What most people miss about marketing | Rory Sutherland (Vice Chairman of Ogilvy UK, author)

Rory’s background (0s)

• Rory Sutherland is the Vice Chairman of Ogilvy UK, author of "Alchemy: The Dark Art and Curious Science of Creating Magic in Brands, Business, and Life," and founder of Nudge Stock, the world's biggest festival of behavioral science and creativity.
• He is a proponent of thinking from first principles and encourages people to use human psychology to inform how they design, build, and market their products.
• Sutherland believes that good products don't automatically succeed and bad ones don't necessarily fail, emphasizing the importance of marketing and timing in product success.

The success and failure of products (2m37s)

• Rory Sutherland, Vice Chairman of Ogilvy UK, highlights the success of Facebook's Meta TV (now called Portal) as a product, citing its high quality and affordability. He personally owns four units and purchased another when he heard it was being discontinued.
• Despite the product's positive reviews and functionality, Sutherland notes that the initial reviews focused heavily on privacy concerns, with only a small portion acknowledging the product's quality. This negative framing, he argues, contributed to the product's discontinuation.
• Sutherland finds it perplexing that despite the product's success, video calling on TV remains uncommon, requiring users to resort to less convenient methods like plugging in laptops. He believes this highlights the disconnect between product quality and consumer perception, often influenced by negative framing and anxieties.

Why the urge to appear serious can be a disaster in marketing (4m8s)

• Good marketing often feels like a stand-up comedian's routine about your product. This means it's engaging, memorable, and unexpected.
• The urge to appear serious can be a disaster in marketing. Consumers are more receptive to gradual evolution than complete reinvention.
• The concept of "maximally advanced yet acceptable" is key. This means finding the sweet spot between innovation and familiarity, allowing consumers to comfortably adapt to new products and services.

The role of distinctiveness in product design (8m5s)

• Distinctiveness in product design can be a powerful marketing tool. Rory Sutherland, Vice Chairman of Ogilvy UK, argues that seemingly "odd" or "inconsistent" features can actually make a product more memorable and appealing. He cites examples like the Jaguar's unique light switch placement and Rolls-Royce's foot-operated headlamp control, which were initially considered flaws but ultimately became defining characteristics.
• "Friction" can be a good thing. Sutherland suggests that features that require a bit of extra effort or are slightly counterintuitive can actually increase engagement and interest. He uses the example of MCI's "Friends and Family" calling plan, which offered discounts to a limited number of frequently called numbers. This seemingly irrational approach generated more buzz than a simple price reduction.
• Mistakes can lead to unexpected success. Sutherland highlights the case of Veuve Clicquot champagne, whose labels accidentally turned yellow due to a printing error. Instead of discarding the flawed bottles, they were sent to England, where they became a hit. This led to the intentional adoption of the yellow label, which became a defining feature of the brand.

The MAYA principle (12m29s)

• The MAYA principle, which stands for "maximally advanced yet acceptable," suggests that products and experiences should be just the right amount of new and different to be engaging, but not so unfamiliar that they are confusing or off-putting. This principle is illustrated by the success of the Danish TV series "The Killing," which was initially considered too "weird" for British audiences but ultimately gained popularity because it was just different enough to be interesting.
• The concept of "weirdness" is crucial to the MAYA principle. The example of the Danish TV series highlights how a product or experience can be successful if it is "just the right amount of weird." This means that it should be familiar enough for people to understand, but also different enough to be engaging.
• The MAYA principle applies to product design as well. The example of Raymond Loewy's fan, which was so quiet that people didn't believe it was working, demonstrates that even a product that is technically superior can be unsuccessful if it is too different from what people expect. Similarly, the example of the electric toothbrush or razor that was made too quiet highlights the importance of maintaining a certain level of "noise" or "vibration" to convince people that the product is actually working.

How thinking irrationally can be advantageous (15m50s)

• Rory Sutherland argues that encouraging people to think less logically and more irrationally can be advantageous in marketing. This is counterintuitive to many, especially in business where rationality is often emphasized.
• He draws a parallel between psychology and complexity theory, highlighting the presence of nonlinear effects and the concept of "Yin and Yang" where opposites can both be good.
• He uses the example of hotel check-in experiences to illustrate this point. Both a highly personalized, high-touch experience and a completely automated, no-touch experience can be appealing and distinctive, despite being polar opposites.

The fault of multiple-choice tests (17m40s)

• Multiple-choice tests are flawed representations of real-life decision-making. Rory Sutherland argues that intelligence tests and standardized exams like the SAT, which rely heavily on multiple-choice questions, fail to accurately assess intelligence because they present a single right answer and assume all information provided is relevant. This contrasts with real-life situations where multiple solutions may exist, information is often incomplete, and some information may be irrelevant.
• Real-life decisions are complex and nuanced. Sutherland highlights that real-world problems rarely have a single, clear-cut solution. He uses the example of a ship with passengers getting on and off, where the question asks for the captain's age. The information provided is irrelevant to the answer, yet people trained on multiple-choice tests tend to assume it must be used to find the solution.
• The reliance on multiple-choice tests can hinder our ability to make effective decisions. Sutherland criticizes the practice of selecting and promoting individuals based on their performance on these artificial tests, arguing that it fails to adequately assess their ability to navigate the complexities of real-world decision-making. He suggests that this reliance on standardized tests may be hindering our ability to make effective decisions in business and other areas of life.

Companies that have successfully implemented out-of-the-box thinking (21m31s)

• Companies can achieve success by embracing out-of-the-box thinking and empowering their employees. The text highlights several companies that have implemented unconventional approaches to management and customer service, leading to positive outcomes.
• Octopus Energy and Shopify are examples of companies that have adopted a "multicellular" organizational structure. This involves creating smaller, autonomous teams with clear objectives but significant autonomy in how they achieve them. This approach fosters a sense of ownership and motivation among employees.
• AO Appliances and Zappos demonstrate the importance of human-centric approaches to customer service. These companies prioritize treating customers with respect and empathy, rather than focusing solely on efficiency metrics. This leads to higher employee satisfaction and a more positive customer experience.

“Psycho-logical” thinking (30m31s)

• Rory Sutherland emphasizes the distinction between "psychological" thinking and the traditional economic models of decision-making. He argues that the human brain employs a more nuanced and sophisticated logic when making decisions, taking into account factors like imperfect information, variable outcomes, asymmetrical information, and imperfect trust.
• This "psychological" approach to decision-making is essential for navigating the complexities of real-world situations, where uncertainty is the norm.
• Sutherland contrasts this with the typical economic models that assume decision-making under certainty, a scenario that rarely, if ever, exists in reality. He suggests that these models are often unrealistic and fail to capture the complexities of human behavior.

The hare and the dog metaphor (31m45s)

• The hare and the dog metaphor illustrates the evolutionary advantage of irrational behavior. Rory Sutherland argues that in certain situations, being unpredictable and even irrational can be a survival tactic. He uses the example of a hare being chased by a dog, where the hare's random, unpredictable movements make it difficult for the dog to predict its next move. This unpredictability is a key survival strategy.
• Irrational behavior can be advantageous in social situations. Sutherland suggests that our tendency to follow habits and social norms, even if they are not always logically optimal, is a product of evolution. These behaviors allow us to learn from the experiences of others and avoid costly mistakes. He cites the example of adopting new technologies, where people are more likely to adopt a product if their neighbors have already done so.
• Our decision-making is often influenced by heuristics and past experiences. Sutherland argues that we often make decisions based on intuitive rules of thumb, rather than purely rational calculations. These heuristics can be helpful in many situations, but they can also lead us to make irrational choices. He uses the example of buying electrical appliances, where people often wait for newer, cheaper models to be released, even though this might not be the most logical choice in the short term.

Marketing’s crucial role in product adoption (38m51s)

• Marketing plays a crucial role in product adoption, often exceeding the importance of the product itself. While we tend to focus on the brilliance of successful products, we often forget the marketing efforts that made them successful. For example, the iPhone's success was heavily influenced by Steve Jobs's marketing genius, not just the technology itself.
• Marketing is essential for overcoming skepticism and driving adoption of new products. Many successful products, like the internet and vaccinations, faced initial resistance. Effective marketing campaigns were crucial in persuading people to adopt these innovations.
• Timing and luck also play a significant role in product success. Even brilliant products, like the Japanese toilet and Google Glass, can fail to achieve widespread adoption due to factors beyond the product's quality, such as poor timing or ineffective marketing. This highlights the importance of understanding the market and consumer behavior when launching new products.

The quirks of Google Glass (49m21s)

• Google Glass was a product that failed due to poor marketing and timing. The company launched the product too early and only gave it to developers, who were not the ideal target audience. The user imagery was not appealing, and the product was too expensive.
• The author believes that Google Glass was a good idea, but it was not marketed well. He would have bought it at the launch price because he believes it would be useful for everyday tasks like checking the time, weather, and upcoming meetings.
• The author argues that the failure of products like Google Glass and the Meta Portal does not mean that similar products should not be tried again. He believes that many internet ideas fail because they are mistimed, and that the definition of insanity is not trying the same thing over and over again and expecting a different result. He uses the examples of mobile phones and online grocery shopping to illustrate how people can be resistant to adopting new technologies, even if they are beneficial.

Survivorship bias (55m44s)

• Rory Sutherland, Vice Chairman of Ogilvy UK, highlights the concept of survivorship bias, which refers to the tendency to focus solely on successful outcomes and ignore failures.
• He uses the example of houses still being opened with keys to illustrate this bias.
• Sutherland suggests that we often overlook the failures and challenges that led to the current state of things, focusing only on the successes that have survived.

Balancing rational ideas with irrational ideas (56m9s)

• The importance of balancing rational and irrational ideas: Rory Sutherland suggests that companies should consider both logical and "silly" ideas when making decisions. He uses the example of the ancient Persians who debated matters twice, once sober and once drunk, to ensure they considered all angles. This highlights the need for a "double lock" on decision-making, where both rational and emotional aspects are considered.
• The challenge of presenting irrational ideas: Sutherland points out that creative people often have to present their ideas to rational people for approval, but the reverse rarely happens. This creates a bias towards rational thinking and can stifle innovative ideas.
• The impact of user imagery on product adoption: The example of the electric car illustrates how user imagery can influence a product's success. While early electric cars were technologically advanced, they were perceived as "women's cars" and failed to gain widespread adoption. This highlights the importance of considering how a product will be perceived by the target audience and how social norms can influence adoption.

The rise and fall of tech innovations (1h6m19s)

• The Walkman's success was due to its singular focus. The engineers wanted to add recording functionality, but the project leader, Akio Morita, insisted on keeping the Walkman solely a music listening device. He believed that adding more features would create confusion and detract from the core purpose of the product. This demonstrates the principle of "less is more" in product design, where focusing on one thing well can be more effective than offering a multitude of features.
• Choice reduction can be a powerful marketing tool. The McDonald's menu is a prime example of this. By offering a limited number of options, McDonald's streamlined the ordering process, making it faster and easier for customers. This contrasts with the American diner model, which offered a wide range of customization options, leading to longer wait times and potential confusion.
• The right amount of choice is crucial for product success. Tesla's approach to customization is a good example of finding the sweet spot. They offer a limited number of options, such as different battery sizes and colors, but avoid overwhelming customers with too many choices. This contrasts with the new electric Range Rover, which offers so many customization options that it can become overwhelming and expensive, potentially deterring customers from purchasing the vehicle.

Consistency, distinctiveness, and clarity (1h9m54s)

• Consistency, distinctiveness, and clarity are crucial for building a strong brand. Rory Sutherland emphasizes that these three elements are essential for startups to establish a brand identity. Consistency ensures a recognizable image, distinctiveness sets the brand apart from competitors, and clarity provides a clear understanding of the brand's promise.
• Fame is a powerful force that fundamentally changes the rules of marketing. Once a brand achieves a certain level of fame, it experiences a nonlinear shift in its relationship with customers, employees, and the market. Customers are more likely to trust and buy from a famous brand, employees are more likely to work for a famous company, and the brand enjoys a greater level of influence and authority.
• The value of brand building is often underestimated due to the difficulty of quantifying its long-term impact. Brand building is a long-term investment that yields compounding returns over time. Traditional marketing metrics, which focus on short-term transactional results, fail to capture the true value of brand building. Sutherland argues that brand building is likely much more valuable than short-term metrics suggest, but its impact is often overlooked because it unfolds over a longer period.

Considering psychological, technological, and economic factors in parallel (1h21m12s)

• The "sweet spot" for successful products lies at the intersection of psychological, technological, and economic factors. This means a product should be desirable to consumers, feasible to create with current technology, and profitable to produce and sell.
• Businesses often approach product development in a linear fashion, focusing on one factor at a time. This can lead to missed opportunities, as the process of innovation is rarely linear. Many successful products have evolved through iterations and pivots, often starting with a different initial concept.
• Marketing and innovation are intertwined. Businesses can either identify a consumer need and find a way to fulfill it, or they can develop a product and find a way to make consumers desire it. The ideal approach is to consider both aspects simultaneously.

Where to find Rory (1h23m35s)

• Rory Sutherland's book, "Alchemy," is available in various formats, including audiobook, Kindle, and physical copies. He recommends the audiobook as he narrates it himself.
• Sutherland also co-authored a book titled "Transport for Humans" with Pete Dyson, which is particularly relevant for those in the transportation industry.
• The video encourages viewers to subscribe to the podcast on various platforms, leave a rating or review, and visit the podcast's website for past episodes and more information.