The Future already exists . We just don't know how to sell

Why the Future Already Exists, We Just Don't Know How to Sell It I tend to see the world. Speaker 2 Through the other end of the telescope to most people. And what comes out of this is a slightly strange belief that the future already exists, we just don't know how to sell it now. I know. Speaker 1 That when we look at. Speaker 2 Innovation and we look at past decades. Speaker 1 We tend to see. Speaker 2 Innovation as being completely obvious, self-evident. Someone invents the mobile phone. We immediately decide that mobile phones are much better than landlines and we all switch. Or someone invents multi channel television or someone invents, you know, any kind of new device, for example, air fryers, OK. And we tend to assume people see that they're good and they buy them, OK. Speaker 1 What we're? Speaker 2 Doing I think is concertinaing the past, and we always do that. When we look backwards, we tend to see change as being much more instantaneous and much more self-evident than it really was. And that's because as humans, what we tend to do. Speaker 1 Is. Speaker 2 Once we've made a decision, we post rationalize it and it makes obvious sense, but it didn't make obvious sense at the time and. Speaker 1 What I mean by? Speaker 2 This is that I spent quite a lot of my life. Speaker 1 Persuading people in Britain that. Speaker 2 It was a good idea to have home broadband now. I don't think anybody would move into a house now and debate whether they had electricity or whether they had broadband. It's a fait accompli. That job is done. Speaker 1 But at the. Speaker 2 Time. It involved a surprisingly large amount of work. Speaker 1 And a surprisingly. Speaker 2 Large amount of experimentation. Speaker 1 You could argue, for example, that the mobile phone didn't. Speaker 2 Become a really big technology. Speaker 1 Until they. Speaker 2 Invented Pay as you go. Speaker 1 And that was for whatever reason. Speaker 2 A large number of people had just a huge emotional or indeed practical obstacle to signing up to a monthly contract. Speaker 1 Strangely. Speaker 2 A lot of the people who signed up for pay as you go ended up spending more. Speaker 1 Monthly than they would have. Speaker 2 Done how They had a. Speaker 1 Contract, but nonetheless what they didn't like emotionally. Speaker 2 Was just the idea. Speaker 1 Of continuous commitment. Speaker 2 With no kind of escape clause, the feeling that even if you were skint, you couldn't just. Speaker 1 Lock your phone. Speaker 2 Away in a cupboard. OK, nobody did actually lock their phone away in a. Speaker 1 Cupboard, but nonetheless. Speaker 2 That's what they believed in advance. Speaker 1 And an awful lot of. Speaker 2 Behavioural change and attitudinal change works like that. It seems absolutely self-evident in retrospect. Speaker 1 But at the time. How Experience Changes Preferences: The Ratchet Effect in Action It's anything but, and I kind of call these ratchet decisions. Speaker 1 Quite a lot of new. Speaker 2 Products. Quite a lot of new technologies only become kind of self-evident in their benefits once you've experienced them. Classic example being an air fryer. Another example being a Japanese toilet. Speaker 1 We don't want them in advance. We. Speaker 2 Have a lot of trouble being persuaded. Speaker 1 That we need them, but once the benefit becomes. Speaker 2 Clear. Then suddenly the benefit is absolutely obvious and we can't understand how we ever live without it. In my country, in the UK, it took about 25 years. Speaker 1 To persuade people that 4. Speaker 2 Television channels weren't really enough. Now, I don't know a single case of someone who's reverted from having 150 channels to having. Speaker 1 4 But nonetheless what you'll. Speaker 2 Find is that quite a lot of changes, quite a lot of technologies. Speaker 1 Effectively work in a strange way. It's not that we're. Speaker 2 Persuaded to use them. Speaker 1 It's that having experienced them. Speaker 2 Our whole utility function. Speaker 1 Our whole idea of what's. Speaker 2 Important is fundamentally changed. Perhaps the biggest example of all these changes would be having children. Speaker 1 So to anybody who doesn't. Speaker 2 Have children. Let's say you're married, You're in a long term relationship. OK. Speaker 1 You'd ask those. Speaker 2 People, what do you really enjoy And they'd say staying out late, going on exotic holidays, having a lot of free time, having a lot of. Speaker 1 Disposable income, trying new things. Speaker 2 Having complete flexibility. Speaker 1 Now, from that standpoint, having children. Speaker 2 Is absolutely a dumb decision, OK? It runs against absolutely everything you believe and everything to that point that you've learnt contributes to making life enjoyable. Suddenly you have responsibilities. Travel is immensely expensive. Speaker 1 Even the smallest car. Speaker 2 Journey involves something of a. Speaker 1 Logistical nightmare, OK, but the very act of having. Speaker 2 Children changes your preferences. It changes what you think is important. Speaker 1 And so in a weird kind of way, you know, taking your children to a small party at the weekend is. Speaker 2 Kind of more enjoyable or? Speaker 1 Rewarding than going to. Speaker 2 Studio 54 would have been when you were childless, to be honest. Not quite. Speaker 1 But I mean. Speaker 2 What I'm saying is that once you have children, your preferences change, your priorities change. Speaker 1 Your whole kind of what? Speaker 2 Economists would call your utility function changes and as a result it's senseless in a way to try and rationalise about the. Speaker 1 Future because a different future. Speaker 2 Will actually change you as a person. Speaker 1 And I think there's scope. Speaker 2 In many, many cases to take new technologies which already exist and effectively make them appealing. Speaker 1 Or at the very least get. Speaker 2 People to try them and think about them in a way that fundamentally changes their evaluation of what the product might be now. Speaker 1 We saw that fairly. Speaker 2 Recently, I think with video conferencing, I'd said rather tragically back in 2019 before the pandemic when speaking to Zoom. Speaker 1 That what they really. Speaker 2 Need to get that product off the ground is either a major transport strike. Speaker 1 Or a minor. Speaker 2 Pandemic and I feel slightly sick whenever I remember saying that. Speaker 1 But the point I was. Speaker 2 Making then was very simple, which is that essentially. Speaker 1 You need to create a world in which zoom is normal before people will use it. Speaker 2 To the extent that's desirable. Speaker 1 You know, now we've all. Speaker 2 Been through the pandemic, everybody's been forced to use Zoom. They they're forced to to know how to use it. It's no longer something of a kind of status marker to pretend to be technologically. Speaker 1 Incompetent when joining a video. Speaker 2 Call. That's all changed. Speaker 1 But it needed the period of. Speaker 2 Experience for people to learn it. That's one example. I think another example might be electric cars. Now I'm guessing a few people in the audience have electric cars. Speaker 1 And I'm guessing that 90. Speaker 2 5% of them were very uncertain and unconfident about making the. Speaker 1 Switch but once. Speaker 2 You've made the switch and you've invested a certain amount of time and effort in actually learning how to charge, learning, installing infrastructure effectively, you know, mastering a new technology and mastering a new interface. Speaker 1 You're. Speaker 2 Pretty reluctant to go back again. It's what I call the ratchet effect. There are certain technologies which are very, very slow to. Speaker 1 Click but. Speaker 2 Once they've clicked, they stick. Why We Don't Know What We Want in Advance: The Solar Power Example Now let's take another technology, which I think is a perfect case of an example where the technologists have done all the hard work. Speaker 1 But the marketers have yet to. Speaker 2 Find their stride. Speaker 1 And that'll be solar power now growing. Speaker 2 Up in the UK, Which? Speaker 1 Is not. Speaker 2 Famous for being the sunniest country in the world. Speaker 1 I spent most of. Speaker 2 My childhood thinking that solar power might be a thing if you lived in Phoenix, AZ or the sub-saharan, you know, part of Africa. Speaker 1 But it was pretty much a. Speaker 2 Waste of time in Northern. Speaker 1 Europe, that isn't true anymore. Speaker 2 Extraordinary advances have been made in solar power so that it's effectively very, very potent. Even in a country like the UK, you know a relatively small expenditure can pay for itself over a number of years. Speaker 1 What I. Speaker 2 Don't think we've done there. Speaker 1 Is we haven't worked. Speaker 2 Out how to sell it. Speaker 1 And the assumption? Speaker 2 Is that if you want solar power on your home one, it's going to be fixed? Speaker 1 In the on the roof. Speaker 2 Two, it's all going to be fixed in one go. Speaker 1 Which means writing. Speaker 2 A cheque for $25,000 having a load of men. Speaker 1 Come round, possibly. Speaker 2 Damaging the structure of your. Speaker 1 Roof and forming a completely immovable. Speaker 2 Effectively. Speaker 1 Irremovable attachment to a house. Speaker 2 Which you may be planning to sell in six. Speaker 1 Years time before the. Speaker 2 Repayment period of solar power has come along. Speaker 1 And those are the kind of decisions which for evolved. Speaker 2 Reasons for instinctive reasons humans really, really hate making OK. Speaker 1 Now there is a Dutch. Speaker 2 Company apparently which is experimenting with a different way of selling solar power, which is selling it in a completely modular way, one at a time. Now in that case. Speaker 1 What you do is you. Speaker 2 Spend a few $1000. Speaker 1 And you maybe don't even fix the solar power panel to the roof. Speaker 2 You just put it somewhere in the. Speaker 1 Garden. Maybe it only powers your. Speaker 2 Shed. Or maybe it only powers your summer. Speaker 1 House. Maybe it makes a? Speaker 2 Contribution to charging your car. Speaker 1 And then if what you do works and you like it, you buy. Speaker 2 Another one now first of all, that much better chimes with actually people's willingness or expenditure. Speaker 1 We've all. Speaker 2 Perhaps wealthy. We're all wealthy enough to have $1000 purchases as part of our discretionary expenditure. Very few of us are so rich that an expenditure of 30,000 lbs counts as a discretionary. Speaker 1 Move, but also it works with the grain of human nature. Speaker 2 Which is one thing at a time. Speaker 1 And I suspect that one panel on our roof. Speaker 2 And we like what we see, then the next. Speaker 1 Year or the year after? Speaker 2 We'll buy another one. Speaker 1 All of this boils. Speaker 2 Down to a really, really simple finding, which no economist believes and all economists are wrong about. Speaker 1 But it's a finding. Speaker 2 On which practically every single psychologist in the world is completely agreed. Which is this? Speaker 1 We don't really know what. Speaker 2 We want in advance. Speaker 1 Now the. Speaker 2 Whole of neoliberal economics, and you're in Chicago. So this doctrine was, let's be honest, forged not very far from where you're sitting right now is predicated on the understanding that people have effectively stable preferences. They have complete awareness of their preferences. They have complete trust in the people they're dealing with, and they know to the penny how much utility they'll derive from any particular purchase. Yeah. Speaker 1 Not a single. Speaker 2 Person in the field of psychology believes this. Speaker 1 In many cases, we don't. Speaker 2 Know what we want until we've had it. We don't know what we've lost until it's gone, as Joni Mitchell sang. Speaker 1 In many ways, humans do not know what they want in. Speaker 2 Advance. And the best way to actually get them to appreciate that is to give them a little bit of what they don't know they want and let them find out that they like it a lot more. That's how the world really works. The Subconscious Appeal of Drinking from an Aluminum Can Now you're all thinking that's fine and dandy. Speaker 1 But what's it got to do? Speaker 2 With aluminum, or aluminium as we perversely call it over here. Speaker 1 I think. Speaker 2 And this is a bet. I have not much evidence except the evidence of consumer behaviour to go on. Speaker 1 But I think that without really knowing it, we. Speaker 2 Vastly prefer drinking cold beverages from a can. Speaker 1 Or. Speaker 2 Perhaps from a glass bottle? Speaker 1 Than we do. Speaker 2 From a pet container. Speaker 1 That for reasons we don't. Speaker 2 Fully understand or that we can't actually give voice to the. Speaker 1 Experience of. Speaker 2 Drinking out of something? Speaker 1 Aluminum is basically. Speaker 2 Pleasanter than the experience of drinking out of a PET bottle, all other factors being equal now. Speaker 1 I have a. Speaker 2 Perfect anecdotal case to advance there, which is that. Speaker 1 Until. Speaker 2 Very recently I never drank water and I would, you know, under duress if nothing else was available. I'd obviously drink water if I was absolutely parched. Speaker 1 My father's the. Speaker 2 Same. He doesn't drink water either. He's not a raging alcoholic, he just drinks a lot of tea. He drinks a lot of coffee and sometimes he has a glass of wine. Speaker 1 But effectively, you know. Speaker 2 I didn't drink water myself, it just wasn't part of my drinks repertoire at all. Speaker 1 Until water. Speaker 2 Became available in a can, at which point I considered it differently. I reassessed it and for. Speaker 1 Whatever strange reason, even though in some ways the. Speaker 2 Can was not always closeable, so you'd think it was actually disadvantageous. Speaker 1 I found drinking water. Speaker 2 From a can was pleasant in a way that drinking water from a bottle wasn't. I don't know why my kids have long insisted that I buy Coca-Cola or Diet Coke for them in cans rather than any form of bottle. It costs quite a bit. Speaker 1 More, but they basically don't like. Speaker 2 Coke out of a bottle? Speaker 1 Now this could. Speaker 2 Be to do with partly actually measurable scientific factors like flavour. It could be something completely different, which is just effectively psychological association, expectation. Something about the coldness of the can may appeal to us. In other words, if the can feels really cold, it changes our perception of the drink we're drinking. Speaker 1 I don't fully know the reasons, but. Speaker 2 If it's true, what we need to do is find out whether my anecdotal experience scales up, and find out actually whether. Speaker 1 People will without. Speaker 2 Being able to voice the reasons why pay a premium. Speaker 1 To drink and any drink. Speaker 2 Out of a can rather than out of a pet container. Speaker 1 That's without any knowledge of the. Speaker 2 Awareness, the recyclability, the the environmental considerations concerned that simply the experience is vastly pleasant to a degree where without necessarily knowing why. Speaker 1 People will be. Speaker 2 Prepared to pay the extra? Korzybski's Insight: The Map is Not the Territory in Economics To understand this better, we need to go back to a Polish American philosopher called Alfred Kozubsky. Now, Kozubsky is principally famous now for having coined the phrase. The map is not the territory and. Speaker 1 It's a useful. Speaker 2 Phrase in my field of behavioural economics, because one of the things we would say is that economics provides you with a map, reality provides you with a territory, and that what's left out of the map. Speaker 1 Is often. Speaker 2 More important than the information that the map contains that economics used on its. Speaker 1 Own. Speaker 2 Gives you a very very unreliable guide to how humans will behave. And one of the strongest economic assumptions would be if you ask people do you prefer a plastic bottle or a can and they say don't care because they don't know. Speaker 1 And then you say, knowing that it can. Speaker 2 Cost more than the plastic bottle? Would you be prepared to pay for it? Speaker 1 The people would say. Speaker 2 No, and that's probably true as far as it goes. However, our. Speaker 1 Appreciation of the value. Speaker 2 Of something is denoted by context and an experience. Now to give you a clear idea, OK. Speaker 1 Coca-Cola is sold in. Speaker 2 Perhaps 12 different ways. Now if you buy it in a can from a vending machine, ready refrigerated, you will be paying perhaps 6 or 8 times. Speaker 1 Per unit volume more. Speaker 2 Than you're paying if you buy it at room temperature from a discount store in A2 litre pet bottle. OK, So what people are prepared to pay? Speaker 1 For coke is entirely. Speaker 2 Context determined and context dependent. Speaker 1 And the second. Speaker 2 Thing is, that packaging is a major part of the context, as I weirdly discovered with water. Water from a bottle? No thanks, I'll buy something else. Water from a can? Oh, actually this is quite a nice part of my hydration repertoire. OK, fundamentally, the packaging determines the experience, not as much as the contents do. I wouldn't go that. Speaker 1 Far, but every bit. Well, every bit. Speaker 2 Enough to get people to pay 700% premium for consuming something in one way rather than another way. Speaker 1 The place, the time, the. Speaker 2 Packaging the context all have an effect on our effectively subconscious appreciation of what value is. Speaker 1 And this is where it comes back to Korzybski's. Speaker 2 Other claim to fame which. Speaker 1 Is that he used to be a. Speaker 2 Lecturer at the university and. Speaker 1 Routinely. Speaker 2 At the university, he would start his lecture with a brown paper bag at his side, and every now and then he'd reach into the brown paper. Speaker 1 Bag, take out a cookie. Speaker 2 Or a biscuit from the brown paper bag and munch on it contentedly. Speaker 1 And then he'd go to the front. Speaker 2 Row of the students and appearing to be generous, he'd just share out the contents of the bag and the students would take the cookie, or the biscuit, as we'd call it, from the bag and they'd munch on it perfectly, contentedly delicious, they'd think. And then? Speaker 1 Kosinski. Speaker 2 With a bit of a. Speaker 1 Flourish. Speaker 2 Would take the actual biscuits out of the bag and reveal that they came from a container inside the. Speaker 1 Bag that was labeled dog biscuits. Now the effect on the people who one second before had been munching away. Speaker 2 Contentedly on the biscuits was completely transformational. In one case, a student actually vomited. In other cases, people would spit what they were eating into their hands. Speaker 1 Or they generally run out of the room. Speaker 2 In order to effectively regurgitate or get rid of, you know, any remaining dog food from their mouths before washing their mouths out with water from a tap. And Kosinski used this to indicate a very simple rule about context and the nature and the effect that context has upon appreciation and value by saying. Speaker 1 You see, we do not. Speaker 2 Only eat food we also eat. Speaker 1 Words. In other words, the effect of the words. Speaker 2 Dog biscuits on the biscuits suddenly transformed one's appreciation of a food even though up to that .1's taste buds and found the whole thing perfectly acceptable. Speaker 1 Even quite a little bit. Speaker 2 Tasty. Speaker 1 And that's something we just need to. Speaker 2 Understand much better because. Speaker 1 We're in a world of. Speaker 2 Procurement. We're in a world of rationalisation. We're in a world of effectively where spreadsheets. Speaker 1 Rule and the problem. Speaker 2 With those spreadsheets. Speaker 1 Is they're the map. Speaker 2 They're not the territory, and what you find in reality is that in reality, people will pay a hell of a lot more for a Coca-Cola if it comes with ice than one that doesn't. Speaker 1 Fundamentally, they'll pay more for Coke or a drink. Speaker 2 Or in a can. Speaker 1 And they may in the. Speaker 2 Extreme case that I experienced. Find water perfectly palatable in a can, but more or less undrinkable in a pet. Speaker 1 Bottle that's. Speaker 2 Been my experience to date. Speaker 1 And we really need to know this, because if we don't know this. Speaker 2 And we don't take it. Speaker 1 On board, we'll make every. Speaker 2 Decision economically and effectively our. Speaker 1 Map will ignore what Really. Speaker 2 Matters in the territory. Speaker 1 Which is the huge psychological. Speaker 2 Effects you can have on perception and enjoyment by shape, texture, chemical composition. Speaker 1 Of the packaging, not the contents. Speaker 2 And it's there, perhaps, that the potential for magic really lies. Creating Value in the Mind: Packaging as a Powerful Brand Tool OK, when I say that's where the potential for magic really lies, let me just explain. OK. Speaker 1 Generally, there are two ways. Speaker 2 In which you can create value and there are two ways in which you can focus on the creation of value, one of which is operational. Now 90% of business effort is devoted towards effectively improving shareholder returns to operational improvements. Speaker 1 And it can be. Speaker 2 Impressive if you come across a really badly run company, OK. Speaker 1 But broadly speaking. Speaker 2 There is a law of diminishing returns, which I think many many companies have basically. Speaker 1 Reached the second way, you can look at. Speaker 2 Value is the value created in the mind of the ultimate consumer by which I don't meet the person who purchases, who is probably a rational procurement person interested only in price. Speaker 1 But the much more. Speaker 2 Complicated and much more nuanced price value equation which goes on in the head of an actual consumer. OK. Speaker 1 And but packaging is vitally important because packaging is. Speaker 2 The point at which a product becomes a brand. Speaker 1 It's a point at which. Speaker 2 A product acquires secondary and tertiary meaning It's the difference between being if you like, a single singer and a singer with a backing group now. Speaker 1 This is where. Speaker 2 Harmony starts to occur. Speaker 1 I would argue for example. Speaker 2 That the success of red. Speaker 1 Bull. Speaker 2 Which when you think about it, is completely irrational. I mean, if you sat down and said we want to compete with Coke, how do we do it? You would. Speaker 1 Have said we want a. Speaker 2 Really tasty tasting drink that comes in a great big can and doesn't cost as much as coke so people get great value for money. In fact, the most successful attempt to compete with. Speaker 1 Coke, arguably. Speaker 2 In the last 50 years. Speaker 1 Was Red Bull which? Speaker 2 Comes in a tiny can, it cost a fortune and it tastes kind of disgusting. Speaker 1 OK, but what conveyed the fact that Red Bull was? Speaker 2 Fundamentally different and they marketed it as if you like, as a pharmaceutical product, as a psychoactive product. Speaker 1 As a medicinal. Speaker 2 Product, not as a drink. Speaker 1 What made it different was partly the the weirdly small can, which said what? This is a remarkably potent drink. Because we can't. Speaker 2 Give you a full size can of it because you'll go do Lally. Speaker 1 It was rather like medicine. Speaker 2 And the fact? Speaker 1 That you know. Speaker 2 In a sense, the small size of the container almost communicates the potency of the contents. Speaker 1 And packaging can. Speaker 2 Be extraordinarily articulate and it. Speaker 1 Can create value way above. Speaker 2 In percentage terms, the kind of value. Speaker 1 You can ultimately. Speaker 2 Extract from further operational improvements to your business. Speaker 1 And yet most CEOs and. Speaker 2 Nearly all finance directors. Speaker 1 Who basically rule the roost are comfortable with the realm. Speaker 2 Of operational improvements because it lies directly. Speaker 1 Within their control and where it's all. Speaker 2 Numerically denotable in a sense, the map is the territory in that particular world. Speaker 1 And they're massively uncomfortable. Speaker 2 With creating value in the. Speaker 1 Brain because that way uncertainty. Speaker 2 Lies. First of all. Most of it is psychology, which is effectively extraneous to their map. Speaker 1 And they're wildly uncomfortable with. Speaker 2 The idea that consumers might pay twice as much for something if you package it differently. Nonetheless, the truth remains. Speaker 1 That they will, and they. Speaker 2 Do time and time again. Speaker 1 For instance, you have a problem. Speaker 2 I think if you're one of the laundry detergent manufacturers. Speaker 1 Because how do you convey that your new? Speaker 2 Improved detergent is really a significant investment in. Speaker 1 Improvement rather. Speaker 2 Than just being, you know, a bit of fanfare. Speaker 1 Well, the answer is you put. Speaker 2 In a different format, and they've tried variously powders, powders with coloured flex in it. That's the next stage. OK. The third phase might be? Speaker 1 Gels. Speaker 2 Then liquids, then finally they went to. Speaker 1 Tablets. Speaker 2 And now they have these kind of pods. The problem they now face is if they want to convey a serious kind of technological. Speaker 1 Improvement going forward, they've kind of run out of. Speaker 2 Formats, unless you produce a laundry detergent that's in the form of a plasma or something like that. Similarly, Liquid Death being an example. Speaker 1 You can. Speaker 2 Also convey that your product is fundamentally different and new. Speaker 1 By packaging it differently. Speaker 2 And as I said. Speaker 1 All of this is way before we. Speaker 2 Even get to sharing with consumers the environmental benefits of consuming things from aluminium rather than consuming things in other less environmentally recyclable. Speaker 1 Materials even before. Speaker 2 We've done anything to try and appeal to consumers kind of higher instincts. Speaker 1 We can see that it is perfectly possible. Speaker 2 For packaging to pay for itself 100 times over and for people to pay a premium of let's say $0.50 for packaging which only costs $0.05. Speaker 1 More it. Speaker 2 Basically happens all the time. Speaker 1 Because we make. Speaker 2 Inferences from the packaging about the nature of the product, as I mentioned with red. Speaker 1 Bull, but also the nature of the. Speaker 2 Packaging contributes to the enjoyment of the product. Speaker 1 And there's an interesting. Speaker 2 Case there, which I think is worth looking at, which is beer. Speaker 1 Which is it is still pretty rare, even though it's. Speaker 2 Technologically possible to do so for people to sell beer in plastic bottles. Speaker 1 And for whatever reason, people will pay the. Speaker 2 Premium or deal with the considerable awkwardness of glass bottles and the weight. Speaker 1 And the fact? Speaker 2 That they're more difficult to carry because they fundamentally believe or. Speaker 1 Find that beer in a. Speaker 2 Bottle is better than beer from a plastic. Speaker 1 Bottle 1 explanation. Speaker 2 For this is simply that plastic bottle beer is associated just with the very cheapest beers and therefore it's effectively stigmatised. Another possibility is that you know the plastic does interfere with the taste. Another possibility is that actually the coldness of beer. Speaker 1 Isn't very well. Speaker 2 Communicated with a plastic bottle, whereas it is beautifully communicated to the hand if the container is either glass or aluminium. Speaker 1 But I think from beer we have an. Speaker 2 Interesting case where I think we can reasonably say, OK, that's exhibit A. We do have some evidence to show that there are occasions where people will put up with either inconvenience or actual price in order to actually consume beer in one container rather than another. The Unconscious Role in Our Seemingly Rational Life Decisions Now here once again we have an example. Speaker 1 That what? Speaker 2 People do revealed preference. Speaker 1 Is indicative of values and. Speaker 2 Associations they have in the mind to which they don't really have introspective access. Speaker 1 So I mentioned earlier that in all schools of. Speaker 2 Effectively of psychology, all psychologists are agreed on one thing, that people don't really know what they want in. Speaker 1 Advance if you. Speaker 2 Talk to a real estate agent, a human real estate agent. They will say that almost everybody goes along effectively with a list of criteria for their next house, and they end up buying a house which matches remarkably few of those initial criteria. Speaker 1 Because other. Speaker 2 Things that you can't stipulate, Perhaps a view, architectural style, you know, a particular neighborhood. Speaker 1 Suddenly those things which are hard to define and impossible. Speaker 2 To. Speaker 1 Quantify become dominant in the. Speaker 2 Recursive process of property hunting. Speaker 1 This is one reason, by the way, why I feel, you know, lucky that I. Speaker 2 Predate the age of Internet dating? I'm not that sure how. Speaker 1 Great an idea it is. Speaker 2 For people to effectively select. Speaker 1 People from a screen given. Speaker 2 What we know about human decision making that the person. Speaker 1 You're married to may well bear. Speaker 2 Very few of the criteria. Speaker 1 That you would have assumed were. Speaker 2 Absolutely necessary and a partner before you met them. Speaker 1 You know, essentially when we make a final. Speaker 2 Decision. Our unconscious is allowed. Speaker 1 Perhaps the defining? Speaker 2 Role in the process. Speaker 1 But the great thing about the. Speaker 2 Unconscious is it's it's effectively opaque to introspection, and we can't give voice to the desires of the unconscious in. Speaker 1 Advance but the. Speaker 2 Unconscious speaks to us in retrospect, I understand. Speaker 1 You had a recent. Speaker 2 Talk from Naseem Taleb in which? Speaker 1 I made the. Speaker 2 Point and he's very good to actually quote this in several of his. Speaker 1 Books that we don't even know why we like. Speaker 2 The things we like. Speaker 1 We think we like a dishwasher because it's good. Speaker 2 At washing plates and knives. Speaker 1 In reality, the real value. Speaker 2 We derive from having a dishwasher, which is why not having a dishwasher is so. Speaker 1 Madly frustrating. Is that a? Speaker 2 Dishwasher is a place where you can put dirty crockery out of sight. Speaker 1 The second. Speaker 2 Your dishwasher breaks down. Speaker 1 You're miserable. Not really, because. Speaker 2 You have to wash up. Speaker 1 By hand, but because you have to spend. Speaker 2 You know a. Speaker 1 Quarter of the day looking. Speaker 2 At a pile of filthy dishes which a dishwasher. Speaker 1 Renders invisible. In the same way we don't have swimming pools really to swim in, we have a swimming pool. So you. Speaker 2 Can walk around your garden in a bathing costume without feeling like an idiot. Speaker 1 And also because hot weather is made surprisingly bearable by the. Speaker 2 Presence of a swimming pool. Speaker 1 You may not even jump in the pool, merely knowing it's there. Speaker 2 Makes walking around your garden on a hot day just much more tolerable. Speaker 1 Because. Speaker 2 You know there's an escape. Speaker 1 And as I said, it wouldn't surprise me at all to know that aluminium packaging has many of those same unspoken, unthought benefits which we'll pay for, even if. Speaker 2 We can never describe them. Marketing Environmentalism: Selfishness Backed by High-Mindedness Now you'll notice up to this. Speaker 2 Point that I haven't even mentioned the possibility of getting people to choose aluminium for its substantial environmental benefits. Speaker 1 And that's because I think that the best. Speaker 2 Way to obtain behavioural change is to do it in two ways. Speaker 1 A little bit of. Speaker 2 Selfishness backed up with a little bit of high mindedness. Speaker 1 Let's face it. OK, most. Speaker 2 Of the people who bought a Tesla. Speaker 1 Would claim to their friends it's. Speaker 2 What David Ogilvy called the. Speaker 1 Excuse for doing something that. Speaker 2 They did it to benefit the environment and for lower emissions and so on and so. Speaker 1 Forth, but I wouldn't. Speaker 2 Pretend for a second that nought to 60 in 5.5 seconds didn't also have an influence on their decision, indeed wasn't the primary motivation. Speaker 1 And so our first job, I think, is to make sure. Speaker 2 That the environmentally friendly alternative is at least better. Speaker 1 Or doesn't. Speaker 2 Involve any notion of sacrifice. Speaker 1 There's a huge. Speaker 2 Problem I think in the. Speaker 1 Lot of early environmental adopters almost liked. Speaker 2 The hair shirtedness of doing something difficult and inconvenient and unpleasant and ineffective. Speaker 1 Because it made them look good. The problem with that behavior is it doesn't translate. Speaker 2 Into the majority of the population. Speaker 1 What is? Speaker 2 Technically known as counter signalling, doing something out of almost a. Speaker 1 Display of false modesty works. Speaker 2 If you're a high status already and it works on a small. Speaker 1 Niche of environmental early adopters. Speaker 2 And enthusiasts, but it doesn't really translate into the mainstream. Speaker 1 So it is an unreliable. Speaker 2 Strategy on which to actually base your approach to environmentalism. Speaker 1 So instead first focus is come up with even greater forms of aluminium packaging. You know the aluminium wasp wasted bottle, which I was. Speaker 2 Talking to a a potential. Speaker 1 Customer about last week. Apparently you can only buy them in Japan. Speaker 2 And they're currently very expensive. Speaker 1 Can we make that actually? Speaker 2 More widely available. Speaker 1 I think there's something about the way in which cold. Speaker 2 Is conveyed. Speaker 1 That makes this really magical, but there's also the Japanese possibility of self heating drinks which don't seem to have. Speaker 2 Actually made it to the West. Speaker 1 At all, but seem to me to offer another area for absolutely enormous potential. Again, that's going to be an aluminium. Speaker 2 It certainly isn't going to be in. Speaker 1 PET OK, we should investigate that, make things that are really good, but that doesn't mean that the environmental story is irrelevant. The Decline of Category Advertising and Aluminum's Untold Story Not at all. Speaker 1 And I think you've got a great story. In fact, I think it's a story that you used to tell. Speaker 2 Well, let me demonstrate. Fashions in vogue and all with an accent to elegance designed by Evan Picard. Fashionable too, and with an accent to elegance. Are these gleaming 1958 automobiles. Elegance that comes from the sweeping, graceful design and from the extensive use of Alcoa Aluminum. Alcoa Aluminum is the fashion metal. It imparts A gleaming beauty that won't rust, chip, pit or peel away. More aluminum is designed into the new 1958 automobiles than has ever been used before. Textured aluminum, Super hard aluminum, Lustrous aluminum in beautiful, colorful anodized finishes developed and perfected by Alcoa. This year the most beautiful cars in the world are proudly wearing the gleam and go of Alcoa Aluminum. Aluminum gleam that provides an accent to elegance. Aluminum go that puts extra power and efficiency under the hood. See these beautiful cars at your local automobile showrooms. The Evan Picone fashions at better stores. The aluminum By Alcoa Aluminum Company of America, the world's leading producer of aluminum. Speaker 1 Why don't ads like that exist? Speaker 2 Anymore. Well, the reason ads like that don't exist anymore, I think, is that. Speaker 1 Since globalization, you no longer have the kind of category leadership from enormous corporations which. Speaker 2 In a sense, dominate an. Speaker 1 Industry which allow those industries. Speaker 2 To do what I'd call category level advertising. Speaker 1 It used to happen. Speaker 2 In the 1950s, there was an advertising. Speaker 1 Campaign in Britain if. Speaker 2 You want to get ahead. Speaker 1 Get a hat and it encouraged. Speaker 2 People, I think, slightly battling against the trends of fashion at the time. Speaker 1 That they needed to buy hats now. How was it funded? It was funded. Speaker 2 Actually by a trade body. Speaker 1 Which was the kind of British hat makers trade body and they basically issue a levy on all their members and that would be enough. Speaker 2 To fund an advertising campaign. Speaker 1 Not for a specific brand of hat, but for hats in general. That doesn't really happen anymore because British hat makers own share of the hat making. Speaker 2 Market in the UK. Speaker 1 Is probably so small that you'd end up effectively just creating demand for. Speaker 2 Products. Speaker 1 Manufactured by people who hadn't contributed to the campaign at all, it's the old free rider. Speaker 2 Problem. Speaker 1 In the same way, you probably don't get the dominance of a single player as you might have done with Alcoa in the 1950s where they can. Speaker 2 Fund a campaign effectively. Speaker 1 For a chemical element and be confident of. Speaker 2 Reaping enough of the gains that it actually pays for the cost of the campaign. Speaker 1 I think that's a pity because I think that we spend too much time. Speaker 2 Effectively advertising on the sometimes fairly nugatory differences between different. Speaker 1 Brands and we never. Speaker 2 Get to advertise the benefits of whole. Speaker 1 Categories whether it's the electric car in general rather than. Speaker 2 Specifically the Kia or the Hyundai, for example. There's no advertising campaign for electric cars, there's just an advertising campaign for individual electric cars. Speaker 1 Quite often. Speaker 2 Actually that can be self. Speaker 1 Defeating because you create. Speaker 2 Such a paradox of choice. Speaker 1 That people. Speaker 2 Decide not to electrify at all because they can't decide between all the competing messages. Speaker 1 It also causes. Speaker 2 Car makers to compete on. Speaker 1 Range, which I think is a relevant thing to do in the US in smaller. Speaker 2 Countries like the UK. Speaker 1 Or the Netherlands I think. Range. Speaker 2 Anxiety is very largely a kind of psychological worry that we've imported from the. Speaker 1 US. Speaker 2 Which probably shouldn't be affecting us nearly so much because our countries are what geographers call very, very small, and they're very densely populated. Speaker 1 You know we don't have. Speaker 2 Places which are in the middle of. Speaker 1 Nowhere in the UK, you know I. Speaker 2 Understand what it's like to be stranded with a 5% on your battery. Speaker 1 150 miles east of Boise. Speaker 2 Idaho and a truck stop. That situation doesn't really pertain in a country like the UK. Speaker 1 And it would be great if somebody, maybe the largest player in the market, actually ran some advertising to inform. Speaker 2 Consumers of the remarkable. Speaker 1 Benefits of aluminium, in particular the extent to which it's not only recyclable, but it's also infinitely or near, not quite, but near infinitely recyclable. In fact, the can you're holding in your hand right now may welcome from aluminium that was mined in the 1970s. Speaker 2 For example. Speaker 1 And the fact that once mined effectively at only 5. Speaker 2 Percent of the energy. Speaker 1 Cost it can be recreated. Speaker 2 Again and again and again. Speaker 1 Is something I don't think most consumers know. I think when they think recyclable, they think it ends up. Speaker 2 Being recycled once. Speaker 1 In the way that PET plastic ends up being recycled. Speaker 2 Once it's generally down. Speaker 1 Cycled rather than recycled. You know, it ends up being turned into something like a waste bin and ultimately it doesn't, it only has effectively 1 afterlife. The fact that your product has, you know, almost in Buddhist terms, has the capability for infinite regeneration, I think is a really, really interesting. Speaker 2 Facet which consumers simply don't. Speaker 1 Know. They don't know the fact that actually this is a wonderful case because all the heavy energy consumption has already been done when the product was first created, and now it's just a case for finding infinite new uses for it. They don't know the fact that because it's so valuable, there's a real incentive for people to make use of waste aluminium, whereas there isn't an incentive for people to make. Speaker 2 Use of waste plastics simply because the. Speaker 1 Brand new alternative. Speaker 2 Isn't all that much more expensive. Speaker 1 If only people. Speaker 2 Understood that message and really understood what made it distinct, distinctive and different. That would make a great great. Speaker 1 Difference, so I'd love to see more. Speaker 2 Advertising of that kind. I'd love to see someone actually promoting a chemical element. Speaker 1 As used to happen in the 19. Speaker 2 50s and 60s, as I say. Speaker 1 Rather than always just promoting what makes one individual brand. Speaker 2 Slightly better than another. Speaker 1 And I think there is a real. Speaker 2 Education job to be done. Speaker 1 There and I think you know there's some magic there, the idea that for example, you know the can that you're holding in your hand or indeed the, you know the. Speaker 2 Bicycle, you've just. Speaker 1 Bought contains something. Speaker 2 That was, you know, mined. Speaker 1 20 or 30 years ago. Speaker 2 And has had. Speaker 1 3 or 4 intervening. Speaker 2 Functional lives as a can, as a container, as. Speaker 1 You know, you know, a small part of machinery that's a really, really wonderful thing. You know you have the fact that without aluminium, the Wright brothers would never have got off the ground, for example, there are tremendous. Speaker 2 Stories to be told and. Speaker 1 Tragically, because all budgets are now brand budgets. Speaker 2 We don't have category budgets. Speaker 1 These wonderful stories which I think were told once. Speaker 2 Never get told. Speaker 1 I think it's a really, really sad thing, but I'm going. Free Ideas: EV Chargers as Vending Machines and Fun Recycling To make another. Speaker 1 Suggestion as well when I said people. Speaker 2 Don't know what they want until they have it. Speaker 1 One of the great tips from behavioural science is, and this may not work, it's simply a daft idea of mine. Speaker 2 Which I'd like to. Speaker 1 Experiment with. I have a lot of these ideas, and the point is, the point about these ideas is you'll never arrive at them rationally. We have got to stop having this culture in business where the only things you can try are things you can. Speaker 2 Justify in advance. Speaker 1 Because it's a massive. Speaker 2 Limitation that we impose. Speaker 1 On our pace and scale of innovation. And that's because there are far more good ideas you can post rationalise than there are good. Speaker 2 Ideas. You can pre rationalise. Speaker 1 There is a very limited number of ideas, all of which are very similar and generally A revolve around. Speaker 2 Efficiency and cost cutting. Speaker 1 In terms of rational? Speaker 2 Improvement of a business. Speaker 1 In terms of the creation of psychological value, however, the sky is the limit and the potential scale is immense. And some of the ideas. Speaker 2 May not even cost very. Speaker 1 Much some of. Speaker 2 Them may make you money. Speaker 1 But once again, there are far more good ideas we can post rationalize than good ideas we can pre rationalize now. Anybody here from a drinks? Speaker 2 Company. I'll give this idea. Speaker 1 Away for free An electric car charger is effectively a drinks vending machine with an extra 10 kilowatts or so if you want. Speaker 2 Planning permission for vending. Speaker 1 Machines, it's really different, difficult if you go to a local council and say how would you like to actually meet all your targets for providing vending machines for the next 5 years at no cost? Oh, and by the way, they'll sell drinks as well. They might be a bit more receptive. OK, think about it. OK. It's a contactless credit card device. Speaker 2 It's an electricity supply. It's a connection to the. Speaker 1 Internet. It's something regularly visited by someone to restock and provide maintenance and add. Speaker 2 Another 10 kilowatts or so. Speaker 1 It's an electric car charger. It's an essential part of infrastructure rather than being something you have to beg for permission to. Speaker 2 Provide. So there you go. Speaker 1 That's a free, free idea for any drinks people out there. I'll give you one more for the aluminium industry. In behavioural science, there's a little doctrine called East which stands for Easy, attractive, social and timely if you can make a behaviour easy. Speaker 2 Attractive, social and timely. More people will adopt it. Speaker 1 How can you make recycling more fun? Speaker 2 Actually it's quite easy. It's. Speaker 1 Called a can crusher. If you could look after one of the great. Speaker 2 Advantages of aluminium. Speaker 1 By the way is that it doesn't take up so much damn room in your garbage. In fact, you can shrink your garbage. Speaker 2 Significantly, if you crush a. Speaker 1 Can before you put it in. Most people don't have one. There's an additional bonus. OK, which is that can crushing is really enjoyable and can crushers could be sold at a profit while also sharing information about the remarkable properties of aluminium. Why don't you make it a peripheral aim of yours to get a can crusher in every American home? It's a benefit. It's also incredibly fun. Give anybody a can crusher. They will go around looking for cans to crush. Speaker 2 Design one if you like. Speaker 1 That's even better than existing can crushers. Maybe it's electric, maybe it has some peculiar mechanism, but go and look for a way to make the very active recycling selfishly rewarding as well as socially rewarding. That's my free tip for the day. Speaker 2 Enjoy the rest of your conference. Thank you very much.