Alchemy: The Dark Art and Curious Science of Creating Magic in Brands, Business, and Life

by Rory Sutherland

And by doing so they launched a soft drinks brand that would indeed go on to be a worthy rival to Coca-Cola: that drink was Red Bull. When I say that Red Bull ‘tastes kind of disgusting’, this is not a subjective opinion.* No, that was the opinion of a wide cross-section of the public. Before Red Bull launched outside of Thailand, where it had originated, it’s widely rumoured that the licensee approached a research agency to see what the international consumer reaction would be to the drink’s taste; the agency, a specialist in researching the flavouring of carbonated drinks, had never seen a worse reaction to any proposed new product.

The mythical ‘butterfly effect’ does exist, but we don’t spend enough time butterfly hunting. Here are some recent butterfly effect discoveries, from my own experience: A website adds a single extra option to its checkout procedure – and increases sales by $300m per year. An airline changes the way in which flights are presented – and sells £8m more of premium seating per year. A software company makes a seemingly inconsequential change to call-centre procedure – and retains business worth several million pounds. A publisher adds four trivial words to a call-centre script – and doubles the rate of conversion to sales. A fast-food outlet increases sales of a product by putting the price . . . up. All these disproportionate successes were, to an economist, entirely illogical. All of them worked. And all of them, apart from the first, were produced by a division of my advertising agency, Ogilvy, which I founded to look for counter-intuitive solutions to problems. We discovered that problems almost always have a plethora of seemingly irrational solutions waiting to be discovered, but that nobody is looking for them; everyone is too preoccupied with logic to look anywhere else. We also found, rather annoyingly, that the success of this approach did not always guarantee repeat business; it is difficult for a company, or indeed a government, to request a budget for the pursuit of such magical solutions, because a business case has to look logical.

When you demand logic, you pay a hidden price: you destroy magic. And the modern world, oversupplied as it is with economists, technocrats, managers, analysts, spreadsheet-tweakers and algorithm designers, is becoming a more and more difficult place to practise magic – or even to experiment with it. In what follows, I hope to remind everyone that magic should have a place in our lives – it is never too late to discover your inner alchemist.

In most corporate settings, if you suddenly asked ‘Why do people clean their teeth?’ you would be looked at as a lunatic, and quite possibly unsafe. There is after all an official, approved, logical reason why we clean our teeth: to preserve dental health and reduce cavities or decay. Move on. Nothing to see here. But, as I will explain later in this book, I don’t think that’s the real reason. For instance, if it is, why are 95 per cent of all toothpastes flavoured with mint?

Robert Zion, the social psychologist, once described cognitive psychology as ‘social psychology with all the interesting variables set to zero’. The point he was making is that humans are a deeply social species (which may mean that research into human behaviour or choices in artificial experiments where there is no social context isn’t really all that useful). In the real world, social context is absolutely critical. For instance, as the anthropologist Pierre Bourdieu observes, gift giving is viewed as a good thing in most human societies, but it only takes a very small change in context to make a gift an insult rather than a blessing; returning a present to the person who has given it to you, for example, is one of the rudest things you can do. Similarly, offering people money when they do something you like makes perfect sense according to economic theory and is called an incentive, but this does not mean you should try to pay your spouse for sex.*

This book is not an attack on the many healthy uses of logic or reason, but it is an attack on a dangerous kind of logical overreach, which demands that every solution should have a convincing rationale before it can even be considered or attempted. If this book provides you with nothing else, I hope it gives you permission to suggest slightly silly things from time to time. To fail a little more often. To think unlike an economist. There are many problems which are logic-proof, and which will never be solved by the kind of people who aspire to go to the

Being slightly bonkers can be a good negotiating strategy: being rational means you are predictable, and being predictable makes you weak. Hillary thinks like an economist, while Donald is a game theorist, and is able to achieve with one tweet what would take Clinton four years of congressional infighting. That’s alchemy; you may hate it, but it works.

And what is the single most important finding of the advertising industry? Perhaps it is that ‘advertisements featuring cute animals tend to be more successful than ads that don’t’.

Behavioural economics is an odd term. As Warren Buffett’s business partner Charlie Munger once said, ‘If economics isn’t behavioural, I don’t know what the hell is.’ It’s true: in a more sensible world, economics would be a subdiscipline of psychology.* Adam Smith was as much a behavioural economist as an economist – The Wealth of Nations (1776) doesn’t contain a single equation. But, strange though it may seem, the study of economics has long been detached from how people behave in the real world, preferring to concern itself with a parallel universe in which people behave as economists think they should. It is to correct this circular logic that behavioural economics – made famous by experts such as Daniel Kahneman, Amos Tversky, Dan Ariely and Richard Thaler – has come to prominence. In many areas of policy and business there is much more value to be found in understanding how people behave in reality than how they should behave in theory.

Evolution is like a brilliant uneducated craftsman: what it lacks in intellect it makes up for in experience.

So there are logical problems, such as building a bridge. And there are psycho-logical ones: whether to paint the lines on the road or not. The rules for solving both are different; just as I make a distinction between nonsense and non-sense, I also use a hyphen to distinguish between logical and psycho-logical thinking. The logical and the psycho-logical approaches run on different operating systems and require different software, and we need to understand both. Psycho-logic isn’t wrong, but it cares about different things and works in a different way to logic. Because logic is self-explanatory, our preference is to use it in all social and institutional settings, even where it has no place. The result is that we end up using inappropriate software for the operating system, neglecting the psycho-logical approach.

The reason we don’t always behave in a way which corresponds with conventional ideas of rationality is not because we are silly: it is because we know more than we know we know. I did not decide to travel to the airport by back roads because I had calculated the level of variance in journey time – I did it instinctively, and was only aware of my unconscious reasoning in retrospect. ‘The heart has reasons of which reason knows nothing,’ as Pascal put it.*

seems astonishing now, but the predictions of the future I read as a child assumed that meals would be replaced by parcels of nutrients consumed in handy tablet form – it was for some reason thought that the purpose of food was to provide the necessary minerals, vitamins, protein and energy, and that the job of the food industry was to supply them in as efficient a form possible. Some forward-thinking people had defined food’s function narrowly, in order to create a rational model of what the food industry should do.* In this focus on scale and efficiency, people lost sight of what food is for; while it is, of course, a form of nourishment, it also serves a host of other ends. The proponents of delivering food in pill form had lost sight of the fact that it is enjoyable to eat and a necessary prop at social occasions.* Even if such pills could be produced, it is perfectly plausible that people who ate only such food would be utterly miserable.

Food has become remarkably inefficient, and the pill-promoting futurists of the 1960s would be astonished to see how wrong they were. People spend hours preparing it, eating it and watching television programmes about it. People cherish local ingredients, and willingly pay a premium for foods produced without chemical fertilisers. By contrast, when we made the food industry logical, we lost sight of the reasons we value food at all.

Using this as a metaphor, I would like to see the improvement we have enjoyed in food over the last three decades applied to other fields. 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.

Let me give a simple example. The Uber map is a psychological moonshot, because it does not reduce the waiting time for a taxi but simply makes waiting 90 per cent less frustrating. This innovation came from the founder’s flash of insight (while watching a James Bond film, no less*) that, regardless of what we say, we are much bothered by the uncertainty of waiting than by the duration of a wait. The invention of the map was perhaps equivalent to multiplying the number of cabs on the road by a factor of ten – not because waiting times got any shorter, but because they felt ten times less irritating.

I am willing to bet that there are ten times as many people on the planet who are currently being paid to debate why people prefer Coke or Pepsi than there are being paid to ask questions like ‘Why do people request a doctor’s appointment?’, ‘Why do people go to university?’ or ‘Why do people retire?’ The answers to these last three questions are believed to be rational and self-evident, but they are not.

You will never uncover unconscious motivations unless you create an atmosphere in which people can ask apparently fatuous questions without fear of shame. ‘Why do people hate waiting for an engineer’s appointment?’ ‘Why do people not like it when their flight is delayed?’ ‘Why do people hate standing on trains?’ All of these questions seem facile – and because of this, our rationalising brains find it dangerously easy to come up with a plausible answer. But just because there is a rational answer to something, it doesn’t mean that there isn’t a more interesting, irrational answer to be found in the unconscious.

Even stranger than our teeth-brushing behaviour is our preference for stripy toothpaste. When it first appeared, in a product called Stripe, it aroused a great deal of debate over how it was made. Many people dissected the empty container; others froze a full tube and then cut it open in a cross section.* What was strange was that nobody ever asked ‘Why?’ After all, the moment toothpaste enters your mouth, all the ingredients are mixed together, so what was the point of keeping them separate in the tube? There are two explanations: 1) simple childish novelty and 2) psycho-logic. Psychologically, the stripes serve as a signal: a claim that a toothpaste performed more than one function (fighting cavities, tackling infection and freshening breath) was thought to be more convincing if the toothpaste contained three visibly separate active ingredients. In general, people are impressed by any visible extra effort that goes into a product: if you simply say ‘this washing powder is better than our old powder’, it is a hollow claim. However, if you replace the powder with a gel, a tablet or some other form, the cost and effort which have gone into the change make it more plausible to the purchaser there may have been some real innovation in the new contents.

Imagine you came home to find a dog turd on the floor of your kitchen; you would find it repellent, and would remove it immediately. Having disposed of it, you would wipe the floor with water and detergent, and if I asked you why you were doing those things, you would answer ‘because it’s unhygienic, of course; it’s a source of germs’. But here’s the thing; an early Victorian would have experienced exactly the same emotions and performed exactly the same actions, but they didn’t know about germs. They were, technically speaking, irrational in their dislike of faeces, which was ‘purely emotional’. Nowadays, if someone started flinging faeces around, we would describe him as a public-health hazard, while in the eighteenth century they would have called the practice ‘ungodly’ and in the fifteenth they might have burned him at the stake. So the dislike of faeces was not originally based on sound reasoning – it was rather a sound instinct the reason for which had not yet been discovered.

Metrics, and especially averages, encourage you to focus on the middle of a market, but innovation happens at the extremes. You are more likely to come up with a good idea focusing on one outlier than on ten average users. We were discussing this recently in a meeting when a round of sandwiches arrived. ‘This proves my point exactly,’ I said, pointing at the food. The sandwich was not invented by an average eater. The Earl of Sandwich was an obsessive gambler, and demanded food in a form that would not require him to leave the card table while he ate. Weird consumers drive more innovation than normal ones. By contrast, it is perfectly possible that conventional market research has, over the past fifty years, killed more good ideas than it has spawned, by obsessing with a false idea of representativeness.

It wouldn’t matter much if only Goldman Sachs, say, or a few elite institutions used this criterion, but when everyone else copies the same approach, it is ludicrous. Since almost half of graduates should by definition fall below this hurdle, it will either result in thousands of people spending three years at university for no benefit or to grade inflation in universities, with degree classes becoming meaningless.* This is another example of people not using reason to make better decisions, but simply for the appearance of being reasonable.

Real excellence can come in odd packaging. Nassim Nicholas Taleb applies this rule to choosing a doctor: you don’t want the smooth, silver-haired patrician who looks straight out of central casting – you want his slightly overweight, less patrician but equally senior colleague in the ill-fitting suit. The former has become successful partly as a result of his appearance, the latter despite it.

Some evolutionary psychologists, most notably Robert Kurzban, believe that racial prejudice is a relatively weak force in human psychology since for most of evolutionary history we wouldn’t have encountered people of a different ethnicity. We might, rather, be heavily predisposed to attaching ‘outsider status’ to people who speak with a different accent to us, since such distinctions would have been experienced more frequently. Coming from a country that historically was obsessed with accents,* this does seem worth investigating. Would a privately educated Nigerian be at a disadvantage in seeking a job in London in competition with a white Liverpudlian with a strong Scouse accent? I rather doubt it. Kurzban’s work suggests that prejudice depends on context; we may be more prone to ascribe ‘outsider status’ to someone of a different ethnic background, but this does not mean that we cannot easily adopt anyone of any ethnic background into an ‘in group’ in a different setting.

Geim says of his approach to science: ‘I jump from one research subject to another every few years. I do not want to study the same stuff “from cradle to coffin”, as some academics do. To be able to do this, we often carry out what I call “hit-and-run experiments”, crazy ideas that should never work and, of course, they don’t in most cases. However, sometimes we find a pearl . . . This research style may sound appealing but it is very hard psychologically, mentally, physically, and in terms of research grants, too. But it is fun.’

One astonishing possible explanation for the function of reason only emerged about ten years ago: the argumentative hypothesis* suggests reason arose in the human brain not to inform our actions and beliefs, but to explain and defend them to others. In other words, it is an adaptation necessitated by our being a highly social species. We may use reason to detect lying in others, to resolve disputes, to attempt to influence other people or to explain our actions in retrospect, but it seems not to play the decisive role in individual decision-making.

Has business abandoned its traditional and socially useful role, where competing businesses tested divergent theories of how best to satisfy customer needs, with the market passing judgement on their efforts? It sometimes seems to have been reduced to a kind of monotheistic religion of efficiency where, provided you can recite the approved managerial mantras about economies of scale and cost savings to your financial overlords, no further questions will be asked.

The theory is that free markets are principally about maximising efficiency, but in truth, free markets are not efficient at all. Admiring capitalism for its efficiency is like admiring Bob Dylan for his singing voice: it is to hold a healthy opinion for an entirely ridiculous reason. The market mechanism is loosely efficient, but the idea that efficiency is its main virtue is surely wrong, because competition is highly inefficient. Where I live, I can buy groceries from about eight different places; I’m sure it would be much more ‘efficient’ if Waitrose, M&S, Lidl and the rest were merged into one huge ‘Great Grocery Hall of The People’.

Later on, economists got their own version of the same depressing idea that nothing can be created or destroyed. ‘There’s no such thing as a free lunch,’ they said. The sad consequence is that no one believes in magic any more. Yet magic does still exist – it is found in the fields of psychology, biology and the science of perception, rather than in physics and chemistry. And it can be created.

If you think that’s impossible, look at the paper money in your wallet or purse; the value is exclusively psychological. Value resides not in the thing itself, but in the minds of those who value it. You can therefore create (or destroy) value it in two ways – either by changing the thing or by changing minds about what it is.

But surely this kind of alchemy no longer works today? Well, have you ever eaten Chilean sea bass?* It is the product of a particular sort of alchemy, ‘The Alchemy of Semantics’. The $20 slice of fish that graces plates in high-end restaurants under the name ‘Chilean sea bass’ actually comes from a fish that for many years was known as the Patagonian toothfish. No one is going to pay $20 for a plate of Patagonian toothfish – call it Chilean sea bass, however, and the rules change. An American fish wholesaler called Lee Lentz had the idea, even though, strictly speaking, most of the catch doesn’t come from Chile and the toothfish isn’t even related to the bass.

Klawe, a computer scientist and mathematician, was appointed president of Harvey Mudd College in California. At the time, only 10 per cent of the college’s computer science majors were women. The department devised a plan, aimed at luring in female students and making sure they actually enjoyed their computer science initiation, in the hopes of converting them to majors. A course previously entitled ‘Introduction to programming in Java’ was renamed ‘Creative approaches to problem solving in science and engineering using Python’.* The professors further divided the class into groups – Gold for those with no coding experience and Black, for those with some coding experience.* They also implemented Operation Eliminate the Macho Effect, in which males who showed off in class were taken aside and told to desist. Almost overnight, Harvey Mudd’s introductory computer science course went from being the most despised required course to the absolute favourite.

Once you can casually ask, ‘Who’s going to be the DD on Friday?’ it’s easy to see how this behaviour becomes much easier to adopt, and it’s also much easier for the sober person to defend their sobriety when anyone offers them a drink. In Belgium and the Netherlands, he (or she) simply explains I can’t drink tonight, I’m Bob’ – a Dutch acronym* for Bewust Onbeschonken Bestuurder or ‘deliberately sober driver’. In both cases, creating a name for a behaviour implicitly creates a norm for it.

The lionfish comes from the tropical waters around Indonesia. Though beautiful to look at, it is a voracious predator of other fish, and is able to eat as many as 30 in half an hour. Furthermore, one female lionfish can produce over two million eggs per year, which was a particular problem in the Caribbean, where it has no natural predators. The decimation of local species threatened the environment and the economics of Colombia, much of which depends on fishing. It was also destroying the ecology of coral reefs. This was when some colleagues of mine borrowed an idea from Frederick the Great; Ogilvy & Mather in Bogotá decided that the solution was to create a predator for the lionfish – humans. The simplest and most cost-effective way to rid Colombia’s waters of lionfish was to encourage people to eat them, which would encourage anglers to catch them. The agency recruited the top chefs in Colombia and encouraged them to create lionfish recipes for the best restaurants. As they explained, a lionfish is poisonous on the outside but delicious on the inside, so they created an advertising campaign titled ‘Terribly Delicious’. Working with the Colombian Ministry of the Environment, they generated a cultural shift by turning the invader into an everyday food. Lionfish soon appeared in supermarkets. Some 84 per cent of Colombians are Roman Catholic, so they asked the Catholic Church to recommend lionfish to their congregations on Fridays and during Lent. That additional element –...

A knowledge of the human physique is considered essential in designing a chair, but a knowledge of human psychology is rarely considered useful, never mind a requirement, when someone is asked to design a pension scheme, a portable music player or a railway. Who is the Herman Miller of pensions, or the Steve Jobs of tax-return design? These people are starting to emerge – but it has been a painfully long wait. If there is a mystery at the heart of this book, it is why psychology has been so peculiarly uninfluential in business and in policy-making when, whether done well or badly, it makes a spectacular difference.

To anyone born after 1975 there is nothing outlandish about people walking around or sitting on a train wearing headphones, but in the late 1970s this was a very odd behaviour indeed; comparable to the use of an early cellphone in the late 1980s, when to use one in public carried a high risk of ridicule.* In market research, the Walkman aroused very little interest and quite a lot of hostility. ‘Why would I want to walk about with music playing in my head?’ was a typical response, but Morita ignored it. The request for the Walkman had initially come from the 70-year-old Ibuka, who wanted a small device to allow him to listen to full-length operas on flights between Tokyo and the US.*

The technology involved,* given the economics of mass production, would have added no more than a few pounds to the final purchase price, so why would you not add this significant extra?* Any ‘rational’ person would have advised Morita to go with the engineers’ advice, but according to multiple accounts, Morita vetoed the recording button. This defies all conventional economic logic, but it does not defy psycho-logic. Morita thought the presence of a recording function would confuse people about what the new device was for. Was it for dictation? Should I record my vinyl record collection onto cassette? Or should I record live music? In the same way that McDonald’s omitted cutlery from its restaurants to make it obvious how you were supposed to eat its hamburgers, by removing the recording function from Walkmans, Sony produced a product that had a lower range of functionality, but a far greater potential to a change behaviour.

‘The term affordance refers to the perceived and actual properties of the thing, primarily those fundamental properties that determine just how the thing could possibly be used. [. . .] Affordances provide strong clues to the operations of things. Plates are for pushing. Knobs are for turning. Slots are for inserting things into. Balls are for throwing or bouncing. When affordances are taken advantage of, the user knows what to do just by looking: no picture, label, or instruction needed.’

mentioned earlier in this book that there are five main reasons why human behaviour often departs from what we think of as conventional rationality. The first of these is signalling, the need to send reliable indications of commitment and intent, which can inspire confidence and trust. Cooperation is impossible unless a mechanism is in place to prevent deception and cheating; some degree of efficiency often needs to be sacrificed in order to convey trustworthiness or to build a reputation.

This distinction matters a great deal. Unlike short-term expediency, long-term self-interest, as the evolutionary biologist Robert Trivers has shown, often leads to behaviours that are indistinguishable from mutually beneficial cooperation. The reason the large fish does not eat its cleaner fish is not because of altruism but because over the long-term, the cleaner fish is more valuable to it alive than dead. The cleaner fish in turn could cheat by ignoring the ectoparasites and eating bits of the host fish’s gills instead, but its long-term future is better if the big fish becomes a repeat customer.* What keeps the relationship honest and mutually beneficial is nothing other than the prospect of repetition.

The advertisements which bees find useful are flowers – and if you think about it, a flower is simply a weed with an advertising budget.

Think about it. There are some phrases that just wouldn’t appear in the English language:* ‘I chose not to be angry.’ ‘He plans to fall in love at 4.30pm tomorrow.’ ‘She decided that she was no longer to feel uneasy in his presence.’ ‘From that moment on, she determined no longer to be afraid of heights.’* ‘He decided to like spiders and snakes.’ Things like this are not under our direct control, but are rather the product of instinctive and automatic emotions. There is a good evolutionary reason why we are imbued with these strong, involuntary feelings: feelings can be inherited, whereas reasons have to be taught, which means that evolution can select for emotions much more reliably than for reasons. To ensure your survival, it is much more reliable for evolution to give you an instinctive fear of snakes at birth than relying on each generation to teach its offspring to avoid them. Things like this aren’t in our software – they are in our hardware.

In the words of Jonathan Haidt,* ‘The conscious mind thinks it’s the Oval Office, when in reality it’s the press office.’ By this he means that we believe we are issuing executive orders, while most of the time we are actually engaged in hastily constructing plausible post-rationalisations to explain decisions taken somewhere else, for reasons we do not understand. But the fact that we can deploy reason to explain our actions post-hoc does not mean that it was reason that decided on that action in the first place, or indeed that the use of reason can help obtain it.

Imagine an alien species with the power to fall asleep at will – they would regard human bedtime behaviour as essentially ridiculous. ‘Rather than just going to sleep, they go through a strange religious ritual,’ an alien anthropologist would remark. ‘They turn off lights, reduce all noise to a minimum and then remove the seven decorative cushions which for no apparent reason are placed at the head of the bed.* Then they lie in silence and darkness, in the hope that sleep descends upon them. And rather than simply waking up when they wish, they program a strange machine which sounds a bell at an appointed time, to nudge them back into consciousness. This seems ridiculous.’ Similarly, imagine an alien species that could decide how happy it wanted to be. They would regard the entire human entertainment industry as a spectacular economic waste.

The Netflix documentary Sour Grapes is a fascinating insight into this world. A crooked, though brilliant, Indonesian wine connoisseur called Rudy Kurniawan was able to replicate great burgundies by mixing cheaper wines together, before faking the corks and the labels. He was rumbled only when he attempted to fake wines from vintages that did not exist. I am told that it is possible to detect a forged Kurniawan wine by analysing the labels, but not by tasting the wine. I hate to say this, but Rudy was an alchemist. Several experts I have talked to in the high-end wine business regard their own field as essentially a placebo market; one of them admitted that he was relatively uninterested in the products he sold and would sneak off and fetch a beer at premium tastings of burgundies costing thousands of pounds a bottle. Another described himself as ‘the eunuch in the whorehouse’ – someone who was valuable because he was immune to the charms of the product he promoted.

At some point, we have to ask a vital question: do these various things work despite the fact that they are illogical, or do they work precisely because they are? And if our unconscious instincts are programmed to respond to and to generate behaviours precisely because they deviate from economic optimality, what might be the evolutionary reason for this? It seems rather like the lesson that is taught to aspiring journalists: ‘Dog Bites Man’ is not news, but ‘Man Bites Dog’ is. Meaning is disproportionately conveyed by things that are unexpected or illogical, while narrowly logical things convey no information at all. And this brings us full circle, to the explanation of costly signalling. Part 5: Satisficing

The types of intelligence prized by education and by evolution seem to be very different. Moreover, the kind of skill that we tend to prize in many academic settings is precisely the kind that is easiest to automate. Remember, your GPS is computationally much more capable than you are. Here’s a typical school maths question: Two buses leave the same bus station at noon. One travels west at a constant 30mph, while the other travels north at a constant 40mph. At what time will the buses be 100 miles apart?* Here’s a typical real-life problem: I need to catch a plane leaving Gatwick at 8am. Should I get there by train, taxi or car? And at what time should I leave the house? The odd thing about the human mind is that many people would find the first question difficult, and the second easy, yet the second question is computationally far more complex. This says more about the evolution of our brains than the difficulty of the problem. The reason is that the first question is tailor-made for computation, being what you might call a ‘narrow context’ problem. It assumes an artificially simplified, regularised world (where buses miraculously travel at a constant speed), it involves very few variables (all of which are numerically expressible, and allow for no ambiguity) and it has one single, incontrovertibly correct answer. The question of how to get to Gatwick is what you might call a ‘wide context’ problem. It allows for vagueness and multiple right answers, and it doesn’t demand...

Problem solving

Like bees with flowers, we are drawn to reliable signals of honest intent, and we choose to do business where those signals are found. This explains why we generally buy televisions from shops rather than from strangers on the street – the shop has invested in stock, it has a stable location and it is vulnerable to reputational damage. We do this instinctively; what we are prepared to pay for something is affected not only by the item itself but by the trustworthiness and reputation of the person selling it.

Trust

My late mother knew absolutely nothing about cars, but had an eagle eye for people.* It would have been interesting to set her the task of buying ten cars based on her instincts about the people selling them, while at the same time tasking ten automotive engineers with acquiring ten cars at auction. I’m confident the cars my mother bought would have been every bit as reliable as the cars chosen by the engineers, perhaps more so.

There is a parallel in the behaviour of bees, which do not make the most of the system they have evolved to collect nectar and pollen. Although they have an efficient way of communicating about the direction of reliable food sources, the waggle dance, a significant proportion of the hive seems to ignore it altogether and journeys off at random. In the short term, the hive would be better off if all bees slavishly followed the waggle dance, and for a time this random behaviour baffled scientists, who wondered why 20 million years of bee evolution had not enforced a greater level of behavioural compliance. However, what they discovered was fascinating: without these rogue bees, the hive would get stuck in what complexity theorists call ‘a local maximum’; they would be so efficient at collecting food from known sources that, once these existing sources of food dried up, they wouldn’t know where to go next and the hive would starve to death. So the rogue bees are, in a sense, the hive’s research and development function, and their inefficiency pays off handsomely when they discover a fresh source of food. It is precisely because they do not concentrate exclusively on short-term efficiency that bees have survived so many million years.