Rory Sutherland

The importance of selective inefficiency

You can judge a business by the things it does that aren't strictly necessary

The importance of selective inefficiency
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Readers of a certain age may remember choosing a cassette player in the 1980s. In theory the process was simple: we would have read reviews of competing devices in audiophile publications and then bought whichever device scored best in terms of sound quality, reliability and value for money.

Except we didn’t do this, did we? We went into Comet, looked at three or four examples we considered most attractive, and then pressed the ‘eject’ button on each of them. Invariably we bought the cassette player with the most elegant eject action. If it gracefully whirred open with a sweet damping movement, that was a clincher. Any device in which the cassette holder lunged open with a ‘clack’ was rejected as manifestly rubbish.

To understand this, you need to study the Kano Model, from Professor Noriaki Kano at the Tokyo University of Science. It has been refined over the years, but the essential observation is that different attributes of a product or service have wildly different effects on customer satisfaction, and that elements only tenuously related to a product’s main function may have an immense influence on whether people think it is good or bad.

Is this another example of human irrationality? I’m not so sure. The extent to which a business cares about the finer details of what they are selling is rather a good clue to the psychology of the seller; just as you get a better idea of a person’s character by noticing how they behave when no one’s watching, so you get a better idea of a business by judging the things it does which aren’t strictly necessary. I once met a brilliant man who owns a chain of hair salons: he spent a fortune installing marble lavatories in new branches. Everybody expected the salon itself to look good, he explained; it was the loos which were the real proof-point.

Similarly, if you visit the excellent burger chain Five Guys, you will notice that your fries come in a cup: large, medium or small. Yet, having filled your cup, the staff invariably throw in a generous extra scoop of fries into your brown paper bag. These are the fries which, strictly speaking, they don’t have to give you, but they do — a 21st-century baker’s dozen. A boringly logical man would make the cups larger; an accountant would cut the extra fries. Both decisions would make the experience worse.

When people try to introduce market competition into a monopoly or public sector organisation, what they generally mean is ‘to make it ruthlessly efficient’. This is a mistake. Successful private sector organisations usually follow the Kano model — they learn to practise selective, symbolic inefficiency because customers like it better that way. The problem with obsessing too much about public sector ‘efficiency’ is that you become trapped by ‘intrinsicism’: the belief that the value of a cassette deck lies solely in the quality of sound reproduction. Much of the public sector suffers from this: it does quite a good job of playing cassettes, but when you press eject, it goes ‘clack’.

My proposal is that 1 per cent of the NHS’s annual budget should be spent on Kano improvements: selective, visible wastage designed to make people feel good. With just £100 million spent on attractive furniture, up-to-date reception copies of Country Life and an occasional ‘Would you prefer the afternoon, sir?’, you’d be offering half the benefits of private healthcare straight off the bat.

If you’ve ever wondered why Scandinavians are so happy to fund their public services, it’s simple: they don’t have any horrible plastic chairs. Waiting for two hours in A&E must feel surprisingly pleasant when you’re on a Jørgen Gammelgaard sofa.

Rory Sutherland is vice-chairman of Ogilvy Group UK.
Written byRory Sutherland

Rory Sutherland is vice-chairman of Ogilvy Group UK. He writes The Spectator's Wiki Man column.

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