Your CFO should listen to Rory Sutherland
Behavioral Economics is truly invaluable
If I had to select the two MVPs of the WPP group who are in the public domain and promote advertising the best — One would have to be Jeremy Bullmore of course — veteran creative of JWT. Bullmore’s essays in the WPP annual reports and other publications is mandatory reading for anyone in marketing and advertising. The second would be Rory Sutherland of Ogilvy who has thrown his weight in promoting Behavioral Economics (BE) and brought it to the forefront.
Rory Sutherland is an entertaining speaker and done talks at TED and other fora, and also writes the WikiMan column in the Spectator.
Behavioural Economics (BE) is a relatively new discipline that caught the imagination of the academic and business community after the Nobel Prize was awarded to Daniel Kahneman in 2002. There have been several proponents, practitioners, academicians who have contributed to furthering BE through their books and talks.
But Rory Sutherland stands out given how prolific he has been. His talks are entertaining peppered with frank and colorful comments on issues and people in the public domain. One warning though — it takes me usually twice as long to get through his speech as I take down notes and look up the references he quotes in his speech.
And that is possibly where Rory’s biggest strength is. Let me be frank in admitting that while I do look up his references they are more academic and not exactly easily comprehensible. What Rory does is give us the key points, easily digestible learnings from these luminaries who he also sometimes interacts with — everyone from Daniel Kahneman, Taleb, John Kay, Raj Chetty etc. And in a way there possibly is no one better to sell their academic excellence than Rory Sutherland.
As a result the BE discipline has flourished. And while there are many agencies that promote BE and its applications — it’s in marketing mostly.
Which, IMHO kind of misses the mark…
In one of his talks Rory mentioned that the two fields where BE was already well in practice were Politics and advertising (& therefore by extension, Marketing). And this is evident if one were to step back and look at how brands have been positioned and the offer/mix crafted. Everything from price, packaging, shelf allotment, symbolic cues, advertising taglines, etc. are designed to help the consumers make a better choice and use different BE priniciples like framing, availability, choice architecture etc.
So, who can benefit the most from, and should be listening to Rory’s talks? To make this point let me use a framework that Rory uses in his talks.
This is the 2×2 quadrant map on ‘what makes a difference’. There are clear examples for each quadrant — Consultancy (high cost/ low impact), Strategy (high cost/ high impact), trivia (low cost/low impact). But there’s no single name (‘?’) for the quadrant with low cost/effort with high impact activities — which is where most of the case studies discussed in BE come in.
But, there are other examples that fit into the “?” which we are all too familiar with. Cost cutting has become the go-to solution for everything from meeting numbers to improving efficiencies. This can range from cutting manpower, reducing advertising, to automating features that replace human interface. The single metric that is looked is only the cost savings, with barely a glance at the likely impact this will have on customers and other stakeholders.
Rory’s recent discussions have done an excellent job in terms of promoting the value of advertising (look up ‘signalling’) as well as the impact of cost cuts and the value of human learning (vs. digital/ automation)- where Rory compares the conventional London Cabs to Uber. The next revolution according to him is not going to be technical but psychological.
BE is possibly the best way to help educate the severe and deep impact that activities like cost-cutting can result in, and also appreciate the value of resources that do not seem to be active or in the forefront and therefore, seem dispensable as there’s no direct link to results. (The long forgotten classic line ‘They also serve who only stand and wait’).
And this is where BE should be promoted most to — the stratospheric C-Suite as also the commercial/ finance/ accounts teams who look at costs in their dry clinical manner and miss out the implications and likely impact that can’t be measured in money alone
So, do your organization a favor and share some of Rory’s talks to the finance team as well as your C-suite.
I recommend this summary.
Note: This article only reflects my personal opinion and not that of any organisation or industry body. It was first published here.