44 – Digging Deeper: Behavioral Science & the Future of MRX

Lenny: 00:00:10

Hello, everybody, it’s Lenny Murphy with another edition of the GreenBook Podcast. We are sure glad that you are here with us as we engage in interesting and hopefully stimulating conversations. I think that’s a pretty safe bet that will happen today with our guest. So, my guest today is Leigh Caldwell, one of the partners in the Irrational Agency, and if you have ever heard Leigh present or read any of his blog posts or any of his tweets as well—back in the day—he is a darn entertaining guy, so I think that we’re going to have a great time. Leigh, welcome.

Leigh: 00:00:48

Hi, Lenny, great to see you. Great to talk to you. We are actually recording this while Twitter still exists, but you’re obviously forecasting that by the time it’s released, it no longer will. If so, then rest in peace.

Lenny: 00:01:02

[laugh]. You know, interesting times, I must admit, I’ve only ever utilized Twitter for business purposes. And I won’t get into my opinions about the recent changes, but it is darn entertaining to watch at the very least. So, talk about just changing times [laugh]. We’ll see where things go. So Leigh, for the audience who may not be aware of you, why don’t you tell them a little bit about your background and a bit about the Irrational Agency? And then we’ll go from there.

Leigh: 00:01:31

Yeah, absolutely. So, I founded the Irrational Agency in 2012, with a co-founder. And where it kind of came from, I had been working in the behavioral science space for a number of years at that time. I had been working particularly on pricing research, on pricing strategies; I’ve written a book called The Psychology of Price. And I had, I guess, come to this realization there was a lot of insight to be gained around behavioral economics, behavioral science, into how people really make decisions.

Lenny: 00:03:22

Okay. We will make sure to weave that in at the very end, submit your resumes, too [laugh]. That’s great. The… gosh, I hadn’t thought about it. I guess we really have known each other about from the beginning of the founding of the company.

e systems idea in the brain:: 00:04:18

System 1, System 2, and we also talk about System 3, but maybe we will get onto that later. People are, they are definitely looking for that level of unconscious insight. And there’s been, honestly I think researchers always knew that surveys, traditional questioning approaches could only go so far. We always know that.

Lenny: 00:06:33

Yeah. I couldn’t agree more. On the Gen2 side of the business, we are working with several brands right now, and this happens periodically of reevaluating us in their vendor mix, but their approach, right, their approach to innovation within the insight space. And in all of them, it is being built around the idea of applied behavioral science across any business issue that they have. And what I hear consistently is a lot of dissatisfaction.

Leigh: 00:07:32

Yeah. Yeah, definitely. And if you want to uncover the why we kind of know that just asking consumers, “Why did you do this?” Or, “Why do you like this product? Why don’t you like that product?” Is never going to give a really deep and accurate answer. So, we had to come up with different tools.

Lenny: 00:09:11

Yeah. You know, and it’s interesting, recently I was looking—I forget the website, I’ll have to find it, but it was listing all of the nudge units, right, all of the applied behavioral science organizations from a governmental standpoint—and also within academia—and it encouraged me. It was like, we were looking at the same progression we have with virtually every technology that started in academia, trialed and scaled within government—often the military, but not only—and then filtering out into the public sector. And I think we’re at that point now where that filtering process is occurring, right? We’ve seen the academic, which I’m sure you’re familiar with as well, that proving of it, the testing within government organizations—again, good, bad, or indifferent; that’s a whole other conversation, right [laugh], and now the wide-scale adoption. Would you agree that we’re seeing that progression of the [crosstalk 00:10:07]?

Leigh: 00:10:07

Yeah, I think that’s an interesting perspective. I think you’re right. People often have an assumption that government or the public sector is always the slow one and that companies are faster-moving, more agile, more innovative, and I guess in some areas, that’s true, but in others, companies can be quite conservative with a small c. They can be very much wait and see, wait till somebody else has taken the risk and somebody else has proven this. Whereas at least in government, there is at least some political impetus towards innovation, even if it’s just a matter of, you know, a new government comes in a country and they want to look different to the old people.

Lenny: 00:14:03

Yeah. Yeah, I absolutely agree. You know, I heard—many, many years ago, I was at a Nielsen event in Cairo, Egypt. They were trying to recruit me to move to Cairo. Well, one of the key takeaways was, though, that they that wasn’t the point where Nielsen was trying to mainstream neuromarketing.

Leigh: 00:15:53

Yeah. And I think the idea that it’s about selling more stuff is true, but I think it can sound a little bit more insidious than it really is. I think you can put that another way. You can say the goal is for us to find better ways to make each other’s lives better. And you know, if I sell you more stuff, I hope it’s because I have found a way to show you that the thing I’m selling will make you happier, will make you better off.

Lenny: 00:19:10

Or we could take that in lots of different directions, Leigh. The term you used a little while ago, the libertarian paternalism, that is a powerful statement. I mean, it really—or powerful concept in resonating with what you just said, and you know, gets into the concepts of social good and all of those things. Which certainly we’re seeing a change in that of being baked in into a brand, into its mission, I think especially in the younger generation, at least younger than you and I [laugh] they are expecting that more.

Leigh: 00:19:47

Yeah, absolutely. And you know, there was a time when the social goods of a brand was seen as the satisfying the consumers of that brands with a better consumption experience. And we are now more aware of the social impact, the environmental impact, the bigger picture that is created by what we buy and how we live. And yeah, we want to be able to tell ourselves a story about that as positive and makes us feel good about our choices. And yeah, the whole dimension of purpose marketing plays into that.

Lenny: 00:21:01

Yeah. The word that comes to mind for me is authenticity. I’m sure we both rattle off examples of the inauthentic application, that splash of color, as you say, and you know, we as consumers are smart.

Leigh: 00:21:16

And cynical. Yeah, well, that’s it isn’t it? Cynical is one of those other things that we learned in our long evolutionary history is to not believe everything you hear and probe a little bit further. So, that cynicism has helped us survive over the millennia. And occasionally it can be a little too strong.

Lenny: 00:21:53

Yes well, you know, someone who may classify themselves that way as well, just for the entertainment value.

Leigh: 00:22:17

[laugh]. Yeah, and possibly running Twitter.

Lenny: 00:22:22

[laugh]. Possibly, yeah. That’s why he wants to get to Mars so bad. He’s going back home.

Leigh: 00:22:24

Well, yeah, he’s going home. Yeah.

Lenny: 00:22:28

[laugh]. All right, so you’ve mentioned the concept of narratives several times and you’ve pioneered this concept of System 3. And actually, I think you’re up for an award, right, for the MRS.

Leigh: 00:22:39

Yep. Yeah, at time of recording, we are a finalist for Innovation of the Year at the MRS, and we’ll find out next week, or by the time you’re listening to this, we will know whether we have won that award or not. Yes, so System 3, you’ll all probably know about System 1 And System 2. As I said, it’s almost become common currency in the industry, now. System 1 is the unconscious mind, that the way that you react without even thinking to stimuli and follow habits. System 2 as the calculating and deliberative mind.

Lenny: 00:24:19

Unless you’re Elon Musk. I mean, he may—

Leigh: 00:24:23

Elon my do it that way. But you know, has that worked out for him? I mean, [crosstalk 00:24:25]. But you’re also not just relying on gut reaction. That’s there; it’s definitely there, but it’s not the only thing you’re relying on.

Lenny: 00:27:45

That is very, very cool. So, it’s a projective technique on steroids, effectively?

Leigh: 00:27:52

Yeah, absolutely. Projective is the right word for it. Traditional projective qual is about using your imagination, it’s about putting yourself in a space where you currently are not. And this allows you to do the same thing on a quantitative basis, which allows you to kind of supercharge the analysis, analyze it much faster and on a bigger scale where you can get statistically reliable results. And also to do it in a, kind of, ongoing basis, so you can keep continuously collecting data and have it alert you to opportunities and trends when they happen.

Lenny: 00:28:24

So, are you seeing greater application in, kind of, early-stage innovation and in ideation for that approach?

Leigh: 00:28:31

Yeah. Well, so a couple of examples. We used it in the food and beverage industry a few times, mainly to look at either new categories—so we’ve got a company using it to explore a category they currently are not in—in fact it’s an emerging category that is still very much up for grabs, so they want to explore what that looks like to consumers and where they can find good opportunities to play. We have others where it’s a more established category, but they want to explore the influence of a trend such as sustainability. So, in the snacks and beverage world, there’s a growing awareness of the importance of sustainable packaging, but also sustainable agriculture and so on, and so we have client exploring all of that and seeing what stories do consumers want to hear about this, what story can we tell that’s both credible and meaningful and authentic? And how can we therefore, position our products in a way that people will want it?

Lenny: 00:30:31

Well, it makes me think about what does it look like when you’re combining it almost with Jungian archetypes, right, of your self-perception, your narrative that you tell yourself. I mean, I am the hero, right?

Leigh: 00:30:45

Yeah. Well, so that’s interesting. So, we definitely use this, we do extract personas from this. So, what we did is study that—in fact, this is a syndicated piece of work; you can get this from our website, at least a summary of it—on sustainability. And we found the five sustainability personas or characters that different consumers fit within.

Lenny: 00:32:24

Yeah, I’m not quite sure where I fit in that [laugh]. But more broadly speaking though, and go with that, maybe, harebrained idea of the archetypes, have you found broader personas across category, from the way people approach this idea of narratives? Have you found, you know, look, we’re going to look at the population level, you know, not around a specific product but just in general, that there are folks who approach this—and actually, let me go off for a second. When we think about it, when we were talking, was the explosion of social media, particularly around, like, Instagram and TikTok.

Leigh: 00:33:31

No, I think that’s right. However, I would say that it’s also about perspective. Because in my story, you might be the guide, or you might be the antagonist, or you might be the—you know, you might even be the person that I end up with at the end of the story. But in your story, then I’m the antagonist, or I’m the—you know? So, we each play different roles in each other’s stories, and I think that those archetypes, we all play those archetypes in different times and in different categories.

Lenny: 00:35:46

Wow. That is interesting. Have you ever read Joseph Campbell?

Leigh: 00:35:49

I’ve read a little bit of the original Joseph Campbell, but I read a lot of the narrative theory and story that has followed on from that. And, yeah, there’s a great book called The Science of Storytelling by Will Storr which I would definitely recommend. A lot of these books are written from the viewpoint of people who want to tell stories. So, if you’re writing a novel, if you’re telling a story, if you’re making a TV show, or indeed if you’re doing a research debrief, you will find a lot out there about how to write a good story. You should have your, you know, beginning, middle, and end; these are the high points; this is how you set up your story.

Lenny: 00:37:28

Endlessly fascinating, Leigh. I’d certainly, as you mentioned as we’re recording this, the results are not known yet, but I certainly hope that you win that award. More importantly, I think that this is just a… it’s another dimension of this idea of, if researchers are the keepers of the why—and that’s something I think increasingly is true for us; we don’t own the who, what, when, where, and how any longer, but the why I think is our domain—it is a vital dimension, to try and add more nuance and depth to understanding. So, hats off. It’s very cool.

Leigh: 00:39:01

[laugh]. Well, for the business, we’ve been thinking about setting up a US office. Lots of debates about that. So, you’ll know Chris [unintelligible 00:39:08] and [unintelligible 00:39:09] I’m sure. We work with them in something called The Consortium, which is a, like, a business growth club or small group that they have.

Lenny: 00:42:00

Yeah. Definitely, I think you’re right, for what it’s worth. For any brands that are listening, you know, we are in the period of disruption, it started before 2020. 2020 stepped on the gas and there’s a incredible long tail of massive change that, I think, hopefully not decades, but certainly we have many more years of continual evolving the domino effect of changes that the economic conditions that we’re experiencing now were already in play before 2020. 2020 just exacerbated it and here we are.

Leigh: 00:43:09

Yeah. Yeah, absolutely. And that’s partly done because we have this continuous research that we do in the background that clients can draw on rather than having to do everything from scratch by themselves. And also, yeah, we have our own internal technology team. In fact, before research, I came from a technology industry background, developing software, so we’ve always had that tech focus or tech emphasis.

Lenny: 00:44:18

That’s great. Leigh, it has been such a pleasure catching up.

Leigh: 00:44:26

Absolutely. Well, we’ll put this in for this time next year. And I’m sure I’ll see you at a conference or two before then.

Lenny: 00:44:33

I hope so. I hope so. Thank you so much. Congratulations on all the success; congratulations on the growth. How can people find you if they want to send you a resume to?

Leigh: 00:44:43

Yeah, irrationalagency.com. Our about page has got a listing of jobs, but you can also find me on LinkedIn. It’s @leighcaldwell. It’s L-E-I-G-H C-A-L-D-W-E-L-L, and I think I’ll come up as the top person with that name on LinkedIn. And I’m still on Twitter [laugh] at time of recording. I’m @leighblue on Twitter, so you can chat to me there as well.

Lenny: 00:45:08

[laugh]. Well, as of today, right?