Rory Sutherland

You might have heard of my thing, the Dorman fallacy.

Did you?

I'll remind you.

I'll remind the viewers and listeners, which is simply that, you know, you have a hotel.

It's a five-star hotel.

It has a doorman, someone who welcomes incoming guests.

You know, a combination of, say, McKinsey or Accenture and a tech firm will come in and say, your doorman currently costs you X thousand dollars a year.

We have defined his or her function as opening the door.

We will replace said doorman with automatic door opening mechanism and an infrared human detector and we'll save you $30,000, $40,000 a year.

And then they walk away.

They take the credit for the cost saving and

And then two years later, you know, the hotel's a catastrophe.

The rack rate's fallen off a cliff because the doorman was doing multiple things, many of which were human and kind of tacit.

Security would be one.

You know, there are no vagrants to sleep in the doorway.

Hailing taxis, dealing with luggage, recognizing regular guests, providing status to the hotel.

There are loads and loads of value creation components to that doorman, which aren't captured in the open the door definition.

Yeah, so it's very, very easy.

Management consulting firms, if you're in a business and some management consultants come in, go to the management and say, are they on a gainshare agreement?

A gainshare agreement is a management consulting scam where you claim a certain percentage of the cost savings you identify in year one.