Mr. Spock v. Homer Simpson Live from Sage Summit 2014

In July, Ron Baker spoke at Sage Summit and delivered two presentations. This is the first entitled Mr. Spock v. Homer Simpson. He does a great job of comparing and contrasting two schools of economics: the classical and the newer behavioral. Have a look:

August 29 Show Notes: Interview with Rory Sutherland

Rory-SutherlandWe knew our interview with Rory Sutherland, Vice-Chairman, Ogilvy Group, UK, would be an exciting and exhilarating exchange of ideas.

It’s safer to say it was an idea explosion, which will be difficult to summarize.

Because he mentioned so many useful ideas, as well as books, here are the major themes and highlights of our discussion.

Rory’s Career and Brief Biography

Pre Ogilvy (1988)

Did you meet David Ogilvy? Did you ever get to stay at his castle?

Rory’s book, The Wiki Man, which we quoted from throughout the interview.


While sick in bed, Rory read Steven Landsburg’s book, The Armchair Economist, one of Ed and Ron’s favorite economists. Rory also mentioned other economics books he’s read:

Rory discussed how Ludwig von Mises became one of his heroes. His book, Human Action, describes his theory of Praxeology, the study of human behavior, and prior science before economics, which is preoccupied with human psychology.

Ed then asked Rory: You wrote in The Wiki Man:

I think the pace of technological innovation is going to slow down. This is not a majority view, but I just think the fundamental innovations we can make just are not that huge.

But what about the driverless car, graphene, 3D printing, space travel, Bitcoin––are they disruptive or sustaining?

Ron challenged Rory on what he wrote:

I’m perfectly happy giving ideas away because an idea is worthless unless it’s executed.

Really? Thomas Sowell’s work, especially in Basic Economics, has convinced me that ideas are, always and everywhere, more valuable than their mere execution.

Try to execute a crappy idea: socialism, communism. As a creative, doesn’t the concept that “good ideas are everywhere” bother you? Good ideas aren’t everywhere, otherwise we wouldn’t get so many crappy movie remakes and TV shows.

Even you cited Henry Ford example in The Wiki Man:

Henry Ford’s reaction to a consultant who questioned why he paid $50,000 a year to someone who spent most of his time with his feet on his desk. ‘Because a few years ago that man came up with something that saved me $2,000,000,’ he replied. ‘And when he had that idea his feet were exactly where they are now.’

For more on the idea that ideas are more valuable than execution, see Ron’s blog post here.

Marketing, Branding and Advertising

 Ron asked Rory about Peter Drucker’s statement:

 Because its purpose is to create a customer, the business enterprise has two––and only these two––basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs.

Rory wrote:

The purpose of marketing is to turn human understanding into business or social advantage.

On brands, you wrote:

I suggest it is by far the more valuable economic role that brands play: not to be a promise of ultimate superiority but a cast iron assurance of pretty dependable non-shitness.

And you said that you can’t understand brands without understanding “satisficing,” the Northumbrian term that means to choose the first option that is satisfactory; “good enough” (combination of Satisfy + Suffice).

Herbert Simon in his book, Models of My Life, describes “satisficing” and “bounded rationality.” Ron also mentioned Peter Drucker’s autobiography: Adventures of a Bystander.

‘Effing Debate: Efficiency vs. Effectiveness

Humans don’t like pure efficiency. Rory talks about Arithmocarcy and why the most dangerous technology is the spreadsheet.

Math requires calculate solution, then enact it. Hueristics allows us to do both in parallel—i.e., catching a ball.

In The Wiki Man he wrote:

…how, in their endless, dogged pursuit of a false efficiency, organisations can be rendered slightly useless. And stupid.

Remember that the word “dogged” is derived from the word “dog” meaning “energetic and stupid.

…belief in false efficiency is very simple; it comes from the belief that improvement comes from the elimination of apparent waste.

Rory also quoted Jules Goddard, professor at the London Business School and author of Uncommon Sense, Common Nonsense:

Strategy is the art of staying one step ahead of the need to be efficient. (Ed’s note: This was the take away quote of the interview!)

Hourly Billing and Timesheets

Ed asks Rory about David Ogilvy taking responsibility for introducing the billable hour to ad agencies, in his book, Ogilvy on Advertising. Probably his biggest mistake.

Rory explains why he did it, and how entrenched hourly billing has become in ad agencies.

Last question for Rory: What’s he Reading now? Some fiction, and Super Cooperators by Martin Nowak. He also highly recommends The Origins of Wealth by Eric D. Beinhocker.

Two of Rory’s Presentations You Need to Watch


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