Tag: Rory Sutherland

💎 On the danger of only evaluating projects on what is easy to quantify

A question was given to a bunch of engineers about fifteen years ago: How do we make the journey to Paris better? They came up with a very good engineering solution, which was to spend £6 billion building completely new tracks from London to the coast and knocking about forty minutes off the 3.5 hour journey time. It strikes me as a slightly unimaginative way of improving a train journey to merely make it shorter. Now, what is the hedonistic opportunity cost of spending £6 billion pounds on railway tracks? Here’s a thought; what you could do is employ the world’s top male and female supermodels, pay them to walk the length of the train handing out free Château Pétrus for the entire duration of the journey. … At which point you’ll still have about £5 billion left in change, and people will ask for the trains to be slowed down.

Excerpt from: Transport for Humans: Are We Nearly There Yet? by Pete Dyson and Rory Sutherland

💎 The power of reframing costs in a B2B context

In the same way, in the early stages of a food delivery brand (now worth over £1bn), the proposal was to pay the restaurant directly for each meal it supplied and then to invoice them monthly for the commission on the month’s past sales. A marketing thinker pointed out that this was a mistake. “We should keep the money from each meal sold, deduct commission, and then send them a payment every month”. He or she understood that, if the restaurant saw the new business as a source of incremental revenue they would value it; if they saw it primarily as a cost, they would look for ways to avoid it. Again, in economic terms, there is no difference between the first proposal and the second, but the psychological effect on the business will be dramatically different.

Excerpt from: The Objectivity Trap by Rory Sutherland