights of reason.
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Irrational people are much more powerful than rational people, because their threats are so much more convincing.
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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.
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If you are wholly predictable, people learn to hack you.
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The human mouth allows you to eat, but if your nose is blocked, it also allows you to breathe. In a similar way, it seems illogical to break into a building using the noisiest means possible, until you understand the context in which the offender is operating. It is not appropriate to bring the same habits of thought that we use to deal with things that have been consciously designed to understanding complex and evolved systems, with second-order considerations.
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But, strange though it may seem, the study of economics has long been detached from how people behave in the real world, preferring to concern itself with a parallel universe in which people behave as economists think they should.
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the effectiveness of cute animals in advertising should not shock us. Advertising exists to be noticed, and we have evolved, surely, to pay attention to living things. An evolutionary psychologist might also suggest that a penguin nightlight – a gift for one’s child – might be more emotionally rewarding than a cash reward, which is a gain for oneself.*
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The lesson we should learn from the appendix is that something can be valuable without necessarily being valuable all the time. Evolution does not take such a short-term, instrumentalist view. In looking for the everyday function of the human appendix, we were looking for the wrong thing. Whether something makes sense in theory matters less than whether it works in practice.
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This is a book written in defence of things that don’t quite make sense, but it is also a book that – conversely – attacks our fetishisation of things that do. Once you accept that there may be a value or purpose to things that are hard to justify, you will naturally come to another conclusion: that it is perfectly possible to be both rational and wrong.
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It is impossible for human relations to work unless we accept that our obligations to some people will always exceed our obligations to others. Universal ideas like utilitarianism are logical, but seem not to function with the way we have evolved.
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For instance, there are two equally potent, but completely contradictory, ways to sell a product: ‘Not many people own one of these, so it must be good’ and ‘Lots of people already own one of these, so it must be good.’
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‘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.’
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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.
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There are five main reasons why we have evolved to behave in seemingly illogical ways, and they conveniently all begin with the letter S.* They are: Signalling, Subconscious hacking, Satisficing and Psychophysics.
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For instance, whenever I drive to the airport, I often ignore my GPS. This is because what I need when I’m catching a flight is not the fastest average journey, but the one with the lowest variance in journey time – the one with the ‘least-bad worst-case scenario’.
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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.*
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‘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.’*
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People are much more comfortable attributing the success of a business to superior technology or better supply-chain management than to an unconscious, unspoken human desire.
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For a business to be truly customer-focused, it needs to ignore what people say. Instead it needs to concentrate on what people feel.
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Similarly, before the recent revolution in craft beer, the range and quality of American beer was dismal;* however, since American brewing has become magnificently diverse and inefficient, the US has gone from being the worst country for a beer drinker to visit, to the best.*
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Once we are honest about the existence of unconscious motivations, we can broaden our possible solutions. It will free us to open up previously untried spaces for experimentation in resolving practical problems if we are able to discover what people really, really want,* rather than a) what they say they want or b) what we think they should want.
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People simply do not have introspective access to their motivations.
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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.
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If you would like an easy life, never come up with a solution to a problem that is drawn from a field of expertise other than that from which it is assumed the solution will arise.
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to an astronomer, the solution of an uneducated man whose life had been spent making clocks did not seem worthy of recognition.
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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.*
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As 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.’
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most Britons feel it is repulsive to eat dogs or even horses. If you ask them why, they will contrive a series of arguments to defend what is really a socially constructed belief,
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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.
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it’s easy to achieve massive improvements in perception at a fraction of the cost of equivalent improvements in reality.
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we are much bothered by the uncertainty of waiting than by the duration of a wait.
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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.
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Perhaps, what people are mostly seeking is not treatment, but reassurance.
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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.
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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.
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In general, people are impressed by any visible extra effort that goes into a product: if you simply say ‘this washing powder is better than our old powder’, it is a hollow claim. However, if you replace the powder with a gel, a tablet or some other form, the cost and effort which have gone into the change make it more plausible to the purchaser there may have been some real innovation in the new contents.
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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.
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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.
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What people do with their own money (their ‘revealed preferences’) is generally a better guide to what they really want than their own reported wants and needs.*
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‘the way a question is phrased is itself information’.
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This is not the fault of the markets; it is the fault of the people who have hijacked the definition of what markets should do.
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the number of people who think they understand statistics dangerously dwarfs those who actually do, and maths can cause fundamental problems when badly used.
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it’s a finding that has great implications for the behavioural sciences, because it suggests that many supposed biases which economists wish to correct may not be biases at all – they may simply arise from the fact that a decision which seems irrational when viewed through an ensemble perspective is rational when viewed through the correct time-series perspective, which is how real life is actually lived; 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.
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But let me come back to my previous point. 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.*
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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.
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‘Everyone likes to go to a nightclub in the company of a friend who’s slightly less attractive than them.’
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If you want to buy really cheap art, buy architecture.
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when you are buying mass-produced goods, such as toasters, it generally pays to cultivate mainstream tastes. But when choosing things in scarce supply* it pays to be eccentric.
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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.
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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.
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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.
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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.
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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.
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In the physical sciences, cause and effect map neatly; in behavioural sciences it is far more complex. Cause, context, meaning, emotion, effect.
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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.
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that’s what makes markets so brilliant: they are happy to reward and fund the necessary, regardless of the quality of reasoning.
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The theory is that free markets are principally about maximising efficiency, but in truth, free markets are not efficient at all. Admiring capitalism for its efficiency is like admiring Bob Dylan for his singing voice: it is to hold a healthy opinion for an entirely ridiculous reason.
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If you declare something highly exclusive and out of reach, it makes us all want it much more – call it ‘the elixir of scarcity’.
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Merely adding a geographical or topographical adjective to food – whether on a menu in a restaurant or on packaging in a supermarket – allows you to charge more for it and means you will sell more.
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A great deal of the effectiveness of advertising derives from its power to direct attention to favourable aspects of an experience, in order to change the experience for the better.
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In each case, the more successful competitor achieved their dominance by removing something the competitor offered rather than adding to it.
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With the notable exception of the mobile phone, we generally find it easier to buy things that serve a single purpose.
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Reputation is a form of skin in the game: it takes far longer to acquire a reputation than to lose one.
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All these things only make sense if we assume that some signalling is going on – they are examples of a behaviour which is costly in the short term and which will only pay off, if at all, in the long term.
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They are thus – if nothing else – reliable signals that the person, animal or business engaging in that behaviour is acting on the basis of long-term self-interest rather than short-term expediency.
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long-term self-interest, as the evolutionary biologist Robert Trivers has shown, often leads to behaviours that are indistinguishable from mutually beneficial cooperation.
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It is agreed by both game theorists and evolutionary biologists that the prospects for cooperation are far greater when there is a high expectation of repetition than in single-shot transactions.
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The same applies in interpersonal relations; being rude isn’t so different from being polite, but it requires less effort.
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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.
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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.
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It might be a good rule of thumb for animals to avoid eating brightly coloured animals, since something that doesn’t need to adopt camouflage has clearly survived through some strategy other than concealment, and hence it might be best avoided.
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costly signalling can lead to economic inefficiency, but at the same time this inefficiency establishes valuable social qualities such as trustworthiness and commitment – politeness and good manners are costly signalling in a face-to-face form.
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we intuitively understand that someone with a reputable brand identity has more to lose from selling a bad product than someone with no reputation at risk.*
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Without this mechanism there is no incentive to improve your product, because the benefits will accrue to everybody equally; in addition, there is an ever-present incentive to let product quality slip, because you will reap the immediate gains, while the reputational consequences will hurt everyone else equally.
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the fact that something does not work through a known and logical mechanism should not make us unwilling to adopt it.
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There is a good evolutionary reason why we are imbued with these strong, involuntary feelings: feelings can be inherited, whereas reasons have to be taught, which means that evolution can select for emotions much more reliably than for reasons.
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we like to imagine we have more free will than we really do, which means we favour direct interventions that preserve our inner delusion of personal autonomy, over oblique interventions that seem less logical.
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‘The conscious mind thinks it’s the Oval Office, when in reality it’s the press office.’
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One of the buttons found on them, the ‘door close’ button, is quite interesting, because on many (and perhaps most) elevators, it is actually a placebo button – it is connected to nothing at all. It is there simply to make impatient people feel better by giving them something to do and the illusion of control.
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The single best investment ever made by the London Underground in terms of increasing passenger satisfaction was not to do with money spent on faster, more frequent trains – it was the addition of dot matrix displays on platforms to inform travellers of the time outstanding before the next train arrived.
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What if the reason men hate undergoing certain tests is that they are unconsciously averse to the uncertainty they experience while waiting for the results?
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The modern education system spends most of its time teaching us how to make decisions under conditions of perfect certainty.
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However, as soon as we leave school or university, the vast majority of decisions we all have to take are not of that kind at all.
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Keynes once said, ‘It is better to be vaguely right than precisely wrong’, and evolution seems to be on his side.
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The risk with the growing use of cheap computational power is that it encourages us to take a simple, mathematically expressible part of a complicated question, solve it to a high degree of mathematical precision, and assume we have solved the whole problem.
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We fetishise precise numerical answers because they make us look scientific – and we crave the illusion of certainty.
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This explains why we generally buy televisions from shops rather than from strangers on the street – the shop has invested in stock, it has a stable location and it is vulnerable to reputational damage.
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A company pursuing only profit but not considering the impact of its profit-seeking upon customer satisfaction, trust or long-term resilience, could do very well in the short term, but its long-term future may be rather perilous.*
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In any complex system, an overemphasis on the importance of some metrics will lead to weaknesses developing in other overlooked ones.
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‘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.’*
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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.
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Ideally you would like to buy the best television you can, but avoiding buying a television that turns out to be terrible is more important.
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In a simplistically logical world, a seller with an approval rating of 95 per cent* would nonetheless be able to sell goods perfectly successfully if they were 10 per cent cheaper than goods offered by people with 100 per cent approval ratings.
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However, a quick glance at the data shows this is not the case. People with approval ratings below 97 per cent can barely sell equivalent goods for half the price of sellers with a track record of 100 per cent satisfaction.
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No one would say that a meal they had had at McDonald’s was among the most spectacular culinary experiences of their lives, but you’re never disappointed, you’re never overcharged and you never get ill.
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in the real world, where we have limited trustworthy data, time and calculating power, the heuristic approach is better than any other alternative.
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Heuristics look second-best to people who think all decisions should be optimal. In a world where satisficing is necessary, they are often not only the easiest option but the best.
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Third-party recommendations are not perfect or remotely scientific, but they are rarely catastrophic.
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no one ever got fired for booking JFK.
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it is possible for something to be objectively wrong but subjectively right.
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Big data makes the assumption that reality maps neatly on to behaviour, but it doesn’t. Context changes everything.
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We should also remember that all big data comes from the same place: the past. Yet a single change in context can change human behaviour significantly. For instance, all the behavioural data in 1993 would have predicted a great future for the fax machine.
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A problem arises when human sciences – politics, economics or medicine, say – believe this universalism to be the hallmark of a science and pursue the same approach; in the human sciences, just as in TV design, what people perceive is sometimes more important than what is objectively true.
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‘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.
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When working with IKEA I was once advised: ‘Do not, under any circumstances, suggest ways of making the IKEA experience more convenient. If you do, we shall fire you on the spot.’
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Demanding people do the right thing and for the right reason is setting the bar rather too high.
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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.
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As Shakespeare wrote, ‘there is nothing either good or bad, but thinking makes it so’.
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it is easier to get fired for being illogical than for being unimaginative.
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if you never do anything differently, you’ll reduce your chances of enjoying lucky accidents.
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