Royal Mail

The looming threat of cost reduction fetishism As we approach 2026, Rory Sutherland observes a troubling trend in corporate behavior: a fanatical preoccupation with cost reduction and regulatory paranoia. Most modern businesses operate in these two modes, often ignoring the very departments that create value—marketing and R&D. Sutherland argues that the massive investments in AI will soon demand a return, leading tech firms and consultants to sell automation as a headcount-reduction tool. This trajectory risks repeating the "doorman fallacy," where a role's obvious function is replaced by a machine, but the subtle, unquantified value the person provided—security, recognition, and status—is destroyed in the process. Why the Chicago School is winning a losing battle The current business climate is a clash between two economic philosophies. The Austrian School of Economics, led by thinkers like Ludwig von Mises, argues that value is entirely subjective. In this view, the person sweeping the restaurant floor is as vital as the chef because they create the environment necessary to appreciate the food. Conversely, the Chicago School of Economics views business as an efficiency mechanism. Because this model fits perfectly onto a spreadsheet, it has become the dominant paradigm, treating marketing as a cost to be minimized rather than a discovery mechanism for value. The high price of invisible value destruction Sutherland points to Self-checkout tills as a prime example of value destruction masquerading as progress. While efficient for the business, they offload labor onto the customer, transforming an optional convenience into a mandatory chore. This "asymmetric position" allows finance departments to claim credit for cost savings while remaining unaccountable for the resulting loss of customer loyalty, increased shoplifting, and the erosion of the human experience. In service industries, the human element—like a friendly postie or a helpful call center agent—often trumps operational efficiency in determining brand perception, yet it remains undervalued because it is difficult to quantify in the short term. Reinventing the process around new technology True innovation occurs only when processes are reinvented around new technology, rather than using technology to patch old systems. Sutherland uses the historical transition from steam engines to the electric motor as an analogy. Initially, factories simply replaced one big steam engine with one big motor, seeing trivial gains. Real progress only arrived when they realized small motors could power individual machines. For AI, the third phase won't be "cheaper versions of old tasks," but a proactive model where agencies produce content unasked for and find buyers later, turning events like Cannes Lions from retrospectives into active trade fairs. Marketing as a way of thinking, not just doing The final takeaway for business leaders is that marketing's true value lies in its perspective, not its department. Engineers and rationalists often make "seriously dumb" decisions because they optimize for metrics like speed and cost while ignoring human psychology. Sutherland cites Concorde as a masterpiece of engineering that failed the human test on its return leg from New York, forcing passengers into an inconvenient schedule that ignored their perception of time. Marketers must stop defending what they do and start selling how they think—offering the 180-degree flip that prevents organizations from optimizing themselves into oblivion.