I'm convinced that this book is on par with other famous ones for discussing our decision-making ability. And perhaps it should be the book within a classic reading sequence: Think, Fast and Slow , Nudge , and Fooled By Randomness .
Not everything that makes sense works, and not everything that works makes sense. The "Alchemy" of this book's title is the science of knowing what economists are completely wrong about.
Despite being a relatively long book, when compared to the three books I mentioned (no one can be more convoluted and time-consuming than Taleb!), Rory Sutherland manages to create such an engaging read that it is difficult to stop reading the book. It is as if everything he explains in the text was applied in the production, convincing us that "just one more chapter" was all I needed to read.
The book revolves around a main concept, which the author calls Psycho-logic, which dictates our behavior far beyond rational thought. In fact, Rory brings the evolutionary argument that our reason does not exist to make decisions in the world, but to defend our decisions, which are made even before we are conscious - a theory defended by cognitive scientists under the concept The Argumentative Hypothesis .
Behavioral psychology can help us understand how people make decisions, even when those decisions don’t make sense: the fact that we suffer much more after losing 100 reais than we are happy after winning 100 reais. Or how statistically identical sentences can mean a world of difference:
"Your surgery tomorrow has a 10% mortality rate"
"Your surgery tomorrow has a 90% success rate"
I liked the author's critique of our relentless pursuit of efficiency in business, and how accountants and economists fail to believe that our economic theory works in all real-world cases. It is important to think about how, in many situations, we are driven only by rational models of efficiency, while our companies march towards the abyss of mediocrity.
Although data-driven management and economic consumption modeling are useful tools, they are often used to justify poor business decisions. It is very easy to be fooled by decisions that seem logical and accurate on the spreadsheet, but are completely wrong in everyday life.
"The economic modeling told me to do it" is the 21st century equivalent of "I was just following orders." A direct attempt to avoid blame by denying one's own responsibility for one's actions.
Much of people's consumer behavior deviates from models created by economists and experts, and is a mystery to the logic of technocrats who do not live in the real world, immersed in theoretical rules, statistical models and rationalizations that do not work.
In many ways, to be successful in the business world, you often have to do something unthinkable, or illogical.
The example that first illustrates this concept in the book is the case of RedBull, which despite failing in all product development and consumer acceptance research, became a huge success competing with all the titans in the beverage market: selling a bad, more expensive drink in smaller cans seems irrational, but it works!
You might think that people want to make the best possible decision in a situation, but there is an even stronger force driving any business decision: the desire to avoid taking the blame and getting fired. The best insurance against this is to use conventional logic in any decision.
This possibility of escaping from conventional business logic, and taking the risk of success, is what the author calls Alchemy.
Rory himself describes 10 Rules for Alchemy
Presenting countless anecdotes, including personal stories, corporate marketing, public policies and real-world examples, Rory Sutherland takes us on a great journey through the world of Human Behavior and Cognitive Psychology.
A very interesting book and super cool to read!
I highly recommend it!
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