The Eurostar is a train that runs between Paris and London. It takes 2 hours and 17 minutes from start to finish.
Eurostar spent approximately £6 million to reduce the train time by 20 minutes.
Rory Sutherland, an Olgivy marketer and behavioral economist, makes the point that for 1% of the cost they could have created the same economic value had they just purchased high speed internet and served top quality food.
Sure, good internet and quality food wouldn’t have reduced the journey time, but it would have made the experience better. Now instead of wasting 2 hours and 37 minutes of your day you could spend that time being productive and work (or watch your favorite film on Netflix 😉).
The Eurostar is an example of being really good at solving the wrong problem.
The problem was never an engineering one, it was a perception one.
Solving the wrong problem for £6M
❌Pain: Train takes 2 hours 37 minutes
❌solution: Spend £6m to make the train 20 minutes shorte
Understanding the IPSO formula could help us operate more efficiently in the perception economy.
Solving the right problem for £60,000
✅ Impact of Problem: Inefficient use of 2 hours 37 minutes
✅Pain: The train’s lack of wifi means you can’t work or watch films
✅solution: Spend £60,000 to install high speed wifi
✅Outcome of solution: Customers can spend the 2 hours 37 minutes just as productively as they would if they were at home
In the perception economy, those who build solutions for desired outcomes not surface level pains will win.
The problem was never the amount of time on the train, it was how well customers could spend that time.
If you want to check out some more Rory Sutherland examples I’d recommend his book Alchemy