Rory Sutherland on the Magic of Original Thinking

[Music] what really excites me actually

particularly about this industry is the interplay between technology and psychology because quite often we get stuck in a mental rut and when we dig a little bit deeper we

realize that the only reason for that assumption that mental model that frame of the world is that in 1890 technology didn't allow you to do anything else

so for example the season ticket the rail season ticket is a product really of 19th century ticketing technology it doesn't make any sense anymore what we should be investigating is a

kind of amazon prime system where you can still make a commitment but actually you pay as you go to some degree and there are loads and loads of opportunities i think in this industry

for us to do something quite exciting because i always joke that the sad but inescapable truth about not so much the travel industry and truth but transportation

is that it's effectively a business of engineers who are desperately trying to pretend they're not in the entertainment industry and i remember talking to the board of british airways once and i said if i

didn't work in advertising i think i'd worked for an airline and they said why and i said because what i absolutely love about airlines is the mixture of absolutely hardcore

logistics how do you get a replacement fan blade uh you know delivered from dubai to kuala lumpur by three o'clock in the morning combined with the fact that you're dealing with a bunch of

completely irrational passengers who regardless of the extraordinary genius you've put into actually putting them into the air in a pressurized metal tube at 35 000 feet go i don't think i'll fly

with that airline last last time i went the nuts weren't very nice and i said that's what really appeals to me about working for an airline and they said oh really they said that's what we hate about it that's the thing that

drives us crazy but it's a little similar this is a brilliant observation from kamal galhatra who's the head of ford in north america that car making is a hundred thousand rational decisions in search of

one emotional decision and of course all the mental energy all the sort of selectivity gets focused on the rational decisions designing the drive train etc etc

but ultimately then if you're american you then choose a car on the number of cup holders i think that's right isn't it you know that's what i've always noticed funnily enough volkswagen despite the fact they got fined many billions of

dollars uh volkswagen only had about 0.5 market share in north america and the reason was that german engineers refused for years to put cup holders in the cars

and if anybody has ever worked in the fast food industry you can't make drive through work in germany because something like 60 of germans will not allow food or drinking as a car until

any circumstances because your car is a temple and the idea of defiling it with a bargain bucket is just unthinkable and so a lot of things which look like

technology or look like engineering ultimately boil down to psychology and of course psychology not unreasonably is deeply discomforting to an engineer because they're used to a

world where you can quantify everything that matters you know the thing that distinguishes engineering or logistics problems is there is a single right answer and you have numbers for all the things that count as soon as you

introduce psychology into the mix you you enter effectively a different world and i ended up accidentally becoming famous on the ted talk circuit really

because what was partly a joke which was i merely said you know if you looked at problems psychologically rather than technologically you might come up with different answers and at

the time this is god 2007 i think it was 2009.

we just spent 6 billion pounds reducing the journey time of the eurostar from london to paris from about 3 hours 20 to 2 hours 40 something like that and it cost six billion pounds but it involves

building completely new track between london and folkston and i said to be honest why don't we stop looking at the quantity of time and start looking at the quality of time because

even though it took longer to get to paris by train before they'd spent this money people were still deserting airlines in droves and traveling by train even though it took three hours and 20 minutes and the

reason was nothing to do with the quality the quantity of time it was to do with the fact that on a train you plant your ass in your seat you have three hours to read watch your film or get on with some work and then you

arrive in central paris the plane is faster but it basically has an hour of around at the beginning and an hour of around at the end okay and i said you know rather than spending

six billion pounds making it faster if you want to compete with the airlines why don't you just spend 50 million pounds putting wi-fi on the trains it was another 10 years after they'd

spent 6 billion on tracks it was another 10 years before they added wi-fi to the trains which to me was the bigger comparative advantage over flying uh than actually time

and then i just added a little whimsical joke at the end i said if you really want to spend more money than that you can always spend a billion pounds hire all of the world's top male and female supermodels get them to walk up and down the train handing out free chateau

protruce to all the passengers you'll have saved yourself five billion pounds and people will ask for the trains to be slowed down if you think about it make a journey enjoyable enough and nobody's that

bothered about how long it lasts nobody boasts about how fast their cruise ships are do they okay and actually to a great extent the perception of time as measured by

engineers is measured in seconds in humans it's kind of measured in pain or boredom or irritation it's not measured in seconds you can tell that from the english language we have phrases like time flies while you're

having fun or it was the longest 10 minutes of my life okay and our experience of time is fundamentally different but the reason this bothered me a bit is i said if we only try and optimize travel and

transportation using objective numerical criteria s i derived units like distance and speed and capacity we'll miss out on a lot of things this you may some of you may recognize if

your brits this is the heathrow pod parking system of driverless autonomous vehicles which run on kind of virtual tracks and if you ever go to business parking in heathrow it's about two miles

it's about a mile actually from terminal five to be honest if you're ever stuck landside uh in terminal five for four hours between planes just amuse yourself on these okay

now i realize in i'm in dubai where they probably had them in 1978. okay

the extraordinary thing about these is you the the price for parking at the pod parking which is about a mile from the airport often exceeds the price you have

to pay for parking in the short stay car park now no one will actually admit this but it's because they want to ride on the pod i have colleagues business colleagues who are serious people in

their 60s otherwise highly intelligent adult people making you know mold breaking worldwide decisions and occasionally they turn up for the pod parking and they're told i'm terribly sorry the pod parkings are actually full

today so we've upgraded you for free to short stay parking which is right next to the airport that's basically you know you know traditionally in a normal world you'd pay sort of 20 pounds more per day for

that and they admit to me secretly they say i always go away go oh i was looking forward to riding on the pod okay now the problem with that is you probably can't justify that as a mode of

transport using conventional metrics because a bus would be just as effective a bus might be quicker but a bus doesn't feel the same

but the problem is we don't have numerical metrics well maybe we do mr zach will possibly show us this afternoon but we don't yet have adequate numerical metrics for how people feel

that match the ones that we use to measure the physical world now that wouldn't matter if people perceive the world objectively they really really don't and so the trick is actually ask more

better questions okay we need to explore more david ogilvy never actually said this but it's often attributed to him which is 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 understanding what people feel is difficult we are starting to be able to measure it but until we can

do not rely on people to tell you what they want because they don't completely know because the parts of the brain that do the feeling aren't really connected to the parts that do the talking

very large amount of uh effectively of psychology assumes an awful lot of business activity assumes that we have kind of mental access to our unconscious motivations and desires when in truth

they're what's known as opaque to introspection you can't find it out and the other thing we have to do more is simply experiment don't experiment with everything by the

way often when creative people come up they go we need to experiment more we need to test we need to throw away established wisdom no no no you don't need to do that because established wisdom is mostly established for a pretty good reason

but you've got to have a ring fenced area of 10 to 20 where you're allowed to fail now if you don't believe me have a look at bees okay they've been around for 20

million years and interestingly much the astonishment of bees experts um they noticed that whereas bees have evolved this extraordinary system called the waggle dance where they can communicate

to other bees a good direction and distance to set out to find a reliable source of pollen and nectar what horrified bee scientists is that it varies but about 20 percent of bees

ignore the waggle dance they go off at random they said this doesn't make any sense because in the short term if you want to maximize the efficiency of pollen collection you'd want a hundred percent you know um

obedience to the wiggle dance why haven't b compliance officers evolved you know to demand 100 percent adherence to the waggle dance to bring our nectar collection uh in line with our

forecast for quarter three you know this doesn't make sense and then they modeled it as a complex system and they realized it's what's known in ai by the way is the explore exploits trade-off it exists

in animal foraging and it also exists in artificial intelligence and all dynamic systems need a trade-off between exploiting what you already know in other words that you know load of

flowers over the hill which we've been successfully getting pollen from for the last two weeks but you've got to devote a certain amount of money or investment to the things you don't yet know either because the future is different from the

past or because you simply haven't discovered it yet and so bees interestingly have this indulgent class of dilettante bees who are allowed to make mistakes now i

imagine the obedient bees hate the random bees don't they they go look at them most of their journeys complete waste of time bloody dilutantes just buzzing around the place at random ignoring the waggle dance if you don't have a certain degree of this variation

built in you become over optimized on the past and the hive starves to death the other thing that happens by the way if you're over optimized on what you already know you never get lucky either

you you don't have a system that allows you to exploit lucky discoveries or even lucky mistakes and i think that's an important thing we've got to recognize here which is that we're trying and this is a great

book by the way by roger l martin anybody know him he's canadian a wonderful business writer it's he isn't out yet but he gave me his an advanced

copy a new way to think he argues that we're trying too hard to innovate simply based on what we already know rather than by exploring what we don't yet know

and he thinks we need to have what we're effectively trying to do is to use data to make every single decision an act of logical induction or deduction and his argument is you simply can't do

that the really significant innovations never come about that way they come about through a leap of the imagination or not from the question what is but the question what if

and if you look back okay now i'm old enough one great thing about being 56 is you can remember a time before all these things existed okay and one of the interesting things is if you imagine yourself back to a world

before dyson the world before red bull a world before uber okay none of those things really well before nespresso none of those things really made sense in advance before red bull existed no one was walking around going

what i don't get is why does nobody make an overpriced drink in a tiny can that tastes really disgusting okay nobody was asking for that before starbucks existed no one was going what i really want to

do is spend nearly five dollars on a cup of coffee and then wander around carrying it in the streets okay nobody's asking that if james dyson had come to me uh in the 1990s and said look i think

there's a great market for an 800 vacuum cleaner i would have said james mate look let's look at the market right peaks out at about 400 that's a mila there's no evidence in the

marketplace whatsoever that anybody will pay 800 for a vacuum cleaner it's a distressed purchase you only buy a vacuum cleaner when your parents force you to move out you move out of rented accommodation or your old vacuum cleaner

breaks right i've never heard a couple go hey i'm bored this weekend let's go vacuum cleaner shopping right for the lols okay and i would have said besides anybody

who could afford an 800 vacuum cleaner probably pays someone else to clean their house so they're really not that bothered about it now all of those are perfectly good logical objections okay and i would have used them i would have

felt smug and gone well glad jim's out of the building and if jim had come back and said but wait you haven't heard about my 400 hair dryer i would have had him escorted out of the building as an

obvious lunatic okay nespresso is a most of these things are an act of psychological arbitrage they're the discovery by somebody of psychological value in a place where

nobody else realized it existed you know if you look at nespresso okay piece of genius right if you had to buy an espresso coffee in a jar like nest cafe or maxwell house or folgers for the equivalent amount of

caffeination it would cost about 30 for a jar or 35 and you look at it you go that's insane there's no way i'm paying that right it doesn't come in a jar comes in a pod okay now unless you work

in procurement you don't actually know what a single cup of maxwell house costs okay so when you put that 40 cent an espresso pod into your machine your frame of

reference isn't isn't um ness cafe it isn't maxwell house it's starbucks and you think well you know 40 40 cents that would cost me 2.80 at starbucks this machine is practically making me

money rolls royce and maserati stopped exhibiting their cars at car shows because they looked really expensive you know four hundred thousand dollar car at a car show looks like a monstrous extravagance they went and started

showing them at plane and yacht shows instead because if you've been looking at learjets afternoon okay a four hundred thousand dollar car is like an impulse buy it's like putting the candy next to the till i didn't buy a plane

today so i'll have a couple of those right a huge number of those businesses zoom made no sense at all you're up against facebook you're up against microsoft you're up against apple you're up

against all of the big tech companies it made no sense zoom one i think because it has superior psychology uber as i'll explain later had superior psychology and this is how you can play the

psychology game with time it's not the quantity of time it's the quality anybody here operate a call center okay one of the great mysteries of call centers is that live chat online takes

about three times longer than the phone call and yet for some reason people love it the customer satisfaction levels are through the roof not because it's shorter because it

feels different okay um this is brilliant because the the time you spend waiting for your meal to be prepared is more enjoyable than the time you spend waiting to tell people what you want

okay if you go to a fast food outlet the time when you're just standing there going i want to order a bargain bucket and you're having to cue to wait for that is purely negative once you've said

i want a bargain bucket you reframe the remaining time as time devoted to the quality preparation of my bargain bucket and so time spent while your food's being prepared is inordinately more

enjoyable than time spent before you've placed your order okay and as a result what these screens do effectively is they don't change the duration of the weight they change the

experience of the weight uber okay now a logical person would have said we need to i don't like waiting for a taxi that's true people don't like waiting for taxes new two things you could do a

predictive algorithm which means that there are taxis hovering around anticipating demand and reduced waiting time maybe uber do that a bit the real feat of genius was the map

because what the human brain hates in that situation isn't duration it's uncertainty the guy had the idea for the map watching goldfinger by the way i don't know if you remember goldfinger but bond

has to follow alright goldfinger through the swiss alps while remaining unobtrusive and obviously if you want to follow someone unobtrusively you choose an astronaut in db5 don't you because

it blends in completely with your surroundings but nonetheless he he attaches a tracker to eric goldfinger's car and he can follow him at a distance and see on a scrolling map on the

dashboard where goldfinger's car is and one of the founders of uber said that's what should happen when a car arrives because waiting for a taxi under conditions of uncertainty is agony for

the human brain we hate uncertainty with the map the duration of the weight may be the same but you go oh look he's stuck at those traffic lights i'll have another pint okay completely different nature of time there's also an element

of status with uber i don't know if anybody does this is it just me where you time your departure from the building to coincide exactly with the car drawing up because it makes you feel

like kaiser soze at the end of the usual suspects right i mean if you think about it walking out of a building as a car draws up makes you feel like louis xiv standing around in the rain going i

wonder if that's my car over there low status behavior you know you don't get many rappers doing that generally right and so understanding these things is really really vital dallas fort worth

bit of genius there's a woman there called courtney moore who's the head of behavioral science at dfw fantastic airport i think most people agree one of the things they're looking at is that the whole experience of

waiting to board a plane is messed up by the eight people who insist in forming a queue too early right so instead of just sitting there having a cup of coffee and reading a book once the queue forms you

feel you have to join the queue for fear of missing out which means that the last 25 minutes aren't spent in comfort and convenience but they're spent standing there like you know like a fool to prevent anybody getting in front of you

their plan in dfw is to make it really ambiguous where the plane actually boards so no one can form a cue in advance so people will actually spend the time waiting doing something enjoyable which

i guess is going to chick-fil-a isn't it in dallas right um but they'll spend their time doing something enjoyable rather than just standing mindlessly in a queue again it's not changing the duration

it's changing the quality of time so i know i know this guy founded one of your competitors but you need a 20 bob if you look at bob crandall the founder of the the the american airlines ceo

he's still alive i think isn't he but he's one of my heroes now to be honest some of his ideas were absolutely nuts and the idea of selling unlimited lifetime first class travel on american airlines for a quarter of a million

dollars which he did try they're a bit short of cash and they spent basically they spent the next eight years trying to identify the people who'd bought these tickets and find a legal

loophole to get rid of them because they were turning up basically american american airlines first class lounges having a five-course meal and then going back to chicago again they were you know they were taking

their friends to london for lunch and back again okay mad idea but he didn't invent the loyalty program he invented saber he invented about five absolutely killer ideas

and again they kind of didn't really arise they didn't really arise out of deductive logic they were a feat of the imagination very quick thing you've got paul zach this afternoon so i don't need to go

into huge depth on this two huge forces in human behavior habits basically and social copying evolutionarily we've defaulted when in doubt do what

i've done before and when that doesn't work do what everybody else does because it's not necessarily perfect but it's a non-catastrophic heuristic for decision making if you do what everybody else

does it might not be perfect but it's unlikely to be a disaster you know if everyone if i've eaten the purple berries before and i've never got ill it's safe to eat the purple berries again if i don't know which berry to eat

and everybody around seems to be eating the purple berries but ignoring the red ones i should probably do what they're doing too perfectly logical evolutionary adaptation um

social norms are the other big thing and that by the way has changed a lot because video conferencing has been normalized that isn't going to go away okay in 2019 when i had a two-hour meeting in

frankfurt the coca-cola answer was to fly to frankfurt for the day and video conferencing was dr pepper you know it was an outlier you had to explain why you were having it you know now i apologize for any texans in the room

because i understand that in texas and new mexico dr pepper is basically the default drink so this doesn't apply to any texans but you see what i mean it was like you know now now to some extent if you've got a two-hour meeting in

frankfurt now video conferencing is going to be coke and flying over is going to be dr pepper in terms of the social normalization of the behavior they've kind of reversed we see some

changes by the way in business travel uh ey in the uk has vetoed flying for any trip of one night or less google interestingly has instigated two

weeks of work from anywhere so with your line manager's permission in addition to your two weeks of meager vacation which americans are given um you also with line manager's permission can go somewhere else like stay with your

parents or go to hawaii and provided you do your work it doesn't matter that you're somewhere else so there will be some lasting changes not everything will revert but as i said and as this book says very

well um actually what we tend to do is we get stuck with a mental model and it's the vladimir putin approach to life you get stuck with a mental model and when it

doesn't work you basically dig in deeper okay and quite often what what we should be doing is instead of asking the same question and continually trying to come up with answers to the same question we

need to ask a new question from time to time now this book actually um roger martin's book he was the dean of the rotman business school in toronto makes exactly this point um

so this is the standard question should your employees be able to work flexibly it's a wrong question this is a much more interesting question do you want your customers to be able to work flexibly because i would argue that

if you look at most of our staff in london after we've paid them and after they paid tax 50 percent of their after-tax income disappears in transportation commuting and accommodation costs

if you give you employ if if america as a whole had a greater degree of autonomy around working patterns it would be a huge injection of cash into the discretionary economy

which benefits you guys if you really want to get serious if i were in the travel industry in the united states i'd spend 90 of my lobbying budget um basically lobbying for four weeks of guaranteed paid

vacation i don't understand why you don't do that okay true truly okay bernie sanders was the only person they thought he was mad i don't think it's mad i think america

would be wealthier because if you have the reason only you know forty percent of americans have a passport isn't because they're uninterested in traveling is they haven't got time to go anywhere do you actually campaign for four weeks i know it sounds communist doesn't it to

the americans seriously in europe i've never met somebody so right wing who thought we should have less vocation genuinely okay it's just normalized four weeks perfectly standard you wouldn't take

less you wouldn't work for anybody who offered you less given that money spent in leisure time is actually more labor-intensive than money spent on goods it would probably benefit the american economy if people

had more time to spend it you think i'm mad okay okay this is the well-known commie who really came up with the idea henry ford who very largely created the two-day weekend for his workers

not entirely out of his own beneficence but because he felt that if that spread if the two-day weekend spread across american workers what happens when you've got a two-day weekend it's worth buying a car

okay so henry ford asked a different question which was not how can i get my workers to work as hard as possible he asked a question which is is it possible to create more leisure in wider society so

that it's actually worth owning a car in the first place and i think we often we need to ask more interesting questions because and we also need to experiment more and i think this is why i think they're just

more good ideas that we can post rationalize now good ideas we can pre-rationalize i'll give you a couple of creative examples one of them travel related okay these are things which are obvious in

retrospect i spent years traveling around the world with about 15 plug adapters okay and literally years and years i had the one for south africa the one for australia the one for the united states

and i had several of each because i needed to charge two mobile phones and a laptop and everything else it took me 10 years before i realized if you just have one plug adapter and you buy one of those three gang

extension cables you're catered for absolutely everywhere one universal adapter one of those and you don't have to unplug the table lamp of the television in order to charge your laptop

it took me years now if i suggest if anybody's getting their kitchen done here's a suggestion get two dishwashers and you're looking at me again this guy's nuts he's in the pay of bosch or

indesit or something right generally is everybody thinking why the hell would you get two dishwashers if you have two dishwashers you don't have to unload the dishwasher you have a clean one which you use as a cupboard

and then you use the stuff and you put it in the other one and that's the dirty dishwasher right and then when the dirty dishwasher is full you turn it on and that's your clean dishwasher

so you never have to unload the dishwasher you just move things from one side to the other okay but it's only obvious in retrospect and when you first said everybody

thought i was mad right why on earth would you do that it's only in retrospect that so many things become obvious and i think the world's just full of these things and i think quite often you know the

opposite of a good idea is another good idea that don't engineers tend to think there's a single optimal answer and everything that isn't that answer is wrong because in engineering that's true

in mathematics it's true psychology in many cases the opposite of a good idea is another good idea they're two great ways to check into a hotel fully automated or really high touch

high service it's the middle that's boring in many cases it's the average of two things that isn't the solution i always thought the open plan office was a mistake because it sold for the average didn't it

the open plan office is neither sociable nor is it solitude so you can't get your head down and right and you can't really have a proper chat the future of the office i think it's

half library half pub to be absolutely honest okay um but what often happens is people go in between the two is the right place to

be no no when you've got a contradiction either embrace both extremes or resolve it creatively with a third idea which solves the problem overall the average

is generally not as good as it looks it always seems logical but it really isn't that great now in engineering one plus one equals two and three times one is the same as one times three and psychology these

rules don't apply really important to understand we need a kind of psycho maths if you like to make things work let me give you an example okay um nearly all travel

planning transport planning including high speed 2 in the uk assume that 10 people saving 40 minutes 10 um let's say

let's make it better okay 100 people saving 40 minutes 10 times a year is the same as 10 people saving 40 minutes 100 times a year okay because the aggregate time saving is the same

if you think about it psychologically they're totally different right cutting time for a journey that the same people make very frequently is a life-changing event they can now live somewhere they couldn't live before a

place becomes commutable that wasn't commutable before if you spend money for example on high speed 2 between london and manchester what you're doing is you're giving

maybe a few million people a mild convenience five times a year that's not the same as giving a million people a massive change in potential

life 100 times a year and yet most most models assume commutability one of the reasons the concord didn't really work well if you'd had psychologists they would have closed

down the concord one because it doesn't work flying west to east at all because the best way to fly west to east is when you're asleep okay it's not taking up a whole day in the

air where weirdly you'd have to leave new york at nine o'clock in the morning which makes no sense to anybody okay but the second problem of the concord is nobody flew between london and new york frequently enough for it to really

change their life you know even the man who flew on the concord most he was on the first flight he was on the last ever flight he was the heaviest user of concord by a factor of

about four and i worked out that it saved him about five minutes a day for every day of his working life so rather than having a supersonic airliner he could have just moved a bit closer to

the office to be honest okay understanding that the other thing is that one plus one doesn't always equal two in psychology really really small things can have huge effects the uber

map okay costs almost nothing but it has absolutely monumental effects one of the best things we ever did for british airways was simply to change the layout of their pricing

nobody as a consumer can buy premium ticketing okay unless you can see what the economy price is there are a few really really important things because if you look at if you look at every single airline website it's designed for the business traveler

okay it says where are you going when are you going and what class of travel do you want now for a business traveler that's fine because they know when they have to go and they know where they're going because my boss very rarely says to me

i'd like you to go somewhere sunny sometime vaguely in late august right i have a place to go and i have a time i have to get there okay and the class of travel is determined by my employer so

those are all questions i can answer to a consumer all of those questions are it depends search for a consumer is an iterative process whether i go premium economy or

business or economy depends on what the price of the other available tickets is ah okay you can't decide to go premium economy until you know what the economy price was

secondly whether you go in july or august depends on the ticket price and where you go might depend on the ticket price so i don't think we've even yet designed a really really good interface

for consumer travel selection read eric johnson's book on the recent book on choice he's at columbia i think for more about this what also choice does is it feels

completely rational but we never it's dating sites are rather terrifying like this okay because we never see what we just missed you know as he made the point as someone who is

five foot seven who only looked at partners on tinder who were five inches taller than them would automatically eradicate george clooney from the search uh from their from their search

but we need somehow a much much better way of looking for travel which acknowledges the messiness of human decision making as opposed to the neatness of business decision making and one of things i'd love to talk about if anybody's interested and if

travelport has the technology to make this possible you know i mentioned that three times one isn't the same as one times three okay all yield management and revenue management seems to use the price mechanism to encourage people to change their behavior

okay it always says save 30 pounds now let's think about this a bit if you're a hotel okay any hoteliers here

there must be a few okay a family of five when they stay at a hotel are probably paying for three rooms out of one income a dual income couple with no kids are

paying for one room out of two incomes that means it's actually more expensive for a family of five typically to stay at a travel lodge than it is for a dual income couple to stay at a five-star

hotel why are all the offers always about the price of the room why isn't it second room half price why aren't airline offers why is it always we will drop the

price of every single seat instead of kids go half price discount to the people who are most price sensitive price discrimination is great don't always use the individual

ticket price as a way of changing passenger behavior use your loyalty programs about a fifth of the people who belong to an airline loyalty program would crawl over broken glass to get an extra

five tier points so why are you discounting the price of a ticket to get them to fly at twelve o'clock rather than nine in the morning when you could be using your loyalty program or you could be using information

about twenty percent of people would be motivated to go on a later flight if all you put on the website was this is the least crowded flight of the day because what's the best airline in the world in many ways it's the one that

isn't crowded okay a flight that's 70 percent full will almost always be nicer than the flight that's 100 fault especially if you're in the seat with a broken tv okay because you can go and

sit somewhere else and i think economics and logic and numbers has taken over yield and revenue management to far too great an extent there are loads and loads of ways you can change people's behavior before you

have to resort to bribing them and i think yield and revenue management at the moment simply use the price mechanism as if there's no other motivation i think it's really expensive way of doing it don't tell me it does

work but my god there must be cheaper ways of doing this so i end with a little recap you've got paul in the afternoon so you don't need much of this here are five things we don't currently have

metrics for which humans really really care about status certainty autonomy relatedness and fairness all five of them interestingly crop up

in the travel industry or you know certainty we're happier waiting for a train if there's a display saying next train 10 minutes we'd rather wait for a train for 10 minutes if we knew it was coming in 10 minutes then

wait five minutes for a train in a state event not knowing okay relatedness a large part of loyalty programs is you like to know that the airline knows that you fly with them a

lot because you trust the airline more if you know that they value you disproportionately as a passenger okay fairness there's a whole lot of work to be done i think on pricing and ticket

refunds and rebates and travel which could better understand fairness autonomy we love the freedom effectively to you know make last-minute decisions not to get trapped in things and status you

know all about but those are five things which deep in the human brain they're heavily heavily embedded they don't generally come out in market research we don't have numbers for them and economists don't understand these things

at all they don't feature in economic models and yet they're nearly always there so it's a wonderful checklist to use and i'll finally end on this okay marketing and innovation are basically

the same thing now let me explain okay there are two ways you can create value in the marketplace you can either find out what people want and work out a really clever way to make it or you can work out what

you can make and find a really clever way to make people want it and the money you make is indistinguishable regardless of the direction of travel of that process so

it isn't necessary to introduce a new product to perform r d one other way of doing r d is taking an existing product and presenting it or

pricing it or positioning it or framing it in a completely different way psychological arbitrage is where quite a lot of money is made today

there are psychological solutions out there that could save a fortune if you want people to get an electric car we currently subsidize electric cars very heavily we also have a subsidy if you install a home charging point but in order to install the home

charging point you've got to prove you've got an electric car which is kind of the wrong way around and i said to the government no just subsidize these i said if you can get people to pay a hundred pounds to install one of these on the wall okay don't bother about

subsidizing the electric car they're going to get an electric car anyway because if you put that on your wall you'd feel a bit of a going and getting a diesel wouldn't you right just get the order right don't worry about the incentives get the order

right so there are tons and tons of psychological solutions out there if you want to hold digest to them i've co-written this book transport for humans uh with my former colleague pete dyson who now works for the department

of transport in the uk as the head of behavioral science that's my old book but i'll also be around right till the end of the day i hope so any questions please come and ask me i'd love it thank

you very much [Applause] [Music] you