Astute marketers have long recognized the value of tapping into the psychological aspects of human decision making and behavior. The use of behavioral economics principles in marketing has become a popular topic in recent years. Numerous books on the subject have now been published, and it's been frequently discussed in webinars and conference presentations.
One of the more entertaining treatments of the subject is Alchemy: The Dark Art and Curious Science of Creating Magic in Brands, Business, and Life (HarperCollins, 2019). Alchemy was written by Rory Sutherland, the Vice Chairman of Ogivly (UK) and the co-founder of Ogivly's behavioral science practice.
Writing a review of Alchemy is challenging because Sutherland covers a lot of ground in the book and touches on many points only briefly. Another reviewer provided an apt description of the book when he wrote:
"The ideas that underpin the book are broadly based on behavioural economics and cognitive science, with bits of evolutionary theory, statistics and old-fashioned advertising intuition thrown in . . . Rory's style is discursive: an after-dinner talk of anecdotes, dismantling of conventional wisdom, ever-so-slightly outrageous assertions, and the periodic emergence of abstract wisdom in the third paragraph of a mid-chapter page."
Despite Sutherland's discursive style, his overall objective in Alchemy is clear. He is attempting to persuade readers that relying exclusively on the rational model of human decision making is a mistake. He clearly states his basic thesis in the Prologue of the book:
"Unfortunately, because reductionist logic has proved so reliable in the physical sciences, we now believe it must be applicable everywhere - even in the much messier field of human affairs . . . But what if this approach is wrong? What if, in our quest to recreate the certainty of the laws of physics, we are too eager to impose the same consistency and certainty in fields where it has no place?"
What's In the Book
Like many books about the use of behavioral science in business, Alchemy describes the flaws of the rational model of human decision making and behavior.
But in addition, Sutherland focuses on the problems caused by the over-reliance on logic and rationality. He forcefully argues that an exclusive reliance on logic and rationality can prevent business and marketing leaders from making valuable discoveries. He writes:
"It is only when we abandon a narrow logic and embrace an appreciation of psycho-logical value, that we can truly improve things. Once we are honest about the existence of unconscious motivations, we can broaden our possible solutions. It will free us to open up previously untried spaces for experimentation in resolving practical problems if we are able to discover what people really, really want, rather than a) what they say they want or b) what we think they should want."
In the second half of Alchemy, Sutherland discusses some of the major reasons why human behavior often departs from what would generally be considered to be conventional rationality. For example, Sutherland devotes several chapters to each of the following topics:
Signaling - ". . . the need to send reliable indications of commitment and intent, which can inspire confidence and trust."
Subconscious Hacking (Signaling to Ourselves) - How humans use placebos to influence their own attitudes and behaviors.
Satisficing - The tendency of humans to make "good enough" choices rather than trying to make perfect choices. Sutherland discusses why - in most cases anyway - people are better off being approximately right than precisely wrong.
Psychophysics - Psychophysics is the study of the relationship between stimuli and the sensations and perceptions those stimuli evoke. In this part of Alchemy, Sutherland argues that nothing about perception is completely objective. He also contends that in many endeavors, its impossible to define success except in terms of the resulting human behaviors. Therefore, perception, rather than reality, is what determines success in those types of endeavors.
I thoroughly enjoyed reading Alchemy, and I believe the book would benefit anyone involved in marketing, sales, business management and even public policy development. Sutherland's approach and style are entertaining, and the book is filled with examples and anecdotes that illustrate his points.
But while I can enthusiastically recommend Alchemy, I must also say that I disagree with Sutherland's premise that business and marketing success often require leaders to ignore or abandon logic and rationality and pursue "magical" solutions.
My argument is that because of advances in the behavioral sciences, we now have a better and more complete scientific understanding of how humans make decisions and what influences their behavior. More specifically, those advances have clearly shown that human decision making isn't always or only rational. And most importantly, those advances have demonstrated that people often think and act in ways that are predictably irrational.
Given the advances in our scientific understanding of human decision making and behavior, it would be illogical for marketers not to apply that knowledge when crafting marketing strategies and designing marketing programs. So in other words, marketing success doesn't depend on "magic," but on the rational application of behavioral science principles that describe the irrational aspects of human nature.