ResearchTalk » Book reviews

Buyology: Sound Science or Wishful Thinking?

ResearchTalk — Sun, 18 Jan 2009 12:29:07 +0000

Our article in the Jan ‘09 edition of ESOMAR’s Research World. Grab your copy here.

Martin Lindstrom’s new book and company, Buyology, hope to kick start the next wave of neuromarketing. Will they deliver?

We talk to Martin Lindstrom from his New York City hotel.

Just hours after Barack Obama is elected US President, Lindstrom is getting ready to leave the US for his European book tour, the US tour having generated over 700 articles, including many in the mainstream press and an appearance on the couch of TV’s The Today Show.

It’s his bid to popularise the business book: “I realised that no one reads business books any more…what people, including business people, really read is novels…that’s the style I’ve tried adopting in Buyology.”

And the book is indeed a pleasant, easy read. But that’s one of the criticisms levelled at it by the Bob Barocci, CEO of the Advertising Research Foundation, who apparently dismissed the book in an Advertising Age article by saying that the ARF did not review “pop” books.

Notwithstanding that, the book has received widespread praise and is a bestseller.

So, just what is Buyology all about?

The experiment
“Buyology,” according to Lindstrom’s website, “unveils the results of marketing guru Martin Lindstrom’s pioneering three-year, $7 million dollar study that used the latest in brain scan technology (fMRI and SST) to peer into the minds of over 2,000 people from around the world. The shocking results will reveal why so much of what we thought we knew about why we buy is wrong. Buyology rewrites the rules of marketing and advertising.” Bold claims indeed.

Lindstrom’s inspiration came from a 2004 study by Dr. Read Montague, director of the Human Neuroimaging Lab, who wanted to understand why Coke remained dominant despite Pepsi’s success in taste tests.

These tests were conducted using conventional research and so Montague decided to see if neuromarketing would reveal something different. Sure enough, after examining brain activity, Montague concluded that people weren’t making brand decisions based on taste but on the emotional impact of the brand, and that since Coke was more successful than Pepsi at ‘implanting’ the impression of a quality brand, it had ultimately won peoples’ affections.

Although this conclusion was not universally shared, according to David Penn, MD of Conquest Research, the study did inspire a number of enterprising companies into this space. Penn has taken a close interest in neuromarketing.

One of the inspired was Lindstrom, and he set about designing his own study.

Hypotheses
Aware of the ethics surrounding the use of neuromarketing, and being an unproven technique, Lindstrom was careful to choose a topic for his study that would ruffle as few feathers as possible: “You will always find critical voices no matter how deep you go into things. What I tried to do was to…go into areas where we could be fairly safe about the conclusions we could draw.”

One area that intrigued him was why public policy measures seemed to have little impact on discouraging smoking. He figured neuromarketing could give him the peek into the parts of human behaviour that traditional research couldn’t reach, namely the sub-conscious.

So, armed with an extensive contacts book of wealthy corporates, he began his drive for sponsors. But even he, a globally successful figure in strategic marketing, found it difficult to raise the $7m needed. The issue: corporates were frightened off by the ethical issues around neuromarketing.

But through dogged persistence he managed to convert enough of them. And with eight out of ten product launches failing within three months, you can probably understand why corporates were keen to get involved with something that could improve the odds.

Let’s look at a couple of key things he found.

Tobacco
Lindstrom’s work on smokers confirmed what he believed – that health warnings on tobacco boxes have little impact on smoking behaviour. The results applied whether the warnings were subtle (US) or more brazen (e.g. photos in the UK).

However, he discovered something he hadn’t expected: that rather than deter smoking, warning messages actually encouraged cravings. Completely counter-intuitive, he naturally asked the researchers to re-check the results.

Lindstrom offers an explanation. He believes that as people get used to warnings, they start to perceive them as images rather than text. The ‘image’ then becomes strongly associated with the brand or product. And because the product in question generates positive feelings (cravings), so do any associated images.

It’s the reason why, e.g., the Silk Cut tobacco brand tried to ‘own’ the association with a sheet of purple silk before the advertising ban started; in subsequent tests, 98% correctly attributed purple silk to Silk Cut.

Based on these conclusions, public policy seems to have failed dismally.

Product placement
As the effectiveness of conventional TV advertising deteriorates, product placement is on the rise: “It will be the number one way, I think the concept of the television commercial is dying.”

But based on the study, Lindstrom believes that product placement itself fails much of the time: “We’ve gone from a stage where you feel that just because you’ve put your logo [in the program] you’ve done your job. Well, guess what? You’ve done the opposite job instead.”

He cites the work done with American Idol, the popular TV show. Ford and Coke are two key sponsors. Both pay the same fee and yet Coke achieves far higher brand recall.

Why? Lindstrom reckons it’s because Coke has integrated the brand more deeply and seamlessly into the show. Coke is sipped by the judges. Furniture evokes the shape of its bottles. There are Coke-red walls. And Coke airs commercials during the breaks.

In contrast, Ford chooses to just run conventional ads. during the breaks with no intrusion into the programme itself (except for a logo placed out of context – logos are less important than brand associations such as images, colours, smells, sounds).

The surprising finding is that not only does Ford get much lower recall than Coke, Ford’s recall actually declined as a result of the sponsorship!
Bizarre? Well, Lindstrom says that effective product placement has a “double-barrelled” impact: (a) brand recall goes up, and (b) recall of other brands goes down. It’s as though the brain has limited capacity such that making memory space available for one brand reduces the space available to others.

No doubt these findings will cause some discomfort in the automaker, as well as with advertising agencies charged with product placement.

Efficacy
Lindstrom says that ad. agencies are generally sceptical of Buyology. Notable exceptions include Saatchi’s Kevin Roberts, author of Lovemarks, the book about increasing the emotional quotient of brands.

There are other neuro-sceptics. Among them is Conquest’s Penn (although he remains open-minded).

Penn maintains that the reason neuromarketing failed to advance much since 2004 is a failure to understand that the 2004 Pepsi study showed correlation rather than causation (something the study’s authors were at pains to point out). It did not prove – as some neuromarketers have since claimed – that there is a ‘buy button’ in the brain.

As Professor Lawrence Parsons of Sheffield University puts it: “This is the problem with all neuroscience. We don’t really know what we are seeing when we watch the brain work. Is it the thing itself – the thought, the flash of insight – or just an aspect of it, the bark rather than the dog? We’re just not at the point where we can answer these big interpretive questions.”

While Lindstrom accepts that neuromarketing still has to prove itself, he says that the Pepsi study was generally convincing. He maintains that the main reason neuromarketing failed to advance much was ethics: “After interviewing 300 people on this topic, most felt the main issue was ethical….it was a real struggle to raise the money…no one wanted to be associated with the study, but now sponsors are happy to go public.”

To satisfy any doubts there may be about his study, Lindstrom has offered to open it up to scrutiny: “…under the circumstances that we are working against the same agenda.” He has already shown it to Millward Brown and Ipsos and says they are “…incredibly positive towards the study…and fairly comfortable about it.”

The end of research as we know it?
In 2004, Lindstrom believed neuromarketing would make traditional research techniques redundant. Having completed the study he still holds the view. But being more aware of the shortcomings of neuromarketing and issues around market acceptance, he believes the process will take longer. But dominate, he believes, it will.

This is where neuro-sceptics are bound to have an issue. Penn strongly believes that neuromarketing will never be able to survive without complimentary qualitative (the ‘what’ will always need the ‘why’).

Penn has taken a different developmental route. For example, acknowledging that traditional research lacks sensitivity, he has developed a non-invasive, non-verbal questioning method (Metaphorix) that avoids both conventional pitfalls and the issues with neuromarketing. Lindstrom acknowledges this as a useful contribution but remains a steadfast supporter of neuromarketing nonetheless.

In fact, he has established Buyology Inc., a New York-based neuromarketing company with the intent of maturing the discipline as fast as possible, so as to help bring down costs (from $250,000 to around $60,000 a project) and reduce timings (one part of Lindstrom’s study took two years to develop).

He anticipates that Buyology will have a marked impact over a two-year period, but that more significant change may take at least a decade: “By significant change I mean that one format or another of neuromarketing is going to be implemented or used in almost every major campaign activity for major brands in the world. At least thirteen out of the largest 100 US brands are using neuromarketing in their strategy implementation right now. I know that because I work for these companies.”

In the end, one is left with a clear impression of Lindstrom – that of an entrepreneur hell bent on seeing his vision realised. What’s ambiguous, however, is whether he really believes neuromarketing will replace traditional research.

Giveaway: ‘Buyology’

ResearchTalk — Wed, 03 Dec 2008 10:46:19 +0000

And the winner of the Buyology giveaway is…Elizabeth Luke.

Elizabeth is a senior at the University of Southern California spending her final semester abroad at the University of Amsterdam. She is a communication major with an interest in persuasion and consumer behavior. She will be graduating magna cum laude in December 2008, and shortly after, she will begin her career as a research analyst for emerging consumer products at Nielsen BASES.

Elizabeth’s book is on the way, thanks again to Martin Lindstrom and publishers Random House.

Here are Martin’s responses to some of the questions you sent in (thanks for all the entries):

Q1. While your findings are quite interesting and counter-intuitive (controversy sells, sex doesn’t; product placement can be ineffective), most know that much of consumer behavior is borne from the subconscious. However, if this is so, how come market research, which often comes from conscious opinions from consumers, is so successful? If buyers are not fully aware of their true intentions, then how come we still get useful answers when we ask them directly? (Elizabeth Luke)

A1. I think the reason why market research is ’so successful’ is because, until today, there haven’t been any alternatives uncovering our subconscious mind. Think about it – most research today is only uncovering the conscious mind – this however is about to change and I think neuromarketing is likely to be the answer.

Q2. I would like to ask Martin’s reaction to the criticism the book has received (such as http://adage.com/print?article_id=132035). Is he confident that his conclusions stand up to scientific scrutiny, and how does he refute the allegations made about his methodology? (Simon Kendrick, commercial research consultant, ITV)

A2. There will always be critical voices when new methods are invented. Neuromarketing is far from the answer to everything – however it is (in my mind) a strong alternative to conventional research – and in particular a powerful tool in order to understand our subconscious mind. I’ve spent around $7 million creating the Buyology study – a 4 year long project involving 2,000 consumers and two of the most respected scientists in the world within the field of neuromarketing. Of course there will always be question marks if things could have been done better that said I’m very confident that no-one has developed similar studies at this high level at this scale. I’d like to stress that nothing is 100% correct in the world of science – this of course will always be the case with our work too. Finally – I do indeed work with a range of the largest anti-smoking organizations in the U.S. and across the world – this may be a good indication of that the results are solid enough to be used in order to improve our communication work.

Q3. Iâ€™ve heard it said that a brand can either position itself as good value or high quality, but itâ€™s very hard to be both. Do you think this is true or is there an opportunity â€“ particularly during a difficult economic time â€“ for quality brands to also reposition themselves as value? (Max Willey, Associate Director, Continental Research)

A3. I think it is very dangerous ground and a strategy most companies should avoid. Sorry.

Q4. If everything I believe about buying is wrong, why do I â€˜comfortâ€™ buy? And what are your thoughts on shopping habits based on emotional responses? (Marie Greaves, Senior Project Manager, Lightspeed Research)

A4. Shopping habits are in 60% of cases driven by our subconscious mind – and thus “comfort” or habits or rituals – are often the main driver why we buy what we buy. What’s wrong is the way the advertising industry has (over the last couple of years) managed to capture the consumers – the communication has turned to rational and thus misses the opportunity to talk to our subconscious mind.

Here’s the original post…

Hey everyone, it’s giveaway time

UPDATE: Giveaway now closed.

Thanks to brand futurist Martin Lindstrom and publishers Random House, we’re giving away a copy of Martin’s new book, Buyology. For info on the book look here, here, or here.

The giveaway: we’re restricted this time to mailing to the UK or Europe. You also need to be a member of the Facebook group. Then, email us with your name, position, company, country and one incisive question for Martin.

We’ll try to get Martin to answer the best ones and get him to nominate the one that impressed him most. So get thinking – we need your submission by 11.59pm CET this Friday, 14th.

James Dyson: The Engineer’s Marketer

ResearchTalk — Mon, 25 Jun 2007 20:38:50 +0000

Patrick Barwise – Building the ‘Simply Better’ Biz

ResearchTalk — Wed, 02 May 2007 09:44:37 +0000

The fact that companies like Toyota and Tesco and Proctor & Gamble in many of its categories have shown that you can in fact keep improving delivery on the basics, shows that it’s not just a commodity…
(Patrick Barwise)

The renowned marketing Professor Patrick Barwise is a relatively rare animal, an academic with commercial instinct and pragmatism. Here he talks to Michael Warren about the ramifications of his two most recent books, ‘Simply Better’ (which won the American Marketing Association’s 2005 prize for the best recent book in marketing), and one that he is currently writing with the working title: ‘Customer Insights – Beyond Market Research’. His ability to cut through marketing myths, hype and meaningless jargon using solid reasoning reinforces his position as one of the industry’s most valued thought-leaders

Listen to other podcasts featuring Patrick

STARRING

Prof. Patrick Barwise, LBS, and co-author, Simply Better
Michael Warren, research consultant

Timeline [16m21s]
00m00s Intro.
01m18s Why the basis for ‘Simply Better’ is controversial.
02m35s Differentiation that matters.
03m53s Is ‘Simply Better’ now the received wisdom?
04m44s The objectors – Rees and Trout.
06m24s Customers rarely bother to compare all the competing brands, or use all the information available (the lack of economic rationality).
08m32s Beyond ‘thinking outside the box’.
10m33s Paddy’s new book: ‘Customer Insights – Beyond Market Research’.
13m42s Does the new approach mean greater cost?
14m23s Is ‘Insight’ puffery or something that has substance?

Notable Mentions
American Marketing Association.
Behavioural economics.
Harvard Business School Press.
Harvard Business School.
Insight.
Marks and Spencer.
Peter Drucker.
Proctor & Gamble.
Rational economics.
Research Now.
Sean Meehan.
Tesco.
Toyota.
USP.

“Differentiate or Die”, by Jack Trout and Richard Rees.

Quotes
“…the basics are what really matter to customers…and in most markets you can differentiate on the basics…” (Barwise).

“One reason the book has done well is by the time the dust has settled, people realise it’s in fact an optimistic book, a very positive book.” (Barwise).

“The rational economic model is a deliberately over simplified model. I think the trouble is that some economists don’t realise how grotesque and over simplified it is.” (Barwise).

“Very little which is sensible is completely new.” (Barwise).

“Customer complaints, everyone knows, should be a source of insight and improvement but most companies are not sufficiently exploiting that.” (Barwise).

“There’s huge importance in talking to customers directly, having senior managers spending time with customers.” (Barwise).

“…a customer insight in itself achieves nothing unless it is acted on by the people with the power to act, so that it leads to an improved product or service or whatever.” (Barwise).

“Most market researchers know the saying that managers often use research as a drunk uses a lamp post, for support not illumination!” (Barwise).

Music Theatrimus from the PMN

Thanks to Jo Bowman, freelance media and marketing journalist, for her dulcet tones in the intro and outro.

Series:MarketingTalk

Mark Earls: The ‘We’ is Mightier than the ‘I’

ResearchTalk — Tue, 13 Feb 2007 11:06:39 +0000

The assumption is that by-and-large, individuals make decisions on their own. My Herd point-of-view is that people influence each other, often without realising it

Mark Earls’ latest contribution to life, the universe and everything is gaining traction. His new book rethinks how people make decisions and discovers as a result that much of current research practice is fundamentally flawed in its assumptions and interpretation of consumer behaviour. Quite fitting for this self-styled ‘Contrarian’. The book provides psychology underpinning for many recent phenomena such as social networking, engagement, conversations, ethnography, blogging and predictive markets by showing how we act as groups and not individually. Part of our monthly column for ESOMAR’s Research World magazine

STARRING

Mark Earls, author, Herd: How to Change Mass Behaviour by Harnessing Our True Nature, Head Honcho, Herd Consulting

TIMELINE [17m19s]
00m00s Intro.
00m42s Why current research practices are wrong.
02m09s The industry is improving, but not enough.
03m21s The value of ethnography and predictive markets techniques.
03m57s ‘Herd’ questions the assumptions made in traditional research.
04m31s Improving opinion polling predictability.
05m10s Does ‘Herd’ have implications for all types of research?
05m29s Do social networking tools play a role in ‘Herd’?
06m48s The benefits of meme trackers.
07m10s Would ‘Herd’ have predicted the eventual success of SMS?
08m09s P&G Tremor panels.
08m58s Persuading others to adopt ‘Herd’ thinking.
09m35s Is Tesco a ‘Herd’ brand?
10m28s Co-creation, software beta testing and the open source movement.
11m34s Consumers co-creating ads.
12m10s Other brands that follow the ‘Herd’ philosophy.
13m03s Progressive research agencies.
14m17s Summarising the ‘model’.
15m25s Inspiration for writing the book.

Notable Mentions
Acacia Avenue.
American positivism.
Andrew Ehrenberg (Prof).
Blogs.
Bob Worcester (Sir).
BrainJuicer.
Co-creation.
David Goetz.
Digg.com.
Dodge.
Dove.
dunnhumby.
Ethnography.
Fiona Blades.
Gerald (Jerry) Zaltman: “How Customers Think: Essential Insights into the Mind of the Market”.
Hall and Partners.
Harvard Business School.
Influence maps.
James Surowiecki.
Jeff Goldblum.
John Kearon.
MESH Planning.
Mike Hall.
MRS.
MySpace.
NHS.
Ogilvy & Mather (O&M).
OLR (Opinion Leader Research).
Open source.
P&G Tremor panels.
Predictive markets.
Social networking.
Spring Research.
Stephen Phillips.
TechMeme.com.
Tesco.
The Big Chill.
Tom Daly.
Unilever.
Wardle Mclean.
Wendy Gordon.
Wikis.
YouTube.

Quotes
“Post rationalisation is more important than sex.” (Jeff Goldblum).

“Individuals are really poor witnesses to the richness of their own lives.”

“We (MR practitioners) are still very bad at predicting.”

“I know that when an idea is interesting it creates energy … whereas most of our methodologies don’t look at that as an indicator.”

“The future may be much more two-way.” (in reference to P&G Tremor panels).

“This is perhaps one of the hardest things for business and market research to understand, consumers frankly tolerate us.”

“It’s never been harder to do marketing … we are at an inflexion point.”

Music Theatrimus from the PMN

Series:MarketingTalk Series:AdTalk

Prof. Richard Scase, Global Remix

ResearchTalk — Wed, 13 Dec 2006 13:38:07 +0000

“China will account for 25-30% of world trade in 20 years time”

We all know about the surging economies in India and China and how they stand to become the largest within decades. But in this conversation with the passionate and authoritative Prof. Richard Scase, we hear how this and other global issues such as climate change and energy shortages, will affect everyone in both a personal and professional capacity. It’s not a pretty picture, but then again we need leading forcasters like Richard to get us all to act before it’s too late

STARRING

Prof. Richard Scase, Academic, Entrepreneur, and Author, Global Remix

Recorded live at the Euro MR Event 2006

TIMELINE [15m19s]
00m00s Intro.
00m45s The seismic shifts in the global economy.
02m37s China and India will soon become the main global spenders.
03m30s What should companies be doing?
04m47s Global demographic shifts.
05m12s China and India as centres for research and entrepreneurship.
07m31s The implications of global shifts on the person in the street.
09m33s “Energy prices will treble in the next 5-10 years”.
10m05s Are China and India responding to the challenge of climate change?
10m59s How should governments respond?
12m14s Will we solve the issue of energy shortage before oil and gas run out?
13m42s Richard’s background.

Notable Mentions
Capital Radio.
China.
Energy shortages.
Global warming.
IBM.
India.
Inflation.
Kyoto Protocol.
Microsoft.
Nelson Croom.
Novartis.
P&G.
Unilever.
USA.

Music Theatrimus from the PMN

Series:MarketingTalk
Series:EMRE06 Series:Events

Dan O’Donoghue, Publicis

ResearchTalk — Sun, 08 Oct 2006 14:12:54 +0000

“When you’re in a revolution there are only two sides…and the side that wins is the one going forward…buying into the modern world”

Euro MR Event 1: Re-inventing Research

ResearchTalk — Sun, 01 Oct 2006 14:21:29 +0000

“The board of Tesco still spends one week every year on the shop floor … in order to know what’s going on at the duck level.” (Patrick Barwise)

In this, the first preview podcast for the upcoming European MR Event in London, John Kearon of BrainJuicer and his roundtable of marketing and business thought-leaders discuss the future of research.

STARRING

Ed Keller, The Keller Fay Group, and co-author, The Influentials
Prof. Patrick Barwise, LBS, and co-author, Simply Better
Peter Fisk, The Foundation, and author, Marketing Genius
John Kearon, Chief Juicer, BrainJuicer (Host)

Learn more about European Market Research Event in London

THANKS
A huge thanks to John Kearon, his roundtable guests, and to Stefanie McGowan and her team at IIR Conferences for their help in producing these podcasts.

TIMELINE [29m59s]
00m00s Introduction.
01m51s The increasing importance of word of mouth (Ed Keller).
04m21s Combining insight and imagination for marketing effectiveness (Peter Fisk).
07m08s Customers value excellence on the basics (Patrick Barwise).
10m52s The close link between WoM and brand perceptions.
12m33s The role of imagination in marketing.
13m48s The state of market research.
24m21s Elevating the importance of research.
27m15s The perfect MR agency.

NOTABLE MENTIONS
Altavista.
Apple.
British Airways.
Ethnography.
Gfk NOP.
Google.
IKEA.
P&G.
ResearchNow.
Shell.
Social networking.
Starbucks.
Tesco.
Toyota.
Tremor panels.
Word of mouth.

QUOTES
“Most word of mouth – our research suggests 90% – takes place face-to-face.” (Ed Keller).

“Word of mouth is twice as important to consumers today as it was 20 years ago.” (Ed Keller).

“Averages are the worst thing that market research can deliver because no one is average.” (Peter Fisk).

“60% of market research remains unused.” (Peter Fisk).

“If you look closely at the real evidence on consumer behaviour … people very rarely choose a brand because it offers something which none of the other brands offer … people choose the brand they think [best delivers] the category benefit.” (Patrick Barwise).

“Google is not a pioneer, it’s a ’simply better’ company.” (Patrick Barwise).

“If you do the boring things very well then you make a lot of money.” (Patrick Barwise).

“The board of Tesco still spends one week every year on the shop floor … in order to know what’s going on at the duck level.” (Patrick Barwise).

“Research departments in themselves are a distraction for organisations. If we abolished research departments then in some ways we’d be better off.” (Peter Fisk).

Music Theatrimus from the PMN

Series:Events Series:EMRE Series:EMRE06

ESOMAR 3: Sahar Hashemi, Serial Entrepreneur

ResearchTalk — Fri, 11 Aug 2006 15:18:48 +0000

In this, the third of four preview podcasts ahead of ESOMAR Congress ‘06, one of the industry’s foremost entrepreneurs, John Kearon of BrainJuicer, speaks to one of the nation’s most accomplished serial entrepreneurs, Sahar Hashemi, co-founder of Coffee Republic and founder of new startup Skinny Candy. Sahar talks about ways to stimulate that all-important entrepreneurial spirit within all of us so as to cultivate innovative and fresh thinking

STARRING

Sahar Hashemi, Coffee Republic, Skinny Candy, author of Anyone Can Do It
John Kearon, Chief Juicer, BrainJuicer (Host)

Learn more about ESOMAR CONGRESS ‘06

Thanks
A huge thanks to Sahar Hashemi, John Kearon, and to VÃ©ronique Jeannin, director general of ESOMAR, and her team for their help in producing these podcasts.

Timeline [22m35s]
00m00s How Sahar became an entrepreneur.
03m07s The benefits of an entrepreneurial approach.
04m56s Following your passion.
05m50s The Richard Branson myth.
07m38s Intrapreneurship: entrepreneurship within a large organisation.
09m56s Don’t let market research blind you.
11m42s Intuition vs. hard data.
12m37s The importance of mistakes and perseverance.
17m07s Is serial entrepreneurship easier?
18m22s Living through the doubts.
19m13s Genesis of Skinny Candy.
20m52s Some words from VÃ©ronique Jeannin, Director General of ESOMAR.

Music Theatrimus from the PMN

Series:MarketingTalk
Series:Events Series:ESOMAR Series:Congress06
Series:Leadership

Joseph Jaffe, the New Marketing

ResearchTalk — Tue, 11 Jul 2006 21:44:22 +0000

James Surowiecki, ‘The Wisdom of Crowds’

ResearchTalk — Mon, 15 May 2006 16:36:33 +0000

This podcast is for anyone who cares about the way important decisions are made in business and politics. The book’s central thesis is that in certain circumstances, groups of people can be smarter than the smartest individuals within the group. And while it sounds counter-intuitive, James explains why it really does make sense and unveils the implications

STARRING

James Surowiecki, Author, The Wisdom of Crowds
Michael Warren, michael.c.warren *at* btinternet *dot* com (Host)

PODCAST
When reviewing the book The Wisdom of Crowds, The Financial Times wrote: “As readers of Surowiecki’s writings in The New Yorker will know, he has a rare gift for combining rigorous thought with entertaining example. [The Wisdom of Crowds] is packed with amusing ideas that leave the reader feeling better-educated.”

And this gift comes across in spades during this exclusive and engaging conversation in which James takes us through ‘Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations’

The book’s central thesis is that in certain circumstances, groups of people can be smarter than the smartest individuals within the group. And it’s counter-intuitive because we have all been brought up to see experts as the source not only of information but also of wisdom and good judgement.

This right-brain thinking has profound implications for the ways businesses and politics, among other things, are executed.

So, is it time for a complete rethink?

James is in conversation with our guest host Michael Warren (michael.c.warren *at* btinternet *dot* com), a familiar name in the research industry with over 30 years service, including four years at the helm of the Market Research Society.

The conversation’s a bit longer than usual but much the richer for it, I hope you enjoy.

And remember, tell us what you think about this and our other podcasts because that’s the only way we’ll know whether or not it’s been useful (contact details at the end of these notes).

Please let us know what you think of this podcast.

TIMELINE [37m23s]
00m00s General thesis and the Jelly Bean experiment.
05m52s Prediction markets (including Hollywood Stock Exchange).
07m35s The three pre-requisites.
11m02s Evidence that diversity works.
13m33s Diversity is not default behaviour.
15m36s Lessons from the NASA shuttle disasters.
20m36s Collective wisdom and democracy/politics.
23m58s Is wisdom time related?
26m07s Wisdom and the voting system.
29m48s Is market research the perfect source of collective wisdom?
32m30s Implications for politics and organisations.
36m10s James’s related projects.

LINKS
Publisher
WikiPedia article

QUOTES
On the Hollywood Stock Exchange: “In any given year, that market traditionally picks seven of the eight categories [of the Oscars] correctly.”

On group predictions: “You don’t have to identify in advance who knows what…as long as you satify the conditions to make a group smart…you’re usually going to end up with a collective judgement that is exceptionally good.”

On the importance of diversity in decisions: “Diversity expands the range of information that a group has available to it…much of the time groups don’t necessarily know in advance what tools or perspectives are really going to be valuable in solving a problem.”

On the limitations of experts: “Experts are NOT very good at identifying their own biases or blind spots.”

On groupthink: “One of the paradoxes of the book is that groups are smartest when everyone in them is acting as much like an individual as possible…but in organisations there is a real tendency to try and stress consensus…which makes groups less intelligent.”

On the NASA Challenger disaster: “…the real problem is that there was a lot of disagreement further down the organisation about what the real problem was … and most of that information got put aside [by senior management].”

On party politics: “In a party system it’s all about looking at what others are doing and taking your cues from others [which is contrary to good decisions].”

On the best way to elicit opinions: “Collective judgements work better when decisions are not framed in simple Yes/No terms.”

On market research: “[researcher] BrainJuicer tried to adopt a different model based literally on ‘The Wisdom of Crowds’…they found no meaningful differences [in response] between the two approaches [small, heavily filtered qualitative group vs. and a large, unfiltered but diverse group].”

On the implications for business: “The idea of ‘The Wisdom of Crowds’ does give more credance to the concept of having management teams instead of entrusting power to a dominant CEO.”

Music Brother Love from the PMN

Series:MarketingTalk Series:AdTalk