Three ways to think about value: scarcity, context and signalling

Bring to mind someone ordering oysters in a restaurant.

Who are they? What do they look like? What type of restaurant are they in?

I was surprised to learn this week that Oysters were an everyday staple in the Victorian era, so plentiful that they were given away free in pubs. They fell out of fashion in the early 20th century, and thereafter oyster beds declined in UK waters.

Whilst oysters haven’t changed much in the past few generations, our beliefs have; current associations of luxury & decadence would have seemed strange 150 years ago.

This leads to a broader question: what is behind what we value?

I’d argue we value what we believe in, and that belief is largely driven by scarcity, context & signalling. Here’s as brief a summary as I can manage.

1) Scarcity

Natural scarcity

The team at Ogilvy Change subdivide scarcity into rarity, quantity, competition & time. This makes intuitive sense, whether applied to goods (like truffles or blue fin tuna) or services (like front row seats at the theatre).

Artificial scarcity

In business scarcity is just another lever to generate demand, as evidenced everywhere from Disney’s release schedule to your hotel booking website.

2) Context

Value is relative, not absolute

Karl Marx put it best:

“A house may be large or small; as long as the surrounding houses are equally small, it satisfies all social demands for a dwelling. But if a palace rises beside the little house, the little house shrinks into a hut.”

Culture

The most popular restaurant I saw whilst on holiday in Thailand was Mont. They sell toast. Toast with butter. Condensed milk. Chocolate spread. But essentially grilled white bread. If I proposed we pop out to a restaurant for toast in the UK, you’d assume I had a brain injury. In Bangkok I’d be on trend.

Mont nom sod Chiang Mai

A very busy Mont outlet in Chiang Mai, and some of their toast (pic: mont-nomsod.com)

Comparison

A wonderful example of anchoring is at the Ferrari museum in Maranello. After you’ve gawped at the wonderful lines of the 812 Superfast (£260,908) and heard the rumble of the naturally aspirated V8 in a 458 Speciale (£208,000), you exit through the gift shop. Here you can buy a single bolt from a 1996 F1 car for £450. Mounted in Perspex with an authentication certificate, it is a potent totem. It isn’t a bolt at all: it embodies belief, and signifies connoisseurship. The fact you can buy an entire car for £450 is not the point.

Ferrari screw from Schumacher Suzuka1

A bolt or a potent totem? Perhaps both.

Similarly, when you are specifying options on your £90,000 Ranger Rover Sport, Carpathian Grey metallic paint seems reasonable as a £1700 option by comparison. This is about £170 a litre.

Brands frame our perceptions

As Barden makes clear in the excellent Decoded, brands frame our experience of goods & services. Framing is why people pay about two grand more for a VW Sharan over a Ford Galaxy, virtually identical cars made on the same production line.

Habituation

The novelty soon wears off a new purchase. Psychologists call this hedonic adaption. Consumption is merely a treadmill.

At a societal level, the Easterlin paradox is apt: as societies get richer there are diminishing returns to happiness. A fascinating study on housing supports this point.

Indeed, as we get richer, the market premiumises existing products to soak up our disposable income, even in unengaging categories. You can buy a “cool” washing machine LG Signature range if you so wish.

3) Signalling

Sign value

Baudrillard described four ways an object has value. I’ll focus on three:

  • Use value – what it does;
  • Exchange value – what you can trade it for;
  • Sign value – how it is perceived in relation to other items & what it implies about the owner.
SMEG & Beko_How cool is your cooling device.png

How cool is your cooling? Pics: SMEG & Beko

A SMEG fridge chills just like a Beko fridge; both cost a portion of your monthly pay; however they both have radically different connotations. Functional differences aside, when you buy a SMEG fridge you are buying into the unwritten, intangible but powerful meaning it conveys.

Communicating status

Social distinction is the shadow motive behind much consumer behaviour. We have such a profound need to signal identity that the normal rules of supply and demand don’t always apply: increasing prices can increase demand because of exclusivity. As Clarkson said about SUVs:

“Admit it. You want a big SUV because it’s part of today’s uniform. It tells people that you have a second home in the country and that you shoot. It says that money’s not a worry. All of this is human nature. It’s silly but it’s how we are.”

So many choices only make sense from the perspective of evolutionary biology, the signalling value they offer. Rory Sutherland makes a similar point about cheese:

“…middle-class rules now require that every dinner party cheeseboard must contain at least two cheeses which aren’t very nice… I was baffled by this for a long time, until I realised that these cheeses are not bought to be eaten, but to signal the sophistication of the occasion…There are many forms of consumption today where — dress it up all you like — it is obvious the main value lies not in the intrinsic value of the thing itself but in signalling the refinement of your taste. This increasingly creates a kind of feedback loop where people are driven to absurd lengths to gain competitive bragging rights.”

Absurd lengths? The Silicon Valley elite’s latest status symbol: keeping chickens. As the Washington post report:

“..egg-laying chickens are now a trendy, eco-conscious humblebrag on par with driving a Tesla…Being able to say you have chickens says, ‘I have a back yard,’ and having a back yard says, ‘I have space.’ And having space means you have money, especially when it comes to Silicon Valley real estate.”

Signalling is useful lens for consumption as it allows us to consider underlying motives. In the western world experiences, knowledge and connoisseurship are new markers of status. In California buying SUV might serve a similar purpose to buying a live chicken.

Belief is a trick we play on ourselves

Blind taste testing is often a waste of time; I’ve seen budget supermarkets win taste tests blind, then lose them branded. Research by Stanford neuro-economist Baba Shiv shows our expectations overcome our sense impressions. You taste what you believe. It’s a variant of the placebo effect.

In summary?

  • What you believe in, you value.
  • Value is subjective and relative, not objective and absolute.
  • Value is dynamic, ever changing.
  • Value is dependent on context and culture.
  • Brands frame our experiences.
  • Brands act as carriers of belief.
  • Expectations increase over time. There is no end point.
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APG Noisy Thinking: a planning surgery with Les Binet and Sarah Carter

The APG brought together Les Binet and Sarah Carter for a Q&A at Google HQ yesterday evening, the latest in their Noisy Thinking series. Billed as a “planning surgery” it was an opportunity to pose questions to and discuss the finer points of marketing strategy in a confidential environment.

It’s been a busy year for the APG: 2 books, a conference and a multiplicity of events. Members are getting their money’s worth.

Here’s 7 themes from the evening:

Binet & Carter How Not To Plan APG

#1 Don’t worry about alienating existing users when trying to get new ones

  • We discussed the hardy perennial of comms briefs: the aim of appealing to new buyers “without alienating existing buyers”
  • Their evidence shows this never happens: they have never seen any ad have a negative influence on sales
  • Alienation as an idea is flawed, based on 2 false premises:
    • Brands are important to people (they aren’t);
    • People who buy you are “your customers” (as Andrew Ehrenberg put it “Your customers are the customers of other brands who occasionally buy you”)
  • The violent re-positioning of Super Noodles – taking it from kids’ tea time treat to blokes post-pub grub – had the effect of increasing sales to all users. That’s how ads work.
  • Badly designed research will means provocative new ideas tend to be rejected. When you make an ad, people often end up liking it.
  • Research also underestimates herd effects. When people experience others really enjoying an ad this builds momentum.
  • Takeaway: Worry less. Build new brands through bold executions.

#2 Put communications LAST

  • We discussed a failed loyalty campaign, based on downloading an app to get a discount. The critique? An expensive way to reach a small amount of people, preaching to the converted, cannibalising existing sales, selling them at a lower margin. It got commissioned because it was a “cool idea.”
  • Put comms LAST not first: start with your business objectives:
    • How much you want to sell, at what margin?
    • Think about what behaviours want to elicit to get there (e.g. penetration vs. loyalty)
  • Advertising is a numbers game. John Lewis speak to most people in Britain multiple times at Xmas, investing in something like 800m impressions. A million impressions is a “rounding error” for a national brand campaign.
  • Takeaway: Marketing is about all 4Ps: get away from “1P marketing”.
  • Takeaway: recognise when the audience for any activity is the marketing community itself: “cool ideas” smack of empire building to me.

#3 Something is better than nothing: the mere exposure effect

  • You can think yourself into inaction, executional paralysis.
  • The biggest sin is not doing anything: 2 years off air is enough to kill a brand.
  • Consider the mere exposure effect: just putting a logo out there will have some effect; investing in 40m exposures even more. Move into the realm of great creative work and you’ll be 10x more effective.
  • Takeaway: check your ego and act.

#4 Ads don’t have to make sense

  • Changing the shape of Tetley teabags to make them round made them market leaders within 3 months. This was despite PG Tips’ iconic and long running Chimps campaign.
  • There is no rational defence: it was the same tea, people just quite liked the change. It felt cosy, the bags fitted in a mug. PG inevitably retaliated with the pyramid bag…
  • It’s a reminder that we live in a system 1 world: mints with holes and meerkats that speak Russian are not bounded in cost benefit analyses.
  • Takeaway: The magic of advertising is in the little things that don’t make sense. Fight to hang on to random illogical things that make people feel something.

Binet & Carter How Not To Plan APG 1#5 Think about “functional alibis”

  • Advertising works beyond the linear message > response paradigm it is often reduced to.
  • The Rowan Atkinson Barclaycard campaign used humourous vignettes involving things like burning carpets to illustrate functional benefits like purchase insurance. These “functional alibis” are just jumping off points for creatives to guide the execution – which actually work through swagger & humour.

#6 Stop worrying about maximising efficiency and ROI: worry about effectiveness

  • In 2011 the AA cut ATL brand spending – putting all their investment into DM, email & paid search. This was an offers-based strategy: hook people, then increase prices.
  • Highly efficient & profitable in the short-term, brand metrics went into free-fall. This led to commoditisation as people searched for the category not the brand. Discounts had to be deeper and existing customers lent upon harder; churn increased etc.
  • Analysis showed the brand would be insolvent within 5 years if the strategy continued.
  • Investment in a heavyweight ATL brand campaign reversed the decline (pic).

Binet & Carter How Not To Plan APG 2.jpg#7 Quant pretesting needs a rethink

  • Most quant pretesting methods work on a rational, linear, message-response model.
  • The best you can say for it is that it gets rid of the worst performers, lifting the floor.
  • The critique is that it lowers the ceiling: it dulls the lustre of anything original.
  • MAJOR VENDOR X state they get the same result from an animatic as a finished ad. Question: how can this be anything other than literally testing a message?
  • It is hard enough working out why successful ads work after they are live. The thought experiment of how successful ads might fare in pretesting makes the argument clearer. Example: the Hamlet photo booth ad (worth rewatching BTW) cannot be rationalised: the comedy is in the nuance, comic timing and casting.
  • Question: do we end up not doing humour if pretesting can’t allow it through its maw?
  • Question: what are we pretesting for? If it is executional guidance, isn’t skilled qualitative research best for this kind of nuance?
  • Takeaway: get a grip researchers.

A thought provoking evening. Thanks to Les Binet & Sarah Carter, Google for hosting and compere Matt Tanter from the APG.

 

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Digital Darwinism by Tom Goodwin: book review

Digital Darwinism by Tom Goodwin

Digital Darwinism was published in April to some acclaim. Goodwin is Head of Innovation for Zenith Media, a master of the pithy aphorism and a twitter-era contrarian. My question on picking up the book was whether there would be depth behind the soundbites.

I’m pleased to say there is. It’s packed full of ideas to help us think about business in these ‘accelerated times’. Goodwin contextualises 2018’s digital world by looking at the past, drawing learnings from the adoption of previous ‘new’ technologies like electricity.

What is Digital Darwinism?

The core idea is that technology changed the parameters for business success:

  • The mass adoption of networked computing has supercharged competition: it’s never been easier to try a new provider in any category.
  • Companies are designed to evolve slowly over time, but the speed of technology means the background for business changes faster than any company can.
  • New players, defined by their tech-enabled customer centricity are like invasive species, quickly coming to dominate once stable ecosystems.
  • To survive, established players shouldn’t aim for incremental change, slowly breeding-in hybrid vigor. They need to look further ahead and get used to reinventing and re-reinventing what they offer.

Natural agility is not enough

Incumbents too often tinker around the edges, sprinkling a layer of tech on top of old problems (‘hey, let’s do something with chatbots’) rather than starting at the root of the issue, user needs. Indeed, when it comes to innovation incumbents are at a double-disadvantage. The incentives are misaligned. With success comes complacency:

“We live in the age of insurgents, who use last mover advantage to deploy the latest, best and cheapest tech and who take advantage of new behaviours… The insurgent isn’t bogged down with expertise. What in theory should allow dominant players to win easily often acts against them… you are so invested in the old paradigm, that you actively seek to combat change. Sony made too much money from selling music. Kodak from selling photo products.” 

Asking the questions no-one else is asking

Digital Darwinism is a mindset. The mega-cap tech firms re-imagined established categories by asking questions no-one else was asking, changing parameters of the design process. Goodwin cites the Tesla Model S by example: with fewer than 20 moving components compared to 1500 in a standard car, it takes a sixth of the time to assemble. We’re urged to learn from this audacity. Forget how you currently operate & consider what your company would be like if you started from scratch. Be hard on yourself. Would you do the same things?

Value is different in the digital age

We’re so overburdened with choice in every conceivable category that managing abundance and aiding discovery is what people really need. The consequence? The content gateway is more important than the provider. Examples abound. I shudder to say it, but I know people who know which playlists they like, but not which artists.

“Value is different in the digital age. I use a slower more expensive train to visit my parents because it has wifi and plug sockets. My time is most valuable.”

He’s particularly good on trends

In his view business success emanates from empathy and human understanding, not technology.  

“Innovation has always been misunderstood to mean more. We thought that Nokia was innovative because they made 72 handsets a year, until Apple made a single one and it changed the world. The collective goal of companies has to shift from doing extra, to work hard on doing less, better.”

Indeed, Goodwin urges us to think harder as we look forward. He is scathing about much trend prediction which he dismisses as chartism – the mindless extrapolation of existing trend lines. Assuming you are right because you have a lot of data is absurd:

“We think data will light the way but increasingly it is blinding us…”

“If you ask people about something that doesn’t yet exist, you get something worse than useless – you get something damagingly misleading…”

“Data does an excellent job of mapping the past and the current, but a terrible job for those who need to look ahead…”

I really liked his material on second & third order effects, which make the dance and interplay of trend and counter-trend much clearer. Craft beer makes sense when all the mass market wants to give you is Bud Light; farmers markets make sense in the era of stack it high, sell it cheap retail.

But… winners may not remain winners

The missing element may be a recognition that winners may not remain winners. Volatility is baked-into networked capitalism. As David Karpf writes in WiredIn the rush to identify the next industry that will be disrupted by the digital revolution, we underrate how fragile the business models of the disruptors themselves tend to be.”

Taking the long view from my research, in 2007 Bebo was the teen’s social network of choice; in 2017 the teens I researched only talked about Instagram. Facebook occupied the middle years. Envisage a world where Facebook’s success ebbs away because young people see it as something “for old people – like mum or dad…”

Overall

Goodwin comes across as a frustrated idealist, wanting us to do better. It’s an enjoyable read, and provides helpful context to think more clearly about the parameters of business success in 2018. But don’t expect a blueprint. Goodwin helps us map the terrain. The route we’ll have to plot for ourselves.

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Addendum: other books worth reading about tech-enabled business  

Zero to One by Peter Thiel

Thiel was co-founder of Paypal and is now a venture capitalist, famous for being the first outsider to invest in Facebook. He’s from what you might call the muscular individualist school of capitalism. Depending what you read he may also be a genius suffering from survivor bias and a lack of empathy. Zero to One is slim, crisp and highly readable. Like Goodwin he is no fan of incrementalism. The sections on how Paypal succeeded, power laws and his four scenarios for the future are all highly thought-provoking.

The Inevitable by Kevin Kelly

Idealist, hippie sage Kelly takes us through 12 technological forces which will shape the future. Written in 2014 it feels slightly optimistic in the era of bot-created fake news, but his commentary on AI, “flows” and how screens affect our behaviour is superb.

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Market research and technology: the future

shutterstock_762465823This post was originally published on insightplatforms.com

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We live in the era of Artificial Intelligence.

The payoff? Tech can free us up to think, not do. The future is about automating tasks, not jobs. You don’t need to be a techno-utopian to envision a future where drudge work is reduced and we have more time to reflect on our data and what it means.

The challenge? Our skillset needs to evolve to fit this new ecosystem

The World Economic Forum’s report The Future of Jobs highlighted the 3 skills most prized in modern workers: cognitive flexibility, critical thinking and creativity. In the future when inspiration strikes on the train to a briefing meeting you’ll be able to use a free AI tool to generate some hypotheses from a “big dataset”, then bang the results into software to create an animated visualisation of your viewpoint… all without breaking a sweat.

Good researchers will be specialists who have an understanding of related disciplines. Much has been written about “T-shaped people” – rightly so, because it’s a vivid metaphor. In my experience, clients want business solutions and trust you to combine the right tools and techniques to get there. I’m never going to grasp the finer points of algorithm design or boolean logic. But I might sit across the office from someone who does and chat with them over lunch. And they might provide a breakthrough on my project. Your collective mind works a lot faster.

Good researchers will be hyper-aware when automation starts to erode their skills. Because when systems fail, a skilful response is required. We should be conductors harmonising an orchestra of tech, unintimidated if required to turn our hand to different instruments. In the future I will set my research AI going to facilitate my desk research the day I am commissioned on a project. It will collate and theme sources, but if it fails I have the skills to explore not just Google, but my library, and can call in favours from my peers ahead of the deadline.

Good researchers will be stretched by the advent of AI. It has been 21 years since IBM’s Deep Blue first beat Garry Kasparov. As Kevin Kelly writes “The advent of AI didn’t diminish the performance of purely human chess players. Quite the opposite. Cheap, supersmart chess programs inspired more people than ever to play chess, at more tournaments than ever, and the players got better than ever. There are more than twice as many grand masters now as there were when Deep Blue first beat Kasparov.” Similarly the world’s best medical diagnostician is not a computer or a doctor, but a team of both. There’s a mutuality and complementarity here. Machines have unrivalled processing power. But lateral thinking and eureka effects do not reside in binary code.

Insight is a deeply human act

Human interpretation is art as well as science. Consider body language (like when a participant leans forward and their eyes light-up) cultural nuance (knowing the subtext when an Englishman says “I’m fine. Thanks.”) empathy (your niece’s crocodile tears sounding different to real tears) common sense (thinking ‘hang on a minute’ when Facebook claimed it reached more UK 15-24 year olds than actually exist) or even hard-won knowledge (having a feel for causality when considering feedback loops).

The upshot? Insight is a creative process. Your AI <> big data interface can explore ten thousand data runs a day, but it can’t and won’t tell you what it means, how to combine it with human data, or what to do next. Gut-feel, wisdom and working with clients to inspire cultural change aren’t going to be automated anytime soon.

Insight is a deeply human act. Or to put it another way, a hard AI problem.

Maybe that’s the same thing?

So in summary:

  • Let’s look forward to a future where we automate boring tasks, to focus on interpretation and meaning;
  • Researchers will be conductors of an orchestra of tech, weaving together a symphony of platforms in real time to create harmony;
  • Clients will be our patrons, commissioning each opus to their needs and preferences;
  • A data rich world requires more human contact – not less;
  • We’ll need to adapt our skillsets but we should relish this challenge.

 

 

 

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Market research and technology: past & present

shutterstock_201061505This post was originally published on insightplatforms.com

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Out of the silence, a single word. “Idiot!”

Me: a fresh-faced grad. My accuser: a red faced SRE. My crime? Forgetting to check my data tables against the hole count*. Meaning the whole deck had to be checked and re-written on the day of the presentation. Not my finest hour.

It’s a reminder how much things have changed. Manual checking and verification of data used to be the norm. Quant used to be far more time-consuming and prone to error.

In my 17 years in the industry I’ve seen online data collection go from something clients viewed with suspicion to our primary means of quantification. Online quant is so prevalent many Research Managers I interview have never used CATI let alone F2F data collection.

Fast forward to 2018 and I’ve lost count of the number of times I’ve had to evaluate, commission & master MR tech platforms over the past 5 years.

The challenge: Imposing order on chaos

The proliferation of MR platforms and tools presents researchers with a new challenge: keeping pace with tech. That’s why help from trusted peers (like insightplatforms.com) is invaluable.

Four use cases to consider right now

Whilst online data collection and analysis isn’t perfect, it is easy to take things for granted. The life of a researcher involves less drudgery than it used to. Tech can extend your practice and make your projects easier.

How’s about:

Checking hypotheses on the fly

Data back in an hour? Tools like Toluna’s Quick Surveys provide mean you can check hypotheses before a pitch meeting then confirm product penetration rates in the cab home..

Qual at scale

Remesh demonstrated their tool at the Worldwide Qualitative Research Conference in May. It feels like a “real-time qual-conjoint” (!). Our demo sourced verbatim feedback on a topic for 30 seconds then got users to trade off the responses for 30 seconds, parsing the main themes instantly. One to watch.

Easier analysis of ethno & diary data

Tech for diary studies and auto ethnography has been embraced by quallies ever since smartphones became ubiquitous. There are loads of options. My initial criteria related to participant ease: the simpler the better. Having used a few, the back-end analysis capabilities are as important. They need to allow easy coding, analysis and reporting. I’ve heard good things about Ethos.

Remote qual analysis

Mural is a collaboration tool you might consider to help if you have to do qual analysis remotely. Think of it like a huge online flipchart that updates in real time. You can draw, use sticky notes, share links, images and videos. It allows you to work alone or together, even from a smartphone. Built-in templates like mood boards, customer journey maps & personas come in handy too. You can also vote on outcomes.

Part 2 of this post will examine the future of market research and technology

*For anyone aged 35 or under, a hole count is a read out showing you how many responses there are for each code, used to cross-check the base sizes on your data tables

 

 

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AQR Eyes Wide Open event: Human Packaging

The AQR’s Eyes Wide Open series brings together speakers from adjacent disciplines to examine a common theme. The most recent, on the evening of June 7th was on the subject of Human Packaging, asking the question what do we reveal by the way we present ourselves?

The evening left a marked impression on me. Partly because lineup was stellar; partly because the talks dovetailed so neatly, each supporting and strengthening each others’ themes; and partly because of the audience reaction and interaction. It’s hard to convey, but an engaged audience asking questions to generate a collective understanding is ephemeral, precious. The whole was greater than the sum of its parts.

Photographer, documentarist and pioneer of participatory media Daniel Meadows started the evening. He spent a large part of 1973-4 driving around England, making a national portrait of the English. Years later he tracked his participants down to extend the project. His portraits somehow convey the unique spirit & personality of his participants. Accompanied by first person accounts of real, ordinary lives, they become ‘photography stories’ – moving, funny, and sad.

His work contains rare truth which I can’t quite put my finger on. “I’m interested in the felt life”, he said. “It’s about working with people, not ‘doing media’ to them”. Watch the video and I’m certain you’ll agree. 

Caryn Franklin’s talk came from a different angle, drawing together the evidence to enable all of us to reappraise fashion imagery. Image after image, a common trope emerged. Women were passive, subordinate to men. Insufficiently clothed, they are depicted as having low status, minimal agency or self-hood.

Her argument is both that society has become acculturated to this type of representation, and that unconscious social comparison has pernicious effects, especially on the young. Example after example built a visceral audience reaction. Everyone in the room could now decode the imagery. We all left thinking differently.

Dr Nick Gadsby examined impact of social media on how we present ourselves. His view: we used to live in an either/or era. The self used to be defined by you: it was private, internalised and authentic. Appearance was defined by social norms: it was public, external and constructed.

We are now in an era of and/also. Beauty doesn’t have to be something inherent, it is something we can all do. This is about bettering yourself. “The authentic resides in the journey. The self is about the journey to find oneself.” The and/also notion crystallises in the beauty transformation video (new to me I must confess) and is echoed by brands: AirBnB is home and away; Lululemon is athletic and leisure; Nak’d is healthy and tasty.

That left myself and Nikki Lavoie to riff on gender and clothing (I’ll follow up with the full deck). Our view? Identity is an ongoing & dynamic process: clothes have transformative power and people use them consciously and unconsciously to explore their identities.

Jobs which traditionally gave men masculine status have diminished steadily over the past 50 years. This masculinity gap has many consequences for how men feel, behave and dress. Several typologies become clear according to whether men express themselves either consciously (hyper masculinity) or unconsciously (ruggedness, competition and exploration).

Nikki focused on the feminine, particularly in relation to the workplace. Traits assumed to be feminine like empathy, sensitivity, and gentleness are seen to be make organisations perform better. Yet female leaders are often attacked if they are seen to abandon them (e.g. Clinton and Merkel). She explored how women have to navigate their clothing choices given femininity can be interpreted both as an asset and a flaw, exploring typologies like hyper femininity, the anti sex symbol and the tough gal.

A great evening. Thanks to Judy Taylor for curating and the AQR for organising.

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Book Review – The Elephant in the Brain

“The ultimate science is evolutionary psychology… the behavioural sciences provide you with the what and evolutionary psychology explains the why.” Rory Sutherland, Real Famous Podcast

 “Evolution is smarter than economists” John Kay, Nudgestock, June 8th 2018

Elephant in the brain

Like many, I’m on a learning journey with behavioural economics.

I try and keep up with the popular literature, follow what opinion formers are saying, and bring frameworks into my daily practice. Behavioural economics has shown us the power of our evolutionary heritage: its more nuanced account of human rationality has overwritten homo economicus, the Spock-like model which preceded it.

But just when I feel I’m making progress, pop. I start reading about “an important addition to the field of behavioural economics” which is opening up a new frontier in human understanding: evolutionary psychology. And I’m thinking: FFS! Is that another summer of reading? I was looking forward to the next Jack Reacher thriller.

Kevin Simler & Robin Hanson’s The elephant in the brain is about unconscious motivations in everyday life. It’s newly published & Ogilvy recommended. What’s apparent, reading it is that evolutionary psychology helps to reframe familiar questions, making them appear in a new light.

What follows is an potted overview of their arguments and some questions that spring to mind.

Simler & Hanson argue that hidden motives drive our behaviour

“This book attempts to shine light on those dark, unexamined social institutions in which almost all participants are strategically self-deceived, markets in which both buyers and sellers pretend to transact one thing while covertly transacting another. The art scene for example, isn’t just about appreciating beauty; it also functions as an excuse to affiliate with impressive people and as a sexual display (a way to hobnob and get laid). Education isn’t just about learning, it is also about getting graded, ranked and credentialled, stamped for the approval of employers. Religion isn’t just about private belief in God or the afterlife, but about conspicuous public professing of belief that help bond groups together.”

In this analysis, we are self-interested and self-deceived. What they call the elephant in the brain “is an introspective blind spot that makes it hard to think clearly about ourselves and the explanations for our behaviour.”

Involvement in our institutions is driven by competitive signalling

“Our institutions do ending up actioning many of their official, stated goals, but they’re often inefficient because they are simultaneously  serving purposes no-one is eager to acknowledge.”

Our evolutionary heritage is responsible for this. In the hunter-gatherer era your survival was down to cooperation: if you were ostracised from your peer group you would die. Norms like fairness and egalitarianism emerged from this period. Crucially our brains evolved to get ahead socially, even if that meant being devious:

“Human beings are a species that is not only capable of acting on hidden motives – we’re designed to do it. Our brains are built to act in self-interest while at the same time trying to appear unselfish in front of other people. And in order to throw them off the trail, our brains often keep “us”, our unconscious minds, in the dark. The less we know of our ugly motives, the easier it is to hide from others. Self-deception is therefore strategic, used by our brains to look good while behaving badly. The best way to convince other that we believe something is to actually believe it…”

Signalling is the book’s key concept. Simler & Hanson define it as “anything used to communicate or convey information.”

“There are good reasons to believe that our capabilities for visual art, music, storytelling and humour function in a large part as elaborate mating displays, not unlike the peacock’s tail.”

Theirs is a fundamentalist interpretation of signalling theory. Buying art says to the world: I’m so confident in my survival that I can afford to waste resources. Like the peacock’s tail it advertises a survival surplus: the easy assurance of an animal with more resources than they know what to do with.

In their eyes, we’re unaware of the signalling motive in our purchase decisions. They go further: riffing on Veblen’s concept conspicuous consumption they argue the very notion of individuality is a con-trick we play on ourselves:

“We’re locked in a game of competitive signalling… no matter how much the economy grows there remains a limited supply of sex and social status – and earning and spending money are  good way to compete for it.”

Readers may find the chapter on religion most contentious

Belief is a symptom of the underlying social incentives:

“We worship and believe because it helps us as social creatures. Religion is a team sport – communal practices resulting in a highly cohesive and cooperative social group…”

We signal loyalty to this in group to gain allies, comrades who could help us in the future. Having skin in the game enables trust:

“…sacrifices of time and effort implicitly show loyalty to you and congregants…Acceptance can make the difference between the warm embrace of fellowship and the cold shoulder of ostracism. These are powerful incentives to believe.”

The effort is the point here: it buys you access to the club. Social status is the prize.

The purpose of politics to express loyalty to a tribe

In their analysis, the purpose of politics is not to lobby and effect change. We don’t act rationally, undertaking a detailed policy analysis then picking a side ahead of an election. Terrorist groups don’t disband when they achieve their stated aims. Politics is about tribal loyalty and badges help us sort others into those with or against us:

“As arguments these slogans (‘black lives matter’ or ‘guns don’t kill people, people do’) radically oversimplify the issues – but as badges, they work great.”

In summary

If we misunderstand our own motives to this degree there are troubling implications. Does it trivialise our efforts? Do we just find ourselves in an arena (business, academia, art) and start playing? Do we just want to belong to something, anything, competing to develop social bonds in order to feel worthwhile? Does queuing overnight outside the Apple store or putting on a Corbyn badge amount to the same thing?

It would be easy to overextend these arguments. Distal explanations for behaviour work when the level of analysis is the species; proximate explanations for individuals are more problematic – and risk being accused of being reductive and unfalsifiable. As zoologist John Krebs said in 2014“Biology is not pure, not simple – it is not physics!…there are huge cultural overlays to behaviour.”

Things I’ll be thinking about

  • A thought experiment: if (X domain, Y behaviour or Z context) was just a status signalling competition, would it explain and predict the participants’ actions more fully than any other framework?
  • How is advertising preying on our signalling instincts?
  • Our evolutionary heritage makes us crave the nutrition of social life, yet we binge on the sugar high of social media. It can never be a substitute, only a supplement.

Postscript: how about sport?

To an outsider there isn’t much to separate rugby union or rugby league: it’s scrum pass tackle and ruck. Yet the audience for each code doesn’t really overlap. Seeing poetry in an 8 man scrum and barbarity in “M62 rugby” is about geography, identity.

Competing to show loyalty to your team takes many forms.

sunderland-fan-back-tattoo-ftm-newcastle-united-nufc-650x400

F.T.M or “F#ck the Mags” – Photo credit: Co.uk

Checklist:

  • Does this badge signal commitment better than mere words?
  • Is this about social status: prestige, glory and the admiration of one’s fellows?
  • How much of this is context dependent?
    • How many minutes per week is his shirt off? How does his Saturday 3pm self align with his Monday 9am self?
    • “…each of us is a member of many overlapping groups… context matters…” If he was supporting England at the World Cup in Russia, and found himself sat next to a Mag… would that be OK? How about if they felt compelled to defend England’s honour in discussions with another country’s fans?
Posted in Behavioural Economics, Books, Consumer Psychology, Market Research, Marketing Research | Tagged , , , , , , , , | 1 Comment

Nudgestock 2018

Rory Sutherland Nudgestock 2018.jpg

It’s my first time at Nudgestock, Ogilvy’s behavioural science conference.

I’m in a room with 450 people, a lucky dip of marketers, academics, researchers, students, brand and operations peeps from the private, public and third sectors.

We’ve all travelled to Folkestone, which is sleepy, welcoming. It’s a 10 minute amble through the faded Victorian grandeur to Leas Cliff Hall. Beyond the stage and I can see the sea, which is unexpectedly turquoise.

Today is about the cross pollination of ideas. The presentations reach across industries and disciplines. Our job is to laterally apply these, to connect the dots. Rory Sutherland is the host and compere, his charisma contagious. We sip our coffee and try and take it all in.

Here are my takeaway ideas:

1) Big data contributed to Nokia and Hillary Clinton’s failure

Management need generalities to survive. The context-free certainty of a spreadsheet is alluring as it offers illusory control. “No one gets fired for being logical”

But big data is backwards looking, extrapolating from the past. Cost benefit analyses by McKinsey were behind Nokia’s strategy to focus on the featurephone rather than the smartphone. By comparison, an anthropologist seeing refugees sacrifice half their income to get hold of a smartphone pointed to its game-changing potential. But McKinsey had more datapoints: they won the argument. As Sutherland pointed out “’Iceberg! Dead ahead!’ is one data point… but an important one!”

Similarly, Bill Clinton suggested the Hilary campaign team visit the Midwest to take the mood of the people in 2016, as something felt not quite right. The request was rebuffed by a strategist with the line “my data beats your anecdotes.” We all know how that turned out.

2) Don’t look for rules, look for patterns

Common patterns that make sense in one context can be used to understand others.

There is no grand theory which explains all human behaviour. For the management cadre a set answer based on a mathematical model is more pleasing than stitching together lots of subjects to try find the truth. John Kay pointed out, when you hear economists  say it is “The fault of the world, not of the model” you know you have a discipline in turmoil. We should embrace a wider spread of models to explain why people do what they do. Sutherland and Kay are keen on evolutionary biology (see #9).

“The drive to be rational has led people to seek to find political and economic laws which are akin to the laws of physics — universal, unchanging over time and applicable at any scale. Experts love such universal principles — as they allow them confidently to pronounce on things of which they have no direct experience.” Rory Sutherland, Spectator, 9 June

3) Context & scale often determine how people think, feel and act – not the rational if/then rules modelled by economists

This is best summed up by a quote from Vincent Graham to explain his view of politics:

At the federal level I am a Libertarian. At the state level, I am a Republican. At the town level, I am a Democrat. In my family I am a Socialist. And with my dog I am a Marxist — from each according to his abilities, to each according to his needs.’

4)  Real world social networks have huge power: what your friend’s friend’s friend experiences will affect you

Nicholas Christakis (Director of the Human Nature Lab at Yale) summarised 30 years of research into 40 minutes. His research provides evidence to show if you put something in a network it will make more of it – whatever it is. Love, kindness ideas – or ebola, fake news or hate. But it has to be seeded – need to start the thing off.

Connections and the structure of network matters. Take graphite and diamonds: these are just carbon atoms with different arrangements. Connected one way they are soft and dark (graphite) or hard and clear (diamond) – but crucially, these are properties of the connections not the atoms themselves.

It is the same with human social groups. In one context you can connect in positive manner and achieve good. Or vice versa. Good or bad outcomes however can be seen as emergent properties of the network, not properties of individuals. The whole is greater than the sum of its parts.

In this conception innovation and other positive outcomes come from ties not the people themselves. Our experience of the world depends on connections!

5) There are 3 strategies to affect a social network

  • Connection – re-structure the wiring diagram, who is connected to who;
  • Contagion – changing the flow (e.g. seeding an idea);
  • Position – changing the location (e.g. using the existing structure & ensemble of individuals, can we reposition people to maximise benefit – like a seating chart)

6) The adoption of new products/services is non-linear, and often follows an S shaped curve

Network modelling shows the diffusion of innovation follows an S-shaped (“sigmoid”) curve (see pic):

Nicholas Christakis Nudgestock 2018.jpg

  • In the beginning no-one you know is using a product/service;
  • You see others using it so you try it;
  • Suddenly everybody is using it;
  • Growth plateaus.

In other word, social proof accelerates growth.

Q: If the adoption of a new product or service is non-linear, how should we phase marketing budgets? There is a danger investment is pulled too early.

Christakis went on to describe his current field experiment: using real world interventions to accelerate adoption of neonatal health behaviours in Honduras. A successful intervention would shift the S-shaped curve on the X axis. His 8×2 experimental design is described in the BMJ here – fascinating.

7) Tinder’s rise was exponential

The rise of tinder_market share_Pic courtesy of 7 Park Data

US dating app market share 2013-2014: data courtesy of 7 Park Data

Eliding nicely with Christakis’ themes, Mark Brooks gave us a 10 minute presentation covering the 20 years he has worked in the online dating business. Tinder was a game changer because swiping is fun, automatic, a game – system one all over. When you think about it, the paradigm shift it introduced is obvious: almost overnight, completing a match.com profile feels like writing your UCAS form, system 2, yawn. He flicked past his market share chart so I googled this one. Wow.

8) Facebook dating is the next game-changer

Facebook are launching a dating service imminently. It can prevail because it addresses the three prevailing challenges dating sites face.

  • The feedback problem: sites don’t know when they have been successful. People just leave the site. Facebook will know who, when, and how long resulting relationships are.
  • The limited information problem: matching based on what people say they want rather than what is important. Facebook has every conceievable attitudinal, behavioural and psychographic dataset.
  • The continuity problem: you do a good job and you lose your customers. A peverse incentive. Brooks thinks the future of dating sites is to move from helping you “keep it together” not just get it together – helpful nudges and relationship support (like “it’s your anniversary, why not try this place she likes…”)

9) Human intelligence is collective, not individual

John Kay discussed evolutionary biology, giving us comparative insights into our species. Consider the comparative development of primates: two chimpanzees don’t do so much as carry a log together. Humans can build Airbuses: coordinating tens of thousands across continents in an act of decentralised wonder. No single person could achieve this, only the collective working together. That is the nature of human intelligence, not found in any other mammal species. It is what makes us different. A conference is collective intelligence in action.

10) Business coaches are using behavioural science to help people in the workplace

Caroline Webb, author of the bestselling How to Have a Good Day discussed how under stress you switch to a mode of selective attention. Information automatically and unconsciously gets filtered. We’re not aware of this process by definition (that’s the whole point – it’s a survival mechanism!)

The kicker: under stress you notice things that are already top of mind for you: so if you are in a crap frame of mind, you’ll not be picking up positive cues. This is confirmation bias writ large.

You can solve this by consciously resetting your perceptual filters, boosting your sense of competence and control:

  • What do I know for sure? (e.g. I have speaker notes for my talk)
  • What can I shape or control? (e.g. my attitude)
  • What are some ‘no regrets’ actions? (e.g. I can still make my train if I leave now)

11) You can hack your future memories: apply the peak end rule

The peak end rule says we tend to remember an experience according to its most intense moment and the way it ends, rather than the experience in its entirety. You have control over how your day ends: just think about 3 good things that happened that day to manufacture your memories. In Webb’s words: “The way you remember your days is the way you remember your life” What could be more important than this?

Takeaway: why not apply this at the end of a workshop or debrief: what are the 3 things you have learned today?

All great stuff. Thanks to Ogilvy for organising. Time for a lie down.

Folkestone

Folkestone’s faded Victorian grandeur

Posted in Behavioural Economics, Conferences, Consumer Psychology, Events, Market Research, Marketing, Marketing Research | Tagged , , , , , , , , , , , | 4 Comments