Insights from Alchemy

An ongoing series where I share a “Business Playlist” of articles that made me think in the hope that you find them valuable also.

This week: Insights from the book Alchemy by Rory Sutherland. Hat tips to big thinkers Tom Morgan and Jim OShaughnessy. 

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Insights from “Alchemy”

In this article, one of my favorite bloggers, Tom Morgan shares his insights from Rory Sutherland’s book, Alchemy: The Dark Art and Curious Science of Creating Magic in Brands, Business and Life

I read Rory’s book earlier this year and find his take on marketing and human psychology to be refreshing and provocative. I also seek out any podcast interviews he gives (because he’s hilarious!). 

Tom’s article highlights how an over-reliance on rationality and algorithms can prevent managers from having breakthrough insights. His overarching recommendation is to carve out time and space to ponder counterintuitive ideas, conduct experiments, and allow mental alchemy to flourish.   

From Tom: “Our economy and culture has over-emphasized the quantifiable and intellectual. There is immense value from looking at behavioral and “irrational.” Evolutionary psychology is a great place to start, as it’s often evolutionary leaps that have determined some of the greatest breakthroughs in history.”

And, “Above Dunbar’s Number of 150 people, organizational incentives tend to shift into politics from innovation.”

Rory Sutherland’s Rules of Alchemy:

  1. The opposite of a good idea can also be a good idea.
  2. Don’t design for average.
  3. It doesn’t pay to be logical if everyone else is being logical.
  4. The nature of our attention affects the nature of our experience.
  5. A flower is simply a weed with an advertising budget.
  6. The problem with logic is that it kills off magic.
  7. A good guess which stands up to observation is still science. So is a lucky accident.
  8. Test counterintuitive things only because no one else will.
  9. Solving problems using rationality is like playing golf with only one club.
  10. Dare to be trivial. If there were a logical answer, we would have found it.

Quotes from Rory’s book.  

“The people at the top of organizations are largely rational decision-makers who are naturally disparaging of psychological solutions.”

“Metrics, and especially averages, encourage you to focus on the middle of a market, but innovation happens at the extremes.”

“The single best investment ever made by the London Underground in terms of increasing passenger satisfaction was not to do with money spent on faster, more frequent trains – it was the addition of dot matrix displays on platforms to inform travelers of the time outstanding before the next train arrived.”

“The need to appear scientific in our methodology may prevent us from considering other, less logical and more magical solutions, which can be cheap, fast-acting and effective.”

“Entrepreneurs are disproportionately valuable precisely because they are not confined to doing only those things that make sense to a committee. Interestingly, the likes of Steve Jobs, James Dyson, Elon Musk and Peter Thiel often seem certifiably bonkers”

“Not everything that makes sense works, and not everything that works makes sense.”

“More data leads to better decisions. Except when it doesn’t.”

“The need to rely on data can also blind you to important facts that lie outside your model.”

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Hat tip to Jim O’Shaughnessy who clued me into Tom Morgan, and who has interviewed both Tom and Rory on his excellent podcast, Infinite Loops

Check out Tom’s articles, Rory’s book, and Jim’s podcast. They all make me think!

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Until next time…
Stephen

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