Should Disney be in charge of large infrastructure projects?

I recently read an interesting article that included the memorable question: “What would’ve happened if you hadn’t given the brief for High Speed 2 to a load of engineering firms who immediately focused on speed, time, distance, and capacity? What if you’d given the brief to Disney, instead?”

For the uninitiated (lucky you), High Speed 2, or HS2 as it is known among friends, is the British government’s project to build a second high speed rail link from London to Manchester and Leeds. Except that until a couple of weeks ago, after more than a decade and spending more than £25bn, it went neither to London nor Manchester or Leeds. Instead, it was planned to run between Old Oak Common in the outskirts of London to Birmingham for a total length of about 140 miles. It took a change of government to reverse the insane decision not to run HS2 all the way to Euston Station (where all regular trains from Birmingham end).

Now at least we are back to a true high speed rail from Birmingham to proper London. But it still cost £25bn already and is expected to cost a whopping $232 million per kilometre. Compare this to the average cost of a high speed train line in Germany of c. $50m or in France and Spain of c.$30m. Germany managed to finish the Ulm-Wendlingen high speed rail line for $70m per kilometre. And that line went through a mountain range while HS2 goes through essentially flat countryside. Don’t get me started…

What is interesting about the Disney question is that a company like Disney would have looked at the problem in a completely different way. Engineers think about a train line as creating the fastest connection from A to B. An entertainment company like Disney doesn’t do that. Instead of thinking about how to get people as quickly as possible off the train, they think about how to keep people as long as possible in their establishments – while having fun.

And therein lies the wisdom of Disney. They know that if you make an experience entertaining or ‘fun’, people don’t mind spending a lot of time there. If riding a train wouldn’t be such a miserable experience, we wouldn’t mind spending longer on them to get from A to B.

If you think that is not true, think about flying on a plane.

Imagine you are flying from London to Sham El-Sheikh on the Red Sea in Egypt. That is a regular flight time of five and a half hours. So, you book a ticket with EasyJet or Ryanair and sit in your seat where your ears get a visit from your knees and the pilot comes on the intercom to tell you that unfortunately, the departure will be delayed by one hour.

Later, once you are about to land and you are starving and thirsty because you refused to spend the equivalent of a week’s salary on a packet of crisps and a can of Coke, the captain comes on the intercom again to inform you that due to heavy traffic, the plane will be in a holding pattern for another hour before it can land.

Now imagine you have booked the same ‘experience’ in business class on a proper airline (which in my view rules out British Airways, but that is another topic).

Let’s think about another ‘chore’ we all have to do, which is financial planning and investment. If you ask a banker or a financial adviser how to plan for retirement, they will focus on expected return and risk and emphasise the need for a disciplined investment approach and regular contributions to your savings account, etc. It’s the (financial) engineering approach to building a high-speed railway.

The problem with this approach is that if you fall only a little short of expectations, people quickly become dissatisfied. But what about building a retirement plan that is ‘fun’? And importantly, I don’t mean fun in the sense of ‘let’s all become day traders and gamble in crypto assets and Gamestop until we get rich’. That is the wrong kind of fun.

I don’t know how such a fun financial plan would look in detail, but Christophe Faugère and Renaud Gaucher argue that such an approach, which they call Happiness Finance, might lead to better financial outcomes because people are more engaged and stick to their plan for a longer time.

In the case of personal financial planning, they suggest creating the role of a financial ‘happiness’ advisor who is trained both in financial planning and psychology and happiness research. Such an advisor would then engage in client education (because we know better educated clients are happier) and actively link product and investment recommendations to the client’s happiness.

Crucially, this advice might include not selling any product because, e.g., taking on additional debt might increase stress to a client and outweigh the benefits of having a new car or a second home. Or it might include selling different products that may not be optimal from a pure risk-return perspective but might give the client other benefits that make them happier (think of sustainable investments or bragging rights for being invested in certain companies or ventures).

I know many successful financial advisers already do that to some extent, but I find it a fascinating approach to reframing any business (be it finance, railways, supermarkets, or whatever) and thinking about how they can get a competitive advantage by being more ‘fun’.