The Third Eye

These are my favorite bits from an outstanding (yet 3+ hour) chat between Rick Rubin and Rory Sutherland

Spotify link to the episode

While expanded on below, I just want to highlight my favorites quotes from each section:

• By enshrining trade-offs in the mode of thinking of policymakers, and business people, and problem solvers, what you’ve actually done is create an incredibly infertile ground for creative ideas…what worries me about free market capitalism is that economists and most people, management consultants, like it for entirely the wrong reason…We’re not using it to its fullest capacity. Because our appreciation of what its value is. Its true strength is not efficiency. In fact, a controlled economy can be very efficient within narrowly defined parameters. The real joy of capitalism is the discovery mechanism.
• The problem with economics. It’s a sharp science, but it’s hard to argue with. Because it’s got this artificial internal consistency that, even though it’s not actually rooted in reality, it’s an impressive kind of edifice in terms of its own internal lack of contradictions.
• When you present a choice on a screen, people will make a totally different choice than the choices they make in a shop…the screen is revealing a preference. I find it so interesting, the extent to which the interface determines the behavior.
• When they’re arguing something, they’ll go, why are we arguing this? It’s a two-way door. Don’t argue it. Test it. Because we can test it, we’ll very quickly find out at low expense.
• Prediction combined with Bayesian updating makes more sense as a data architecture than perceiving everything and then forging it into a whole. If this is true, it explains many oddities, like the fact that advertising changes the taste of a product.
• If believing something untrue leads to good consequences, is it therefore rational to believe things that aren’t true? Absolutely. However, this leads to consequences such as victim culture, where it becomes complex. You may have to acknowledge that, yes, it is undoubtedly true that you are victims, but it is not beneficial to dwell on it. There’s evidence that individuals, not necessarily collective groups, who constantly blame external forces for their misfortunes, are probably right in some cases. However, the consequences of that belief state are not healthy. Therefore, it’s a good idea to move on. Similarly, there’s an opposite concept, which is believing positive things that aren’t true. If it leads you to make better decisions and therefore enjoy better consequences, go with that.We can post rationalize. We can pre rationalize. So why make the ability to rationalize something a prerequisite for trying something?

Intro

One of the things I’ve noticed about modern behavior revolves around the question: Do you want to win arguments or solve problems? We’ve mistakenly equated the two, assuming that the person with the best arguments has the best solutions. I believe we’ve both concluded that sequential logic in problem-solving doesn’t necessarily lead to the best outcomes. It’s fundamentally sub-optimal. Problem-solving is much more Darwinian and iterative. It also relies on subconscious mental processes or tacit skills that we can’t fully articulate or codify.

This raises an interesting question: Is the creative process actually a process? You subtitled your book “A Way of Being,” suggesting that creativity is something you embody, not a skill that can be easily replicated.

One must acquire a sort of “third eye” to truly engage in it.

On Creativity

Creative work is kind of a Galapagos Islands for understanding how you solve wicked problems. Because every day you have to go and solve a wicked problem where you can rewrite their advantages. You can rewrite the rules. You can get rid of assumptions. But fundamentally coming to a conclusion is difficult because you don’t know what success looks like before you. I mean, if you’re solving a physics problem or an engineering problem, you know when you’ve succeeded. Yes. And in this case, genuinely, you know, it’s much closer to a penicillin or a Viagra than it is, you know, you know, being able to actually spot moments of fortunate accidents or whatever. So many of the discoveries that have changed the world happened by accident. And there seems to be a blindness to this.

Newcomer advantage

The?‘newcomer advantage’ is when a fresh perspective proves beneficial to problem-solving as it lacks the influence of preexisting assumptions:

It’s incredibly easy for experts to bring all their assumptions with them. One thing that doesn’t happen enough is that areas of scientific expertise, instead of engineering expertise, could benefit enormously. This is my main concern. This is what I spend my time fighting against, a very simple asymmetry. All creative people must present their ideas to rational people for approval. There’s someone in finance, someone in legal, someone in compliance. Well, I accept that. It never happens the other way around. Finance people with a spreadsheet never say, “I’ve arrived at this figure and my recommendation is 3.7, but before I share that with the board, I’m going to present it to some slightly wacky people to see if they have an alternative idea, or to see if they can redefine the question.” It never happens.

Artistic breakthroughs can have no sense of proportion

1. That’s when inspiration happens, when you’re moving from one thing to another. You can cheat the odds, but you can’t force it. Anyway, John Hegarty, the great guy, told this story. He once worked with Paul McCartney on a business venture. Paul didn’t quite like John’s initial work, so he said, “I think we need to come back with this.” John said, “Well, you said next Tuesday, but can we actually have about two or three weeks because nothing good ever comes in a short time?” Paul McCartney replied, “That’s not true. I wrote ‘Yesterday’ in 15 minutes.”Two points to that.One, John Hegarty, ten minutes later, to this day, regrets not replying with, “Imagine how much better it would have been if you’d taken some time over it.”But the second point, which I think often causes misunderstanding, is he didn’t write it in 15 minutes, but he didn’t choose which 15 minutes. They were in the past. You could write it in 15 minutes if you have the dream the night before, of the melody, which is what happens. And so much, of course, so much of waiting to get lucky looks like laziness, actually. Or looks like a complete lack of focus.

1. Artistic breakthroughs can have no sense of proportionI’ll tell the story, which I always love, which is that the decision in ‘Ring of Fire’ to use the trumpets was a kind of whimsical one, wasn’t it? So Johnny Cash was basically, you know, that moment where he just goes, “Okay, what we need here is trumpet.” I think he had an idea about the sound of like Mexican trumpets. It just painted a picture in his mind. Now, we don’t know the counterfactual. Without the trumpets, it’s not the same. It’s not the same. And so not having a sense of proportion is actually appropriate, I think, to the job in hand, where it is actually the small thing that is utterly transformative, and so not having a sense of proportion is part of the job. Sometimes the thing that makes it great is a tiny difference, not a big change. That’s also out of our control.Everybody, when they look for a reason for something serious, is looking for a serious reason. Yes. That the cause has to be commensurate in importance with the outcome. But actually, great things happen for stupid reasons. And stupid things happen. People trying to be important create stupid effects, whereas, people sometimes trying to be stupid can create great effects. And actually, this idea of proportionality, that the world is kind of Newtonian and that there are equal and opposite reactions and so forth, is a great model if you’re a physicist. It’s a disastrous model if you’re an economist.The famous case where the Beatles were turned down by the record label, which was EMI, wasn’t it? They were turned down by everyone, at first.They can seemingly come from nowhere. And so the Beatles turn up, which was interestingly on New Year’s Day, I think, where they get lost driving through London, and they go and play their demo tape to whoever it was who says, you know, small bands with guitars or on the way out and all this sort of thing. We don’t like their sound, you know, etc. And they signed I think Brian Poole and the Tremolos instead. One of the reasons for signing them was they were more of a local band, so when you recorded with them, you only had to pay for a travel card in on the tube rather than paying for return train tickets from Liverpool, which is the procurement decision of all time, if I say so.But was it the right decision? Because if you look at the evidence then, ‘Love Me Do’ isn’t that great a song, right? It’s like, you know, I mean, if that was all they recorded, it wouldn’t have been remembered, okay. On that demo tape, there was no evidence of greatness that anybody could reasonably be expected to notice. And indeed, you know, the Brian Poole who may sign, you had some slightly earlier success. So my question is, what was it? So it’s ‘Love Me Do,’ and then it goes to what does ‘I Want to Hold Your Hand’ as next? Or is it? I think so. I think so, okay. What happened between those two songs?You can ask the same question between Radiohead’s first album and their second album. Okay. If you listen to Radiohead’s first album, it has ‘Creep’ on it, which is an amazing song. But if you listen to the album you wouldn’t know this is a special group. And then they made arguably the best album of the next 10 years. So it’s hard to know what happens.I look at it in a spiritual way. To me, it’s like proof of the existence of God. It’s like something changes. I’m friends with Chris Rock, the comedian. And when we first became friends, he was my comedian friend who was not funny.* Sorry he was not funny. He was my comedian friend who wasn’t funny. And our relationship was about music because he loved music and had great taste in music. But he was a not funny comedian.And then after several years, he invited me to the Comedy Store. He said, “Oh, come see my new set.” And I went… And I went doubtfully because he’s my not funny comedian friend. And I walked in. And he was the funniest person I had ever seen. Now, for the last four or five years of our friendship, he was not that funny. I don’t know what happened. It shifted. In a moment. It was like someone upstairs pointed, it’s like, “Now you. It’s you.”

Deep insight about framing and ultimately the stories we ascribe to big concepts like “capitalism”

There’s a friend of mine who’s an economist called Nicholas Gruen, who Martin Wolf, a brilliant man from the FT, describes Gruen as the best economist you’ve never heard of. And he thinks that one of the worst things that economics foisted on the world was the idea of the trade-off. That most problems are a trade-off between one thing and an opposing thing, and the optimal thing is somehow somewhere in between these two opposing variables.

Economics encourages people to look for a trade-off, treating it as though it’s effectively inexorable, and simply look for the optimal point between these two things. He would argue that it’s basically created a massive creative deficit because people don’t look for magic, and they don’t believe it when it’s presented to them. Yes. And if all creative things are, to some extent, if not magic, by the way, you practice magic. Is that right? I did as a child. You see, this is fantastic because the understanding that actually by changing our perception of something, you can make absolutely remarkable things happen, and the usual trade-offs that are assumed need no longer apply.

By enshrining trade-offs in the mode of thinking of policymakers, and business people, and problem solvers, what you’ve actually done is create an incredibly infertile ground for creative ideas. Because you basically treat the trade-off as if it’s kind of just part of the system. I have to ask the question of this kind of obsession with efficiency. So the way I describe it in the book is that what worries me about free market capitalism is that economists and most people, management consultants, like it for entirely the wrong reason. And it’s a bit like liking Bob Dylan for his maleficent singing voice, okay? It’s very healthy opinion to like Bob Dylan, but probably his singing voice isn’t why. It’s a bad reason to hold a good opinion. And I would argue that most of the appreciation of capitalism, which is driven by the idea of its efficiency, not its inventiveness, is exactly the same problem, that we tried to optimize free market capitalism for what you might call narrow efficiency at doing preordained tasks under the natural constraints of these trade-offs, what we should have been doing is optimizing capitalism for inventiveness. So capitalism is not bad, the way that we view it is maybe not necessarily the best way. I think we’re not using it to its fullest capacity. We’re not using it to its fullest capacity. Because our appreciation of what its value is. Now, in fact, I’m not saying that consumers don’t care about efficiency entirely. If you can find a way to do something ten times cheaper, that’s a breakthrough. You know, that’s completely transformative. But given that most purchases nowadays in the developed world are from discretionary income the extent to which efficiency is prized by consumers as opposed to, for example, meaning, calls into question lower price as a strategy.

Capitalism is often viewed as an efficiency mechanism, when in reality, it’s an exploration and discovery mechanism. The Austrian School of Economists recognized this. The miraculous strength of capitalism isn’t its beautiful singing voice or fantastic lyrics. Its true strength is not efficiency. In fact, a controlled economy can be very efficient within narrowly defined parameters. The real joy of capitalism is the discovery mechanism.

Doing the wrong thing efficiently is actually worse than doing the right thing badly.

Applied “framing”: the interface

Most human behavior is strangely path-dependent. It’s significantly affected by strain and heuristics. By the way, if you sent that phone-only response out to my children’s generation, you’d get a 0% response rate because they really, really hate talking on the phone. What you do now is, for anyone under the age of 30 or 40, you provide a text response because that’s the only thing they prefer, or a WhatsApp response or something similar. The idea of talking to a human being on a phone fills them with absolute paranoia. But the fact that the short-term nature of the interface has such a massive effect is fascinating. The other benefit I had through that test was that it got me really interested in the internet because I thought when you present a choice on a screen, people will make a totally different choice than the choices they make in a shop and a totally different choice than the choices people make, for example, in a mail-order catalog. [Kris: very “medium is the message” vibes]

An interesting thing is in McDonald’s, now you order on a screen rather than face to face. Now, bear in mind, particularly men, when they order their McDonald’s from a screen not face to face, they are vastly more likely to include two burgers in a single order. This is really interesting because the screen is revealing a preference. It’s not about money or cost. It’s just that the guy might feel awkward asking for two burgers. Well, you know, do you want fries with both burgers? It could be an awkward conversation. Whereas the second you do it on a screen, apparently, the whole thing changes.

Now, if you think about it, all I can say is that the speed with which McDonald’s rolled out those screens. I’m not privy to any inside information, but the speed with which fast food outlets rolled out those screens, which was almost unprecedented, suggests that they are unbelievably lucrative in terms of changing what people order.

Now, there are other factors which are fascinating, which is that there’s another interesting psychological thing about those screens, which is that it’s more annoying waiting to place your order than waiting for your food to arrive. Because you can reframe the food coming to arrive as well, they’re preparing the food it’s adding to the quality of my meal, whereas waiting to tell people what you want is doubly frustrating. And so there is a kind of mental mind hack in that it may not reduce the end-to-end wait, but it reduces the more irritating part of the waiting, which is waiting to tell them what you want. So there are other mind hacks in that, but I find it so interesting, the extent to which the interface determines the behavior.

Decision-making

2-Way Doors

What if we need to innovate, but the only way we’ve innovated so far is by extrapolating from past successes. What we need to do is we need to actually imagine something here. We need to imagine a different reality, okay? If you can get just a proportion of people to do that sometimes where it makes sense to do so. Now I’ll give you a great thing which everybody can steal, which I only heard about recently, but within Amazon there’s a phrase which is called the two-way door where if you try it and it doesn’t work, it doesn’t really impose significant costs so you can reverse.

In Amazon, when they’re arguing something, they’ll go, why are we arguing this? It’s a two-way door. Don’t argue it. Test it. Because we can test it, we’ll very quickly find out at low expense. And if it doesn’t work or it has deleterious effects, we’ll just cancel it and revert to the status quo. They’re very conscious of the fact that you spend a load of time arguing about one-way doors, but arguing about two-way doors is stupid.

It’s exactly to your point that if you argue about it in theory, it’s a much more hotly-debated thing than if you just show it in practice. You know right away when you do it in practice. So why argue about the theory? We call it the burden of proof because proving things in advance is a massive pain in the arse, and it wastes a lot of time and it wastes a lot of effort.

Now the most interesting thing is apparently Amazon Web Services came up as an idea where someone said, we’ve got all this server capacity, why don’t we sell it to other people? And apparently, this may be anecdotal, they put together a paper that wasn’t very good. You know, it didn’t make a great business case. It was just this vague paper. And so everybody’s saying, okay, so that doesn’t work in theory. And then somebody said, yeah, but this is a two-way door, right? We’ve got the server capacity anyway. If we can sell it and make more money, it’s good. If we don’t, what have we lost, okay? And of course that’s now the most profitable bit of Amazon. The business of actually selling their server capacity to third parties. And basically selling the robustness they need as a retailer to other people who want that level of robustness. That’s what makes them the most money. Amazing.

And of course, 99% of companies will go, nah, you haven’t really made the case there, right? Without asking the question, why do we need to make that greater case? Because if it fails, it’s cost us peanuts. It’s an asymmetric bet with a manageable downside, both in terms of time and money. The upside is potentially huge. Go for those bets.

Predictive Mind Hypothesis

The predictive mind hypothesis suggests that our brain is constantly predicting, and it uses our senses only to the extent that we perceive reality differing from the prediction.

• There are sound experiments, such as sine wave voices, where a spoken sentence is reduced to a sine wave. Initially, it sounds like modem noise, but after reading out the sentence and replaying the sine wave, it becomes impossible not to hear the sentence in the sine wave. There’s a view that these experiments, like the McGurk effect, demonstrate this.
• In the McGurk effect, if you record someone saying “bar” repeatedly, and then record a video of the same person saying “par” or “far”, particularly “far” with the teeth, and play the video over the audio of “bar”, you hear “far”. This is because your brain effectively overwrites the audio component with the unconscious lip-reading component. There are many interesting illusions and experiments that illustrate this.

The data architecture also makes sense, as it’s similar to the algorithms used to compress photographs. These algorithms predict what the next pixel will be and only use data to describe how reality differs from the prediction. This is a much more data-intensive way of constructing a photograph than using raw files, where you have massive megabyte files because you want to be able to edit every single pixel, which can only be done in a raw file. This approach would make sense in terms of making the most efficient use of available bandwidth in the human brain. Prediction combined with Bayesian updating makes more sense as a data architecture than perceiving everything and then forging it into a whole. If this is true, it explains many oddities, like the fact that advertising changes the taste of a product.

The tension between “customer is always right” and “customers don’t know what they want”

Marketers, and creative people in general, are looking for anomalies, unique anecdotes, and outliers. They’re not really seeking the mainstream because that area is already overpopulated. Consider these two statements: “The customer is always right” and “The audience doesn’t know what they want.” Both seem true, creating a tension. They are both true in the sense that if you offend or upset a customer, you’re doing something wrong. However, this doesn’t mean you should ask your customer to design your customer service program.

Every time you upset a customer, you should learn from the experience and try not to repeat it. But don’t assume that the customer’s definition of what they want is really what they want. This is where a deeper search is needed. I don’t completely reject market research, but it must be handled very cautiously. For example, one might assume that first-class air travelers want the finest wine and magnificent food. In reality, these individuals often have access to such luxuries at home. A large part of what they want is to be left alone. The assumption that top-tier service should be very attentive may not always hold true. While customers may say they want attentive service, the trick is to maintain a distance where you can always be hailed, but not to continually approach them offering more wine or food. Even though they think they’d like that, it can actually be a nuisance. This is an interesting way to resolve the tension.

When the truth is not adaptive

If believing something untrue leads to good consequences, is it therefore rational to believe things that aren’t true? Absolutely. However, this leads to consequences such as victim culture, where it becomes complex. You may have to acknowledge that, yes, it is undoubtedly true that you are victims, but it is not beneficial to dwell on it. There’s evidence that individuals, not necessarily collective groups, who constantly blame external forces for their misfortunes, are probably right in some cases. However, the consequences of that belief state are not healthy. Therefore, it’s a good idea to move on. Similarly, there’s an opposite concept, which is believing positive things that aren’t true. If it leads you to make better decisions and therefore enjoy better consequences, go with that.

We can post rationalize. We can pre rationalize. So why make the ability to rationalize something a prerequisite for trying something? There’s no reason not to try things to find out where they lead.

Rory’s goal when he gives a talk

I have a kind of heuristic, if I do business talks, which is very simple, okay? If the AV guys are paying attention to what you’re saying, you’re doing okay. If the security guy likes it, I’m doing okay.

An area where Rory has changed his mind: the minimum wage

I’ve definitely changed my mind about behavioural science, in the sense that there is always a danger that organisations default to paying people the minimum they can afford. It isn’t actually good business, by the way, but it’s just a very easy thing with which to win an argument. Why should I pay my staff more than I need to recruit them? Actually, there are lots of reasons, but they’re hard to argue. And that’s the problem with economics. It’s a sharp science, but it’s hard to argue with. Because it’s got this artificial internal consistency that, even though it’s not actually rooted in reality, it’s an impressive kind of edifice in terms of its own internal lack of contradictions.

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