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

by Rory Sutherland

You are more likely to come up with a good idea focusing on one outlier than on ten average users.

Real excellence can come in odd packaging.

By creating a very easy ‘no-brainer’ decision, it encourages more people to take up the higher-value full subscription.

Context is everything: strangely, the attractiveness of what we choose is affected by comparisons with what we reject.

Usually someone has often already found an answer to your problem – just in a different domain.

Firstly, it doesn’t always pay to be logical if everyone else is also being logical. Logic may be a good way to defend and explain a decision, but it is not always a good way to reach one. This is because conventional logic is a straightforward mental process that is equally available to all and will therefore get you to the same place as everyone else.

when choosing things in scarce supply* it pays to be eccentric.

the same quality (such as not having a lift) can be seen as a curse or a blessing, depending on how you think of it. What you pay attention to, and how you frame it, inevitably affects your decision-making.

A nervous and bureaucratic culture is closed-mindedly attaching more importance to the purity of the methodology than to the possible value of the solution, which leads us to ignore possible solutions not because they have been proven to be wrong, but because they have not been reached through an approved process of reasoning.

We constantly rewrite the past to form a narrative which cuts out the non-critical points – and which replaces luck and random experimentation with conscious intent.

In reality, almost everything is more evolutionary than we care to admit.

to play down the part of accidental and unplanned factors in our success is misleading

that’s what makes markets so brilliant: they are happy to reward and fund the necessary, regardless of the quality of reasoning.

We don’t value things; we value their meaning. What they are is determined by the laws of physics, but what they mean is determined by the laws of psychology.

you don’t need to tinker with atomic structure to make lead as valuable as gold – all you need to do is to tinker with human psychology so that it feels as valuable as gold.

If you declare something highly exclusive and out of reach, it makes us all want it much more – call it ‘the elixir of scarcity’.

it is surprisingly common for significant innovations to emerge from the removal of features rather than the addition.

If you want to offer ease of use – and ease of purchase – it is often a good idea not to offer people a Swiss Army knife, something that claims to do lots of things.

Cooperation is impossible unless a mechanism is in place to prevent deception and cheating;

Reciprocation, reputation and pre-commitment signalling are the three big mechanisms that underpin trust.

Upfront investment is proof of long-term commitment, which is a guarantor of honest behaviour. Reputation is a form of skin in the game: it takes far longer to acquire a reputation than to lose one.

the prospects for cooperation are far greater when there is a high expectation of repetition than in single-shot transactions.

social capital as ‘the shadow of the future at a societal scale’.

There is the ‘tourist restaurant’ approach, where you try to make as much money from people in a single visit. And then there is the ‘local pub’ approach, where you may make less money from people on each visit, but where you will profit more over time by encouraging them to come back.

‘costly signalling theory’, the fact that the meaning and significance attached to a something is in direct proportion to the expense with which it is communicated.

Bits deliver information, but costliness carries meaning.

The potency and meaningfulness of communication is in direct proportion to the costliness of its creation

Just as certain features such as acute vision or hearing and the capacity for swift movement will confer an advantage in survival, certain other features may confer an advantage in reproductive success – these are the attributes that allow you to mingle your genes either with larger numbers of mates or with mates that have a higher level of genetic quality.

instinctive and largely unconscious, it is perfectly rational, because we intuitively understand that someone with a reputable brand identity has more to lose from selling a bad product than someone with no reputation at risk.

Without the feedback loop made possible by distinctive and distinguishable petals or brands, nothing can improve.

Without this mechanism there is no incentive to improve your product, because the benefits will accrue to everybody equally; in addition, there is an ever-present incentive to let product quality slip, because you will reap the immediate gains, while the reputational consequences will hurt everyone else equally.

‘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,

humans regularly deployed oblique methods to generate bodily states and emotions which, like our immune response, we cannot consciously will into action – but which we can coax into existence. In particular, he mentioned bravery placebos, devices designed to achieve higher levels of bravery than could be obtained through conscious will alone.

the mammalian brain has a deep-set preference for control and certainty.

what makes an effective placebo is that there must be some effort, scarcity or expense involved.

The risk with the growing use of cheap computational power is that it encourages us to take a simple, mathematically expressible part of a complicated question, solve it to a high degree of mathematical precision, and assume we have solved the whole problem.

it’s surely better to find satisfactory solutions for a realistic world, than perfect solutions for an unrealistic one.

We will pay a disproportionately high premium for the elimination of a small degree of uncertainty – why this matters so much is that it finally explains the brand premium that consumers pay. While a brand name is rarely a reliable guarantee that a product is the best you can buy, it is generally a reliable indicator that the product is not terrible.

The more reputational capital a seller stands to lose, the more confident I am in their quality control.

when we make decisions, we look not only for the expected average outcome – we also seek to minimise the possible variance,

‘Defensive Decision-Making’ – making a decision which is unconsciously designed not to maximise welfare overall but to minimise the damage to the decision maker in the event of a negative outcome.

Often, we are baffled by people’s behaviour. ‘I told him this, and he did that.’ We think they are being irrational, but the reality is that they didn’t hear what we think we said.

what determines the behaviour of physical objects is the thing itself, but what determines the behaviour of living creatures is their perception of the thing itself.

what people perceive is sometimes more important than what is objectively true.

‘Nothing is as important as we think it is while we are thinking about it.

It is thus in our evolutionary best interests to be slightly paranoid,

the ‘Goldilocks effect’ – the natural human bias that means that, when presented with three options, we are most likely to choose the one in the middle.

Change the format:

Add intricacy: simply adding coloured flecks to a plain white powder will make people believe it is more effective,

Add effort.