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Ep 375: The Magic Of Behavioural Science


Over the last couple of years, I’ve developed an increasing interest in the use of behavioural science in advertising and marketing and its growing relevance in broader business disciplines. I’m absolutely convinced that it offers a route to incredible innovation in talent acquisition and therefore is something we should all be actively investigating.

So what is behavioural science, and what implications does it have for recruiting, diversity and the future of work. There is no one better to explain all of this than Rory Sutherland, Vice Chairman of Ogilvy. Rory is one of marketing’s most original thinkers and influential speakers. He is a pioneer of behavioural science in business, and it’s a huge privilege to have him on the show to share his thoughts about talent and talent acquisition.

In the interview, we discuss:

• Why Behavioural Science is the science of knowing what economists are wrong about

• The dangers of defensive decision making

• Finding psychological truths and the importance of emotions

• Why Uber has a map

• Recruiting for diversity of thought

• How Ogilvy have redesigned the recruiting process to find people of exceptional non-standard ability

• While the average is not the optimal solution

• The difference between equality of opportunity and diversity of opportunity

• Why work is a relational relationship, not a transactional one

• Cost reduction versus lost opportunities

• Personalising the value exchange between employer and employee

• The future of work and why it has taken a pandemic to get us there

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Transcript: (0s):
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Matt Alder (47s):
Hi everyone. This is Matt Alder. Welcome to episode 375 of the Recruiting Future Podcast. Over the last couple of years, I’ve developed an increasing interest in the use of Behavioral Science in Advertising and Marketing and its growing relevance in broader business disciplines. I’m absolutely convinced that it offers a route to incredible innovation in talent acquisition and therefore is something we should all be actively investigating. So what is Behavioral Science and what implications does it have for recruiting, diversity and the future of work?

Matt Alder (1m 28s):
There is no one better to explain all of this than Rory Sutherland, Vice Chairman of Ogilvy. Rory is one of Marketing, most original thinkers and influential speakers. He is a pioneer of Behavioral Science in business and it’s a huge privilege to have him on the show to share his thoughts about talent and talent acquisition. Hi Rory and welcome to the podcast.

Rory Sutherland (1m 54s):
Oh, it’s a great pleasure to be on. Thank you, Matt, very much indeed.

Matt Alder (1m 56s):
An absolutely pleasure to have you on the show. Now I’m a great fan of your work and I’ve read your book and follow a lot of the things, there are a lot of the content that you put out there. But there may well be people listening who’ve not come across you before. So to start off with, could you just introduce yourself and tell us what you do?

Rory Sutherland (2m 12s):
Yes. I’m the Vice Chairman of Ogilvy, the advertising group in the UK, but I’m also within Ogilvy, the co-founder of a Behavioral Science practice, which essentially studies what I occasionally call the science of knowing what economists are wrong about. And in particular, I’m conscious of the fact always that in any business setting, there is a, what you might call a Newtonian deterministic quantifiable dimension to a problem. But there’s also an emotional or perceptual dimension to the problem and one of the curses of business is our need to appear rational in all settings to defend our decisions.

Rory Sutherland (2m 57s):
Sometimes in fact, makes business decision-making more biased and more ridiculous than consumer decision-making because the one advantage consumers have in making a decision is they don’t necessarily have to justify it in front of a U-shaped table. And so they’re free to use a mix of emotional heuristics and rational calculus in making a decision. Now, I always put it very simply. I say, when you make a decision as a consumer, this is an oversimplification, but it’s a useful distinction. What we’re trying to do is minimize the risk of regret. And when we make a decision in a business setting, it’s subtly different because what we’re trying to do is to minimize the risk of blame.

Rory Sutherland (3m 39s):
And as a result, we may choose a course of action not because it’s in fact better in terms of its results, but simply because it’s easier to defend. So recruiting graduates would be a perfect example of this. It seems perfectly rational despite the fact actually that there isn’t much evidence. In fact, there’s quite a little bit of evidence that shows that degree category does not correlate very well with workplace performance. There’s also evidence, I think, from the workplace that after you’ve been doing a job for four years, nobody cares what you got at university because your performance in your job is a much better measure of your value than your performance doing some artificially generated tests five years previously.

Rory Sutherland (4m 23s):
It might be that your degree got you the job in the first place. And it’s not a completely hopeless proxy metric. I mean, it shows some degree of intelligence, some degree of literacy, some degree of determination and self-organization, but equally the reason we do it is not necessarily because it’s a good decision, but simply because it makes sense. The reason, the subtitle of my book is The Surprising Power of Ideas that Don’t Make Sense is because business I think, explores far too little because if you can make a decision that’s easy to defend. You make it, you say, decision taken completely rational justification for this decision, move on, nothing to see here.

Rory Sutherland (5m 8s):
And you fail to experiment in more interesting areas, for example, recruiting people from a mixture of places and backgrounds.

Matt Alder (5m 14s):
Absolutely. Obviously I really want to talk about recruitment and talent and get your sort of perspective on it. But I suppose, just to bring this to life slightly, could you give us maybe an example of Behavioral Science in action from some of the, you know, some of the work that you’ve done with your clients?

Rory Sutherland (5m 30s):
Yes, I mean, the first thing is, is that most models and most arguments in fact have an unpleasant side effect, which is that when you have a good argument or you have a good reason, or you have a good model, it lulls you into a false sense of security in the– you start to think you know more than you really do. So a very simple example of behavioral science in action, which I can tell anecdotally, is simply that we had a client who had a product that wasn’t selling very well. And they said, well, I think this product isn’t selling very well. So we’ll drop the price. Now I bought in there and say, whoa, have you tried putting the price up?

Rory Sutherland (6m 12s):
And they look at me as if I’m insane, but my point is, there are many, many documented cases where goods only become valued when they’re priced correctly. Now I’ll admit this there’s a lower chance of success. When you put the price up, then there is when you put the price down, but it’s a much more valuable discovery if you succeed. And so that will be an example where we point out that the, the standard economic model of decision, of human decision-making lacks real predictive value and accuracy, because there are many, many documented cases where people deviate from it, okay? The second thing that business mostly uses as a defensive mode of decision-making is consumer research, which is asking people what they want.

Rory Sutherland (6m 58s):
And that also has major failings in terms of its predictive value and its accuracy because people don’t know what they want, or rather there was a great phrase often attributed to David Ogilvy, which is the trouble with market research is that people don’t think what they feel. They don’t say what they think, or they don’t do what they say. And so the link between stated intentional preference and revealed intentional preference is often a pretty stark gap. And yet of course, within in a, an institutional setting, those two things, it makes economic sense or our customers tell us to do this, okay?

Rory Sutherland (7m 39s):
We’ll always basically ensure that you don’t get fired. It’s much, much easier to get fired for being irrational than it is for being unimaginative. And so there’s a distinct rationality bias in all business decisions, which causes it to fail to explore, piles of action, which may be slightly counter-intuitive or may have a second order intelligence, not a first. I’ll give you a great example from labor economics and I’m talking about this quite a lot, which is, if you ask people, would you like a company car or would you prefer the cash alternative? Nearly everybody will say the cash alternative, because that sounds like a rational answer, okay?

Rory Sutherland (8m 20s):
After all I can go and lease a car myself with the money. I would argue that there were, there was huge value to employers in providing company cars, because it showed long-term commitment to the employee, but it also gave the employee something they may value more than money, which is a guilt-free luxury. So put very bluntly, okay. A company car allows you to drive a much better car than your spouse would allow you to buy with your own money. What I say is that we’ve turned business into a rationality competition and an efficiency competition because those approaches are very, very safe in Korea, what you might call career insurance terms.

Rory Sutherland (9m 2s):
I’ve got a good reason for doing what I did, therefore I will happily make that decision. But quite often the best decisions involve a degree of counter-intuitive logic, emotional logic, or, you know, metrics which to some extent don’t exist because we’re packed full of objective metrics about time and distance and cost. But we don’t really have SI units for the human emotions. We don’t have an SI unit for regrets or an SI unit for anxiety and uncertainty. And my contention is a lot of fantastic discoveries are made in the consumer space almost by accident or not necessarily fully intentioned because they happen to tap into a psychological truth, which nobody’s been looking for because it’s not easy to measure.

Rory Sutherland (9m 49s):
So my example of that, I always favor is the Uber map, it’s a piece of psychological magic because it relies on the fact that actually we’re not that bothered about the duration of our wait for a taxi, whether it’s five minutes or 12, doesn’t really bother us that much. What we really hate is the degree of uncertainty about its arrival. And so the map, doesn’t reduce arrival time appreciably, if all you were measuring was how quickly a taxi turned up. You’d never noticed the effect of the map. Psychologically have it’s transformative because instead of going, oh my God, why isn’t he here yet? I bet they lied. He’s not coming at all. Maybe he’s already left. Maybe he can’t find the house.

Rory Sutherland (10m 29s):
You look at the map and you immediately go, oh, look, he’s stuck at those traffic lights. I’ll have another pint. And your emotional state returns to a happy norm.

Matt Alder (10m 38s):
I think that’s, that’s very true. And then typically when the car suddenly jumps half a mile in either direction, when you’re expecting it to be behaving in a kind of a, in a scientific way.

Rory Sutherland (10m 49s):
There is apparently a theory that the little map of cars that it shows before you book is actually profoundly dishonest. It’s just there to give you a rough idea about the abundance of cars, but I don’t know if that’s true or not. I need to find out.

Matt Alder (11m 4s):
Yeah, I can believe that, definitely. I think where this is really, really interesting is obviously when it comes to recruiting and talent acquisition, it’s very much a business that is dealing with people where in some respects, the products are people who have minds of their own and persuading people to join organizations is very cool.

Rory Sutherland (11m 21s):
And you don’t switch off your emotions when you put on a suit or sit behind a desk?

Matt Alder (11m 26s):
Absolutely, absolutely. And as well, in terms of the way that, the way that people even define talent is kind of interesting and open to interpretation. I think one of the really interesting examples that you have in your book is talking about recruiting for diversity of thought and how, in some ways, the way that recruitment works is just not set up to deliver that. And actually, if you want diversity of thought in your business, you need to think differently about how you do it.

Rory Sutherland (11m 53s):
It’s actually set up to deliver the opposite of it because our university is really, we’re developed to produce colonial civil servants. In other words, people who are completely reliable and sensible, but weren’t necessarily experimental or wild. Now you add onto that as an additional problem, which is the need to appear fair and objective requires you to apply the same criteria to every applicant. Okay. Which means you end up with people who are disproportionately similar. Now I had a moment of terror the other day because I came across an Oxford graduate who had a double first in Philosophy and Theology.

Rory Sutherland (12m 34s):
Okay. Now, without getting into huge detail, it’s bloody difficult to get a double first in Philosophy and Theology. Okay. And he couldn’t get an interview with management consulting firms because they’re mostly recruiting engineers. Now, an engineering mentality, by the way, particularly the mentality of a really good engineer, which isn’t necessarily someone who gets a first in engineering I might add, okay, is really valuable quality to have around. But my God, you don’t want everybody to be like that. I mean, you could argue if you look at the Chinese Politburo where I think everybody is an engineer, you could argue and I think with justification that China has had an extraordinary success in infrastructure, but it hasn’t, isn’t a great success in aesthetics is it?

Rory Sutherland (13m 22s):
I tend to go to China and my reaction is you’ve effectively built Akron, Ohio at a gigantic scale, right? And so the preoccupation with trains and bridges probably reflect the lack of cognitive diversity of the Chinese –the Chinese Politburo they’re pretty light on females. I think it’s fair to say. I doubt if many of them are actually, say gay. They’re pretty light on ethnic minorities and they’re also light on cognitive diversity. And I didn’t see many choreographers among them, you know, it’s engineering straight up and simple. And I think that reflects actually bizarrely a kind of weird Marxist view of the world.

Rory Sutherland (14m 6s):
And I don’t understand why we’re replicating that in free market capitalism. Because if we do that, we’re actually destroying one of its great virtues, which is diversity of problem solving. Actually, if you hadn’t had him as a guest on your show, get Matthew Syed on. Because he’s written the book Rebel Ideas, which is absolutely about this.

Matt Alder (14m 25s):
I’ve actually had him on as a guest actually. I’ve actually have had him on as a guest. And yeah, it’s really interesting. It’s all of it. It’s totally, I think it’s such an interesting topic and it’s so important for employers to understand when they’re thinking about diversity or when they’re thinking about talent and who they bring into their organizations. From the process perspective —

Rory Sutherland (14m 47s):
[Inaudible] tick box there.

Matt Alder (14m 49s):
No, absolutely.

Rory Sutherland (14m 49s):
Because in order for it to be meaningful, you have to create an environment in which it’s okay to be diverse and which in which you feel comfortable being diverse. And that, that’s not just about ethnic diversity, it’s about every kind of diversity. I always make the point that Marketing in any organization, along with HR actually suffers from a fundamental problem, which is that in HR and in Marketing, if you’re doing your job correctly, you’re principally concerned with the future, not optimizing on the past. And you’re also concerned with messy complex systems and emotional qualities, not just deterministic Newtonian ones. And so being an HR guy in a board meeting or being a marketing guy in a board meeting is extraordinarily difficult because you’re completely against the grain of the dominant culture and the board meeting.

Rory Sutherland (15m 41s):
And I was joked about that saying that when I’d been a non-executive director, they’d sit there and go product X isn’t selling very well. So again, to reduce the price and we’re going to explore new distribution opportunities and I’d be sitting there at the back. And what I wanted to say was, have you thought about making it pink? But I realized that to make such a suggestion in that setting was akin to career suicide. It was like farting in public. You know, it was fundamentally embarrassing to raise the possibility that emotional considerations or perceptual considerations may have a part to play on the solution.

Matt Alder (16m 17s):
And what about the sort of process of recruitment? What could companies be thinking about if, to sort of improve that, this sort of diversity and diversity of thought that they’re bringing into their organization in terms of how they actually kind of run their recruitment processes?

Rory Sutherland (16m 32s):
But at Ogilvy we’ve made a first step, which is something called The Pipe, which is a parallel system of recruitment of talent. Where we don’t demand or even consider their university performance or their academic performance. We simply set a variety of exercises to spot people of exceptional, what you might call non-standard ability. Okay. And it’s particularly used for recruitment to the creative department, but it also applies elsewhere. And that agency is quite an interesting place because accidentally it’s produced an environment which does have, you know, a range of cognitive styles or modes.

Rory Sutherland (17m 12s):
And it generally tolerates them. We’ve had creative department, planning department, account handling department, finance department, all of those require different skillsets. And by the way, I’m not disparaging university graduate recruitment because I know from long experience, any good ad agency, you need a few chin stroking Oxbridge types. Okay. And they’re very, very valuable, but what you don’t want is everybody to be a chin stroking Oxbridge type. So one of the things we are doing, and I think it’s a very important first step is to understand that the optimal solution in a complex system is very rarely an average.

Rory Sutherland (17m 52s):
Really, really important point. I’ll give a nice analogy, which I think makes sense of this. Okay. I hate open plan offices because I think they’re neither one thing nor the other. They’re an attempt to solve for the average. Okay. Actually what you want for productivity is two extremes, a mixture of solitude and sociability. You also need a mixture of very high intensity work, concentrated work, and, you know, periods of discretionary free time. And what generally leads to productivity in a knowledge economy is actually a highly varied working environment. Bear in mind, in addition, by the way that the role of the office will be completely different for different people.

Rory Sutherland (18m 36s):
So some people will now be going to the office to escape the chaos that is their home life and to find some solitude and some people were going to the office because they’re bored and lonely at home and actually want to have a bit of noise and chat and banter. So this attempt to optimize for an average is a fatal mistake in any complex system, absolutely fatal mistake. Because quite often, you know, there’s a great quote from Neil Spore which is, the opposite of a good idea can be another good idea. That what you want is an optimal level of variance, non-optimal average. And we’re optimizing for the wrong thing. The question should not be what is the perfect working environment to impose on everybody for 35 hours a day, a week.

Rory Sutherland (19m 21s):
Okay. It should be, what’s the optimal variety we need to provide people with. So they can find an environment that best suits their own cognitive style at a time, which suits what they’re trying to do in the moment. And if you want the real intellectual backdrop to this, the creation of artificial and unhealthy uniformity is a product of top down thinking and decision-making where people at the top tend to understand the world through averaging and through aggregation. Lived experience is often about variety. And there’s a great book, if any of your readers want to read this, it’s by an Anarchist Anthropologist called James C.

Rory Sutherland (20m 1s):
Scott. And it’s called seeing like a state and the state will always try to optimize for the average whereas actually it’s the variance that really matters. I’ll give you a lovely example of this just in terms of human temperature, okay. The perfect temperature for a room, as you will know if you’ve been on holiday and crack the windows open and laying in bed in the morning. Okay. The perfect temperature for a room is not an average uniform temperature. It’s a room that’s slightly too hot mediated by a random cooling breeze.

Matt Alder (20m 34s):
That makes sense.

Rory Sutherland (20m 35s):
So actually sitting out of doors on a slightly hot day, but where there’s a bit of a breeze that cools you down periodically is a much nicer state for the body than being at a constant 68 Fahrenheit or whatever it is that’s mandated. By the way in recruitment if you have a graduate recruitment scheme, you’re trying to optimize for the average. I, now one of my suggestions to overcome this is hire people in groups because then you’ll see diversity as complimentary not contradictory. Okay. The only reason I got hired is because they were hiring four people and basically they said, okay, let’s take a punt on the weirdo. If they had had four jobs, which they advertised and recruited four separately at Ogilvy back then, I wouldn’t have got any of those four jobs.

Rory Sutherland (21m 20s):
Because when you hire in groups collectively, you become more cognizant of variance. When you’re hiring one person at a time you’re hiring against a template and risk aversion also changes. Because if you think about it, if you hire four people, you can afford to up on one of them. But if you hire one person, you’ll try and hire as close as possible to an expected norm to minimize the risk of blame if your hire doesn’t work out.

Matt Alder (21m 47s):
Yeah. No, that makes perfect sense.

Rory Sutherland (21m 49s):
Right. And so, you know, it’s very interesting that you tend to get a high level of diversity in consulting firms, ethnic diversity when they hire graduates, but when they appoint people to partnerships, the system seems to break down a bit.

Matt Alder (22m 1s):
Yeah, absolutely. That really makes sense. One of the favorite quotes from your book is where you say that “A flower is just a weed with a marketing budget.” And obviously people are really struggling to recruit across the world in all kinds of industries at the moment, for all sorts of different reasons that seem to have come to a head with where we sort of currently are in the pandemic.

Rory Sutherland (22m 27s):
I don’t think it’s unhealthy for companies actually to start thinking, how do we keep people? How do we look after them? And also, can we make the relationship between employer and employee a bit less transactional? Because the assumption that my job was infinitely replaceable by hungry people coming from elsewhere, how does unintended side effect of making the relationship, making labor economics ridiculously transactional? You turn up and don’t cock up. We’ll give you some money this month, but don’t think we’re committed to you in the long term, medium term, because we don’t care. Let’s be honest. Okay. Gen Z noticed, we always keep saying, oh, gen Z they’re so, you know, they’re flibbertigibbet, they flipped from job to job.

Rory Sutherland (23m 10s):
They don’t really commit. Maybe that’s because employers started treating work as though we’re transactional, not relational. And these guys noticed, okay. Right? Now, when I first joined, you know, Ogilvy, you know, they would send me, paid eight and a half thousand quid a year, they’d sent me on a training course that cost three grand. To be honest with you at the time, I would rather have had the money. But what that training costs did show was that you are committed to my long-term presence in this organization. And there’s some evidence I think, isn’t there, that the main payoff for training is in staff retention. And maybe that’s a second order psychological effect, which is not that the training itself is necessarily valuable.

Rory Sutherland (23m 53s):
I’m sure it is. I’m not suggesting it’s a total waste of time, but the training is a reliable way of signaling like a weed with a marketing budget. Okay. It’s signaling the fact that you’re committed to that person in the medium to long-term. You don’t see that with the relationship with them as purely transactional. And I always argue that actually capitalism operates at two levels. There’s transactional capitalism. That’s kind of buying something from a motorway service station. Okay. You go in, you give money, you walk away. Then there’s the relationship with your local pub, which is relationship. I had a local shop once and I used to go and I used to smoke at the time. And I used to go and buy cigarettes there, you know, every day. And I’d buy a newspaper and one day I left my wallet at home and I just said to the shop I’m terribly sorry I’m 40P short for the tube.

Rory Sutherland (24m 39s):
Could you lend me 40P and I’ll pay you back on the way home. And they said, no, I never went there ever again. And so, you know motorway service station visits are highly transactional. I would argue that employment is immensely relational it’s way out on that scale. Okay. And yet labor economics effectively said, the reason your pay is called compensation is because it compensates you for a lot of leisure. And so it really is thought of labor economics on that totally crude question of transactional exchange.

Matt Alder (25m 9s):
I think I said, that’s such an interesting point. And I think it certainly explains the position that lots of companies are in at the moment we’re seeing in certain industries, there. There are kind of a wage wars going on to attract talent and it’s not necessarily working. And I think a lot of it is because the relationship between employers and employees is very much under the spotlight.

Rory Sutherland (25m 34s):
Because actually reciprocation in relational capitalism is almost by definition, not direct. If you went to your mother-in-law’s for dinner on Christmas day and you left 50 quid on the table. Right. Okay. That would be about the weirdest thing you could conceivably do. The point is that we instinctively respond to things where the nature of the reciprocation is not directly predicated on the act of performance. Reciprocal altruism among humans depends on extraordinarily subtle and oblique forms of reciprocation. The time I would came closest to leaving Ogilvy in 32 years, nothing to do with pay, nothing to do with working hours, working hours is a bloody ridiculous to begin with.

Rory Sutherland (26m 20s):
Okay. But nothing to do with any of that. Okay. My phone broke and they gave me as replacement, a worse, a reconditioned version of a worst phone. Okay. Now there’s someone in the finance department who is congratulating themselves for the brilliant cost saving by offloading these reconditioned phones. Okay. The effect it had on what you said about your employees by that act. We’ve got to be really careful by the way, because procurement and finance are in some ways parasitic departments, which are able to claim the credit for reduction in costs without ever being forced to take the blame for the resulting lost opportunities, because costs are easier to quantify than opportunities, costs savings appear immediately, lost opportunity is a by and large invisible.

Matt Alder (27m 12s):
Do you know what? I once sat on a train, I think I was going from London to Manchester and there was a guy sitting opposite me. He was on the phone to his boss or to someone in his company. And he had exactly that problem. He’d been given a worse and it was a few years ago when everyone, lost people tend to have the same mobile phone now, but there was a real kind of differentiation between types of mobile phone. And he’d been given a worse phone and you’ve been given a worse phone than someone on his team and a worse phone than someone had just started. And I reckon he spent half the journey from London to Manchester. It’s getting into this horrendous state on the phone. Do you know what? I didn’t really understand it, until you positioned it like that.

Matt Alder (27m 54s):
It had nothing to do with the phone. It was the value of the company’s name.

Rory Sutherland (27m 59s):
No, no, no. It’s nothing to do with the phone, it’s nothing to do with the phone. Well, I can prove this. So there’s a wonderful case in Michael Lewis’ book, which is about Solomon Brothers, when they’d first invented Mortgage Trading, he was on the mortgage trading desk. And he said a new consignment of mobile handsets arrived on the trading floor. And he said, these grown men were fighting to get these handsets. Now, most of these people would pay the seven figure salary. Okay. They could have bought, you know, they could have gone and bought the contents of a mobile phone store, but that’s not the point, you see. You were not actually emotionally perceiving it in terms of utility at all.

Rory Sutherland (28m 43s):
You know, I worked for Ogilvy at the time for 30 years and I was the Vice Chairman of the company. And you’re giving me a reconditioned phone that’s worse than the phone it replaces, trust me. Okay. It’s nothing to do with the phone. Okay. It’s just, you know, you, people got to be serious, you know. I always make the point about first-class travel on rail, which is the one, one thing I refuse to, regardless of WPP travel policy, I refuse to compromise on that and [inaudible] just to be clear, okay. I buy advanced first-class tickets, which are cheaper than the full fair second class tickets I’m allowed to buy because I’m a grown man of 55. I’m perfectly capable of catching train.

Rory Sutherland (29m 25s):
Okay. So I save the money but I refuse to obey their ludicrous policy because my argument is, look, if I’m traveling with a junior member staff, I’m the Vice Chairman of the company, I’ve worked there for 30 years and I’m sitting in seat B47. Okay. What does it say about that person’s likelihood to persevere with Ogilvy. Okay. I can stay here for 30 years. I’d make it to Vice Chairman and I’m still going to be on the cheap seats. God’s sake. You know. [Inaudible] finance are allowed to make these edicts generally without a bang on themselves, by the way. Someone made the point that they got procurement consultants into their organization and discover they’d arrived on the Concorde.

Matt Alder (30m 6s):

Rory Sutherland (30m 6s):
We really need to understand this, because I’ll give you an example. I think we should have been experimented with flexible and remote working five years ago. Not 10 years ago, not enough people have reasonable broadband at home, but some guy I’ll name him, actually, Michael Tidmarsh, IT guy at Ogilvy took out a zoom account and being a bit of a nerd. I started experimenting with it. And I went, hold on, this is actually significantly better than the thing that it replaces. This is actually in usability terms and in quality terms, it’s a kind of, it’s escape philosophy.

Rory Sutherland (30m 48s):
You know, it fascinated me that so few people were experimenting before the pandemic hit with this kind of thing. And I think defensive decision-making is the explanation to it, by the way. Which is most of these companies, which switched to remote working in the space of three days, if you’d set that up as a corporate project, okay, it would have taken them two years to start making a move because they would have, burbled all about security, risks and VPNs and blah, blah, blah, blah. When they’re forced to do it– now here’s a really interesting theory of mine, okay. The reason that most innovative period in human history was the United States in the 1930s. And the reason we saw such spectacular innovation during COVID is partly a very simple thing, necessity is the mother of invention.

Rory Sutherland (31m 36s):
Okay. When you’re forced to do things differently, you find a way, but there’s a second psychological reason, which complements that. When there’s a crisis, you’ve got an excuse to fail so you become a bit braver. You see what I mean?

Matt Alder (31m 47s):
Yeah, absolutely.

Rory Sutherland (31m 47s):
Which is, if you can say, I’m terribly sorry, I’ve fallen 10% behind, but it’s because of COVID. You’re not, you know, you’d be a bastard employee to fire someone for underperforming during the COVID crisis. So suddenly those people can try things which in constant conditions of economic growth, they’d be too frightened to try and in 1930s in the United States aftermath of the Great Depression, not only was there a requirement to innovate, okay, because it was innovate or die, but there was also permission to do so because there was permission to fail.

Matt Alder (32m 20s):
One of the other examples in your book that really struck me was improving the sort of the customer experience ’round someone from a utilities company, coming around to your house, by giving them a shorter window of time to know when that person’s arriving. I think that’s something that we’ve seen with home deliveries these days. They give you a quarter of an hour slot.

Rory Sutherland (32m 40s):
Very, very big difference, by the way, between a one hour slot, you don’t have a Carter in Scotland, do you?

Matt Alder (32m 46s):

Rory Sutherland (32m 46s):
Oh you do? I’m sorry. Okay. My daughter in Newcastle doesn’t get it for some weird reason. But anyway, the one hour slot is very different from two hours slots. Because the two hours slots a bit like being under house arrest, whereas a one hour slot is, I better be home by 7:00 PM. So I’m understanding these things I think is really, really interesting. They’re not linear, nothing psychological is linear.

Matt Alder (33m 7s):
And well, I wanted to, I wanted to ask you about that because I wanted to put that in the context of the candidate experience, the experience that companies give people when they’re looking for a job. It’s something that has been discussed and debated for sort of over a decade in our industry, in terms of how can we improve the candidate experience. And a lot of it will come down to giving sort of timely feedback and all these kinds of things, but it still remains a big problem because I think there was some sort of fundamentals about the recruiting process and majority of people who apply for a job probably get rejected, which doesn’t set up a great experience. I just think that maybe as an industry we’re thinking about it, the wrong way, what are your thoughts on that?

Rory Sutherland (33m 51s):
I mean Ogilvy, as you’re absolutely right. Just as your advertising has an effect on people who don’t respond to it, it has a future effect. Your employer brand, and in defense of the ad industry, the ad industry is actually often not always pretty good at this because advertising and marketing are a little bit of a closed loop. Not many people come into it late in life. Okay. You either, you start there and you tend to stay there. Okay. And secondly, it’s a relatively small world. So it’s highly likely that you will encounter one of your rejected employees quite often as a client actually.

Rory Sutherland (34m 38s):
Okay. Or a potential client in eight years time. So a long minded ad agency would be actually fairly assiduous about writing to people with a decent explanation, not automating that process too much. I’m ridiculously, okay. I’m ridiculously, I shouldn’t say this. I’ll get loads of people ringing me up and asking for favors, but if someone says, I want to get into the industry, can you give me any tips? I’ll always give them the time of day, particularly over zoom, actually. One great thing about zoom is it allows you to be more generous with your time and I’ll always give them the time of day. And, you know, to be honest, it’s enlightened self-interest to a degree. Some of it isn’t some of it’s altruistic. I just think, you know, other people deserve the kind of breaks that I had.

Rory Sutherland (35m 19s):
And I also remember that, you know, I came from a background, I didn’t know anybody in advertising and marketing. I lived in the Welsh borders. You know, I’m slightly worried about this business of having, you know, long periods of, I’m very worried about the business of working, work experience. Simply because, you know, when I, I’m not claiming an underprivileged background that would be absurd. I had a very privileged background, but geographically, I didn’t know anybody as a kid with whom I could crash in London. So working experience in London was pretty much out of the question, I couldn’t have afforded it. And so, you know, I worry about things like this, which are, you know, it’s silly to talk only about, for example, only about diversity through the lens of ethnicity or gender, because, you know, there are lots and lots of hidden biases kicking around all over the place.

Rory Sutherland (36m 13s):
I’m entirely in favor of, as you can, I hope tell from the rest of my conversation of promoting diversity, of opportunity. And by the way, you know, it’s one of the things we always look for is equality of opportunity. Maybe what we want is diversity of opportunity. Okay? So maybe we need nine routes to the top rather than having one route to the top and turning it into a kind of fight to the death. So, you know, we really, really need to think more in complex systems terms about this stuff, because otherwise we’ll end up trying to optimize things either which we can’t change, or we’re trying to solve problems, which are already in the course of being solved while completely missing problems like geographical diversity, with this glorious zoom age or the zoom boom, I predict in terms of what is the potential for an explosion in service sector productivity, enabled by remote and flexible patterns of work.

Rory Sutherland (37m 10s):
Okay. We need to actually, we really need to open up our eyes to geographic discrimination because nobody notices. Do you know by the way that the Beatles got rejected by EMI. This is a great HR story. Okay. So the EMI, when they rejected the Beatles, or was it Decker? It was EMI, wasn’t it? One of the reasons they did it is they eventually decided to invest in Brian Poole and the Tremeloes instead. And one of the reasons for their decision, I’m not making this up, in fairness to Brian Poole and the Tremeloes, they got a number one pretty quickly. They wanted a rubbish band to invest in. Okay. But the reason they partly, they rejected the Beatles, is the Beatles were based in Liverpool and Brian Poole and the Tremeloes were in Dagenham.

Rory Sutherland (37m 56s):
So if you want to meet Brian Poole and the Tremeloes, it only involved paying for their tube travel card, whereas the Beatles would recraft train tickets down from Liverpool. So you could say that was one of the more short-sighted decisions.

Matt Alder (38m 12s):
That’s what encapsulates everything that we’ve spoken about.

Rory Sutherland (38m 14s):
Fascinating. So I love that, you know, HR decisions that went badly wrong because in fairness to the guy who made that decision, who’s often been vilified. If you look at the set, the Beatles played and so forth, three of them were covers. And a few of the original songs they did perform have never really reappeared. So I think it’s rather fun talking on a recruitment podcast about the world’s most famous recruitment gaffe, because the reasons for it seemed perfectly sane at the time.

Matt Alder (38m 44s):
It does calculate things really well. I mean, as a final question, because you sort of touched on it a little bit there, what does the future hold? How has, what we’ve sort of collectively been through over the last 18 months, two years sort of set the direction for what’s likely to follow?

Rory Sutherland (39m 1s):
I’m intrigued by it. I think one of the things we’ll discover is that the value exchange between employer and employee, it needs to become much more multi-dimensional and it becomes much, it needs to become much more personalized. I learned this actually very interestingly. My argument is that capitalism is not an efficiency maximizing tools through competition. That’s a relatively trivial part of capitalism. It’s a process of discovery. We don’t know what we want. Okay. And one of the things I think that’s really important is that this same process of exploration and discovery that takes place between a business and consumers, where Uber discovers the map, for example, okay.

Rory Sutherland (39m 42s):
Needs to take place between employer and employee. And I learned this quite fast, I had a crash course, too. I had a PA who was a single mum, and I’m very, very much in favor of exploring interesting value exchanges, because that’s what marketing is, deep down. And so I said, the first thing is, okay, very rarely will I care if you take your son to school because I’d actually prefer nine o’clock in the morning, I’m trying to find some clients office I’m totally confused. I prefer you carrying a Blackberry and above ground and taking your son to school then on the tube, traveling to work. In the end, we had all sorts of weird arrangements. She could go home early whenever she wanted to, but equally I would also ring her occasionally at eight o’clock on a Sunday evening and say, what the hell is this meeting on Monday?

Rory Sutherland (40m 27s):
I would post my expenses to her home because she liked to do them after her son was asleep while watching telly, which made perfect sense to me. So the value exchange is not one of tight for money. It’s much more complicated than that. So I think this exploration of the nature of work is long overdue. And I think we failed to make it for all kinds of reasons. One of which is that we were reluctant to test things that were actually relatively pleasant on the grounds that it looked unfair, giving some people a pleasant option of work while keeping other people, you know, essentially nose to the grindstone. And so the very testing of it raised social problems. There was also the huge thing about what I call defensive decision-making, okay.

Rory Sutherland (41m 9s):
If you did the boring thing, you flew to Frankfurt. If anything went wrong, people blame British Airways. Okay. If your flight was delayed, everybody blamed British Airways. If you suggested a video conference, it might be a much better idea overall, but because you’d made that eccentric suggestion, if anything went wrong, they’d now blame you and said, I told you we should have flown to Frankfurt, okay. So asymmetry of blame is a really, really interesting thing to investigate in business because it distorts decision-making to an extraordinary degree. It leads to research being used as a great phrase goes, as a drunk uses a lamppost for support rather than the illumination. The science behind this, by the way, is really robust.

Rory Sutherland (41m 50s):
If you read book by Hugo Sperber and Dan Messier, two French Psychologist and evolutionary thinkers, they make the case that the whole faculty of reason evolved for us to create defensive arguments or to appraise other people’s arguments. He rose for social purposes, not to optimize individual decision-making. We have emotions do that. And their prediction is that if their theory is true, you will see people taking a course of action because it’s easier to defend rather than because it actually has a better outcome. And I would argue, you see that in the business world, almost everywhere.

Rory Sutherland (42m 31s):
[Inaudible], one of the proponents of defensive decision making argues that if we actually abandoned things like presenteeism and defensive, decision-making where a large amount of work is done not to improve the decision we make, but to defend it in the event of its eventual failure. He thinks we could all basically go home on Wednesday afternoon and not suffer a loss in productivity of any kind.

Matt Alder (42m 53s):
Rory, thank you very much for talking to me.

Rory Sutherland (42m 57s):
Oh, it’s a huge pleasure.

Matt Alder (42m 59s):
My thanks to Rory Sutherland. And if you’re interested in Behavioral Science and some of the topics that Rory was talking about, I would strongly recommend that you read his book, Alchemy: The Surprising Power of Ideas That Don’t Make Sense. You can subscribe to this podcast in Apple podcasts, on Spotify or via your podcasting app of choice. Please also follow the show on Instagram. You can find us by searching for Recruiting Future. You can search all the past episodes at on that site. You can also subscribe to the mailing list to get the inside track about everything that’s coming up on the show. Thanks very much for listening.

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