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Pulse Book Club – Vol. 2 – Alchemy

Alchemy by Rory Sutherland

Rory Sutherland’s Alchemy is built upon the premise that, in business and in life, transformational ideas and solutions often defy logic. 

Sutherland introduces the book by describing the thought process of anyone trying to compete with Coca-Cola in the non-alcoholic cold drink business for the last hundred years or so.

He explains that the logical solution to competing with Coca-Cola would be to create a drink that tastes better, is less expensive, and comes in greater volumes than Coke.

He then describes the company that has come the closest to competing with Coca-Cola since its inception. A company that makes a terrible tasting drink that comes in tiny cans and is up to five times more expensive than the same amount of Coke.

Red Bull.

The rest of the book is filled with examples like this, solutions to real world problems that have worked despite their apparent insanity. 

Sutherland’s argument isn’t that logic, reason, and pragmatism don’t deserve a seat at the table, but that they need to make room at that table for Alchemists: people who are willing to explore and test irrational and illogical ideas in order to expand the set of possible solutions to problems.

Alchemy is a book that helps the reader understand the times and places that logic, rationality, and assumptions need to be ignored in favor of something a little bit more magic.

Here are Sutherland’s 10 rules for Alchemy.

Rule #1 – The Opposite of a Good Idea Can Be Another Good Idea

“Business and policy making loves the idea of a single right answer,” Sutherland explains. Because once we arrive at a single right answer, all blame and fault is absolved from the decision makers. Thinking outside the conventional avenues of logic and economic theory often produces more transformational ideas than the risk-averse ideas that can be easily defended.

“It’s wonderful (to rely only on logic) if you want to keep your job, but if you want to have an original idea, it’s potentially disastrous.” 

 

Rule #2 – Don’t Design For Average

Out of all the metrics and data we have at our disposal in today’s technological landscape, Sutherland describes how many firms try to solve problems for a single, average representative of the data they’ve collected.

In reality, it’s nearly impossible to move the needle by designing products, services, and systems for the ‘average’ consumer. Sutherland suggests designing for extreme consumers on all ends of all spectrums, and letting those users push its adoption towards the average consumer.

 

Rule #3 – It Doesn’t Pay To Be Logical if Everyone Else Is 

If everyone in a market or industry is racing to see who can be most logical as effectively and quickly as possible, everyone will end up coming to the same conclusions.

Sutherland describes how, in military strategy, it’s dangerous to be too logical. Because the forces you’re competing against can easily recognize the most logical course of action and plan for it.

In order to win in competitive markets, businesses must recognize the logical assumptions that are constantly being made by their competitors, and look to detach themselves from those assumptions. Once an organization frees itself from preprogrammed, logical assumptions, it widens the set of solutions to all the problems that they might encounter.

 

Rule #4 – The Nature of Our Expectation Affects the Nature of Our Experience

Our needs and expectations drastically affect what our experiences are. Sutherland describes a trip to East Berlin, where he stayed at a boutique hotel that was built in an old police station, containing all of Berlin’s artistic and cultural quirks. 

Sutherland claims that if he was expecting a Marriott, it would have been the worst hotel experience of his life. But since he was planning on a uniquely ‘Berlin’ experience, it was possibly the best hotel experience of his life.

Managing and steering expectation is paramount for organizations seeking to solve problems for people or other organizations.

 

Rule #5 – The Problem With Logic is That It Kills Off Magic

Once you solve a problem with logic, you have already destroyed any possibility of magic. 

If you think that people see the world objectively, you create a box for your business in which you can only create value through objective means.

For example, if you design a pair of shoes under the premise of those shoes outlasting and keeping your feet more comfortable than your competitors, then the only way you can create value is by making your company’s shoes more sturdy and more comfortable.

If you design shoes with the premise that they will make the consumer happier, and project certain characteristics of their lifestyle, you have far more avenues to create value.

 

Rule #6 – A Good Guess Which Stands Up To Empirical Observation Is Still Science

One of Sutherland’s most emphatic claims in his work is that there are far more solutions to problems that can be post-rationalized than ones that can be pre-rationalized.

Limiting ourselves to predictable, easily-justifiable solutions may work perfectly within perfectly logical systems. However when dealing with multi-faceted, complex economic and psychological systems that often behave in unpredictable ways, we need to give space for educated guesses and gut feelings.

 

Rule #7 – Test Counterintuitive Things Because No One Else Will

It’s unbelievably risky and dangerous to be slightly bonkers in business, ” Sutherland says. “The slightest bonkers thing that you do which fails, puts your job on the line.”

Sutherland continues to explain how failing when attempting rational solution allows you the liberty to try again. As noone will fault anyone in business for attempting an easily pre-rationalized solution.

Your business can create a significant competitive advantage for itself by creating a small space where people can test solutions that don’t make sense, because self-preservation will erode all illogical solutions in people within organizations that don’t allow for it.

While most of your business needs to be driven by things that are already known, when encountering unknowns, it helps to allow imaginative members of your team the space to experiment with solutions outside the rationalist’s comfort zone, because most of your competitors will be afraid to go there.

 

Rule #8 – Solving Problems Using Only Rationality is Like Playing Gold With One Club

What rationality leaves out is sometimes more important than what it puts in. Logic regularly ignores the differences in the way different people think, decide, and act.

Narrowing the scope of your solutions to ones that are based in assumptions about human behavior completely ignores the different ways to effectively engage with people who fall outside the framework of those assumptions.

 

Rule #9 – Dare to Be Trivial

In simple, mechanistic systems, the result of a change is equivalent to the scale of the change itself. 

In complex systems, small, trivial changes can have drastic impacts on results. Sutherland describes how many companies waste so much time and energy tearing underperforming systems down to rebuild them from the ground up. When, in reality, sometimes small tweaks and changes can move the needle even more.

In simple, mechanistic systems, the result of a change is equivalent to the scale of the change itself. 

In complex systems, small, trivial changes can have drastic impacts on results. Sutherland describes how many companies waste so much time and energy tearing underperforming systems down to rebuild them from the ground up. When, in reality, sometimes small tweaks and changes can move the needle even more.

 

Rule #10 – If there was a logical answer, we would’ve already found it

Many lasting problems within organizations exist because the people charged with solving the problem have “logic-ed” it to death, without significant results.

Many of these long-lasting, seemingly unsolvable problems are the ones that require a shift into solutions that don’t make sense until they work.

If you’re running into dead-ends constantly seeking different ways to solve a problem that won’t go away. Experiment, guess, test. As Sutherland so eloquently puts it at the end of the book, “…most of evolutionary science has been a fluke anyway.”

 

 

 

 

 

 

 

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