Camille Moore asked Rory Sutherland, Vice Chairman of Ogilvy, “What do you see as the biggest problem that’s facing branding right now?”
Rory Sutherland: I think the biggest problem is the false God of perfect ROI calculation and prediction in advance.
It’s very good to measure. My origins are in direct marketing. Measuring is fantastic. The downside of working in direct marketing was always that you weren’t allowed to do anything that you couldn’t perfectly measure. And so you were confined to doing things at the bottom of the funnel.
So the biggest problem in business, and I would argue the government, is the treasury or the finance function is extremely unwilling to invest in anything which has the slightest degree of speculative value.
And so we end up, particularly in the Anglo-Saxon world, with an efficiency-driven race to the bottom rather than an opportunity-driven race to the top. The idea that your job is to do the same for less rather than to do better for more.
Camille Moore: It’s the opportunity cost.
Rory Sutherland: Your identification of the phrase opportunity cost is fascinating. Because here’s the problem. Finance people don’t really want to make the company money over time. They just thrive on certainty and predictability. They try to make the world resemble their fantasy of perfect certainty, perfect quantification, perfect measurement.
Here’s the problem. A cost is really quantifiable and really visible. And if you cut a cost, it delivers predictable gains almost instantaneously.
An opportunity cost — a missed opportunity — by its very nature, is somewhat nebulous. If you’re completely unwilling to embrace the uncertain, you will never pursue any incremental opportunity at all. All you will try to do is to serve your existing customer base ever more cheaply until a weird crunch point where they get pissed off and go away.
Rory Sutherland is the author of Alchemy: The Dark Art and Curious Science of Creating Magic in Brands, Business, and Life.
Related reading:
The Tyranny of Metrics by Jerry Z. Muller
Slack: Getting Past Burnout, Busywork, and the Myth of Total Efficiency by Tom DeMarco
Effectiveness in Context: A Manual for Brand Building by Les Binet and Peter Field
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