Alchemy by Rory Sutherland | Book Summary
Title: Alchemy: The Surprising Power of Ideas That Don’t Make Sense
Author: Rory Sutherland
Genre: Behavioral Economics
Finished: February 2021
Published: 2018
🚀 The Book in 3 Sentences
Just because something is rationally sound, doesn’t mean it’s right.
In most areas of life, it’s the perception of the thing that counts, rather than the thing itself.
The most optimal solution to a problem comes from exploring it from all angles, not just the predetermined rational, mathematical, or ‘reasonable’ metrics by which we tend to narrowly view success.
🎨 Impressions
I pretty much love everything Rory Sutherland writes or says, so I knew I was going to enjoy this book. Alchemy covers ground that he has explored before and from what I can tell, this work stands as a good overview of his most important ideas. I believe Rory is at his best when he applies multiple perspectives to a particular problem, behavior, or situation. All delivered in his signature irreverent voice and personality, this was a really fun and enlightening read.
The most interesting parts of the book for me were the sections on satisficing and psychophysics.
Satisficing refers to the behaviors that prioritize the least undesirable option available (as opposed to ‘maximising’, which seeks the most optimal option and is rarely used in day to day purchase decisions). Rory quotes copywriter Joel Raphaelson: “When we choose between two brands, we aren’t choosing which one is definitively the best, but which one we are more sure is good.”
Psychophysics is the term Rory uses to describe the relationship between our perception of reality and our behavior (and how that perception is more important than reality itself). Here, he gives a personal example of his father, who was reluctant to spend £17 a month on a paper subscription. When Rory translated that into 50p a day, he was much more amenable to the idea.
Sometimes I think the argument can get lost amongst the definitions of ‘reason’, ‘rationality’, ‘logic’, and other such terms. At times I couldn’t help but feeling like an emotional motivation that drives human behavior is still a ‘reason’. For example, Rory recounts the invention of the sandwich. As the story goes, the Earl of Sandwich invented the sandwich because he needed a food that he wouldn’t have to leave the gambling table for. This strikes me as both a rational motivation and creative solution.
A quote from Nassim Taleb, an admired friend of Rory’s came to my mind when reflecting on this point and the overall takeaway from the book:
"If something looks irrational — and has been so for a long time — odds are you have a wrong definition of rationality.” - Nassim Taleb
📚 Who Should Read It
This book is for anyone who wants to see the world of marketing or business a little bit differently. Rory’s voice is so charismatic that I think most people who come across this book would really enjoy it.
☘️ How This Book Changed Me
It definitely has motivated me to apply more perspectives and lateral thinking to the problems in my own work.
🕵️♂️ How I Discovered It
Through being a fan of Rory's.
✍️ My Top Three Quotes
It may help to think of life as a bit like a criminal investigation. A beautifully linear and logical narrative when viewed in retrospect, but a fiendishly random, messy, and wasteful process when experienced in real time.
Behaviour does not map nearly onto reality, because perception is what determines how people behave. By changing what people pay attention to, you can change the value of something.
Nurture a fear of the obvious and embrace the imaginative.
💡 Key Points
Rory’s Guide on How to Be an Alchemist
Give people a reason to be optimistic
The difference between sour grapes and sweet lemons: people will naturally leverage a positive narrative if you provide it to them. After all, regret minimisation requires a plausible narrative!
“There is nothing either good or bad, but thinking makes it so.” - Shakespeare
Examples:
Reframe the airport bus from a time-wasting inconvenience to a convenience that takes you all the way to the baggage claim, so you month have to walk.
Make an office lottery equitable by using the university room allocation system: whoever gets the best office gets the worst parking spot and vice versa.
Be up front about your limitations and people will rationalise it for you. Some great slogans convey an implicit negative or acknowledge a trade off:
Avis We Try Harder
Stella Artois Reassuringly Expensive
Marmite you love it or you hate it
Harley Davidson A Completely Irresponsible Thing To Do
What works at a small scale will work at a large one
People would rather make a sub-optimal choice as a collective than risk utter failure going it alone, even if the rewards are greater too
There are more pairs of eyes watching for predators i.e. more people on the same pension means there are more safety checks if something goes wrong
Find different expressions for the same thing
£17 a month = 50p a day, but it’s expressed very differently. See also, the Sainsbury’s Try Something New Today case study: ‘Increase average basket by £1.17 per visit’, as opposed to ‘Grow the business by £3bn over three years’...
Create gratuitous choices
As long as the choices are not painful or difficult, this will give people more ownership over their decisions and they will feel better about making them. It’s harder to like something when you haven’t chosen it.
Be Unpredictable
Being rational makes you predictable! Nurture a fear of the obvious, and embrace the imaginative.
Don’t be afraid to be trivial
Best Buy’s $300m button: ‘Sign up for a Best Buy account or just proceed straight to checkout’. The button story shows us that what is important is not the actions the customer performs, but the order in which they take them.
People are more than happy to register for an account after they have achieved their goal of purchasing the item. Depending on the context, typing your address can feel good or bad: getting my item delivered vs adding myself to a database of spam marketing.
Drayton Bird, Rory’s copywriter colleague, argues that paying attention to trivial things is not necessarily a waste of time. No one complained Darwin was being trivial comparing the beaks of finches, because the conclusions drawn were so interesting.
🤓 Further Reading
Nassim Taleb’s Black Swan and Antifragile.
