• John Bessant

Value shifts as innovation drivers….

January is now well past and so too is an annual event.  The CES (Consumer Electronics Show), one of the hottest tickets in town if you are involved in marketing or product development across so many sectors, takes place every year in Las Vegas.  The desert sparkles with ideas as for 3 days nearly 200,000 thousand people from over 160 countries will be sprinkled with the fairy dust of new tech possibilities.

Image Alex Knight Unsplash

It’s been going for fifty years and many of today’s staples in the huge $400bn consumer goods market first saw the light of day there –  from the early video recorders and CD/DVDs, through to the games engines like Xbox and PlayStation and to today’s mainstream products like OLED TVs or 3D printing technologies.

This year’s ‘wow’ exhibits included tennis playing robots, foldable PCs, phones you can roll up and put in your pocket, TV screens which spread out like fabric across your wall. Smart vehicles being demonstrated not only by the usual suspects but now by players not normally associated with Big Auto – Sony with its huge range of sensors, Yandex (the Russian equivalent of Google) strutting its digital stuff in the form of a modified Prius which , they claim, has already driven over 1.5 million miles on the road without a driver behind the wheel.  Of course you could forget wheels and the ground, how about Hyundai/Uber’s flying taxi concept? Straight out of the pages of a 1950s science fiction magazine, but now a serious contender for a transportation licence.  Wearables of every shape and size, smart home equipment which includes intelligent everything (how about the bathrooms complete with Alexa-enabled smart toilet?)….

The list goes on – and from an innovation point of view this is a bath in pure 100% proof technology push – a glimpse of all the things that might be.

Except that we know that half the stuff won’t appear and the other half will take much longer and change shape many times before it comes into our hands and everyday use.  Just like the catwalk where the most exotic confections emerge from behind the drapes, so innovation is a fashion thing.  Radical new ideas, bubbling out, spilling into our laps while the commentators rake notes.  Risky, surprising, exciting, colourful – but not quite the real world. Yet.

A big part of why there’s a gap has to do with an obvious point about innovation. It’s about needs as well as means and the pull side has to be there.   The best thing since sliced bread may not actually be perceived as such – as inventor Otto Rohwedder found to his cost, having to give away half of his company before he could find an investor smart enough to see the possibilities.  Even then his initial target market – bakers – were distinctly unimpressed.  It wasn’t until the local housewives got a taste of his innovation that it really took off.  (He got it right in the end; within five years of his launch over 80% of US bakeries had bread slicing machinery and it dominated the market).

As any budding entrepreneur filling in their business model canvas will tell you, we need to think about the market and work on what our target segment will value. And that may take a lot of testing and  pivoting around our original value proposition to shape and configure it to the point where its going to diffuse to scale.

So far, so obvious.  But this word ‘value’ is worth exploring a little more deeply.  The Cambridge English Dictionary defines it as ‘…..the importance or worth of something for someone…’.  And clearly much of the CES glitter is, in its nascent form, not valuable because the things on offer feel far from our daily lives, glimmers on a horizon of what might be but a long way from  our current reality.

But value isn’t just a label we attach to things, it’s also about our core beliefs around what matters.  That Cambridge definition goes on to suggest that value is ‘….the beliefs people have, especially about what is right and wrong and what is most important in life, that control their behaviour’  Values viewed in this way are critical to the question of whether or not we adopt innovations.

Technology push is not unimportant – quite the reverse.  It maps out possible directions, nudges us towards the future.  And with suitable champions it can change our lives.   Steve Jobs memorably pushing that dream of a home computer in every household or a smart phone in every hand – those were not need pull innovations so much as wedges driven into our lives which have since become an almost indispensible part of their fabric.  

But the reverse is also relevant.  Demand pull is the other blade of the innovation scissors and it’s also critically linked to our value idea.  What we value will shape our demands. At its most basic, we value food and shelter and clothing and comfort – Maslow’s hierarchy of needs is still a pretty good guide to the essential kind of innovations we’re interested in.  We may need to be educated through storytelling (the role of advertising) that we want many other things, but these stories work best when they are aligned with our core values. 

Image: Catalin Pateo Unsplash

The complicating thing about values is that they change.  Sometimes it’s a long slow process, glacier like but with the same unstoppable force.  Sometimes its a fast sudden shock which flips them over.  But values do shift – and with them the innovation landscape is transformed just as dramatically as with radical new technologies.  

Think about some recent value shifts and how they have enormous disruptive power, changing the game and driving a radically new innovation agenda.

When Walter Raleigh first brought back the tobacco plant from Virginia he pioneered an innovation which over the next four centuries grew into a huge industry.  For most of that time smoking was seen as a pleasure, something to enhance the quality of our lives.  It became socially acceptable and eventually, through clever advertising, to be aspirational – the rugged independence of Marlboro Man.  But gradually the evidence began to seep through about its negative attributes, and the slow burn led to a value shift.  Smoking became socially unacceptable, increasingly a belief backed up by legislation. The challenges forced the tobacco industry to innovate in multiple new directions. 

Or the shift in values linked to our sense of responsibility for the planet we live on.  Again concern and questioning has been around for some time about the sustainability of our consumption patterns but now we might have reached a tipping point.  When millions of schoolchildren get behind figures like Greta Thunberg and ask questions of their parents (and the politicians they vote for) then there is a powerful momentum moving in a new direction.  It drives an innovation agenda which is increasingly about green thinking – whether in automobiles, fast food or flying.  Questions are being asked, fault lines are opening up in what were once mature and established industries.  In innovation terms those industries are reverting to a fluid state, once again a space in which new entrants can experiment and where established incumbents need the capacity to challenge their core business models.

Even innovators like Zara (and its parent group Inditex) are susceptible.  The core model of ‘fast fashion’ with which the company challenged the existing fashion and textile world is now coming under scrutiny for its sustainability.  This is not a philosophical question; the people entering its stores are beginning to review their values and will eventually vote with their feet and their wallets.

Image: Oleg Sergeichik Unsplash

Value shifts are visible in many sectors.  In the world of music the pattern has been shaped as much by these as by key technological developments like the mp3.  Sean Parker and Shawn Fanning set up Napster in 1999 when they were still in their teens.  They rode on the back of a value shift towards a sharing economy in which young people could swap their music. Their actions were vigorously opposed by the established music industry, not without justification since technically they were pirates enabling illegal sharing of files.  But within a year of its founding Napster was the fastest growing start-up in history with tens of millions of users.  Labelling them all as pirates and trying to prosecute them would be like King Canute arguing with the waves.  But the underlying value shift was also opening up new lines for innovation.  What if it were possible to rethink the creation and delivery of music to take advantage of digitalisation whilst preserving the legal rights and royalties for those involved?  It took an outsider to the industry – Apple – to pioneer the alternative ecosystem architecture with i-Tunes and the i-Pod platform, and pave the way for new entrant entrepreneurs like Spotify to capitalise further on the underlying values shift.

It’s not just products – think about a sector like insurance and the services that huge industry offers.  Shifts in values – for example the importance (or not) of major capital goods like motor cars or houses apartments – can have huge effects.  In a sharing economy what people value may be very different and require radical changes to current offerings – in other words, they can trigger significant innovation search.

Image: Kyler Boone, Unsplash

So for anyone interested in innovation – new entrant entrepreneur or established incumbent – there’s a big question around how to work with value shifts? What strategies might be available?  Here are some suggestions:

  1. Invest in antennae to pick up weak signals. A major reason for attending CES is to get early warning of technology trends on the horizon and the same strategy works in terms of values.  There may not be a specific conference to attend  but there are plenty of places where those signals might be concentrated – on social media groups, through opinion leaders and influencers, via what Linda Price and Lawrence Feick labelled ‘market mavens’ back in 1987.  They were talking about people with an acute sense of emerging broad trends in the market place and tapping in to their networks could be useful

  1. Build an observatory. Rather than rely on a few data points from isolated probes it makes sense to consolidate whatever information is available and search for patterns within it.  And that means building capacity to process signals, get some sense of not only whether a value shift is coming or not but also its likely velocity of approach

  1. Watch and work with amplifiers. Complexity theory tells us that changes in social systems emerge through co-evolution, with new directions emerging through a process of feedback and amplification.    So it’s important to be in there, be in there early and be in there actively, experimenting and adapting, probing and learning around what might be game-changing social value trends. But it’s important to remember that ‘there’ may be a long way from the mainstream marketing or R&D department – the current wave of value challenge around climate change began in school playgrounds.

  1. Set up a laboratory to play around with dangerous ideas, those which threaten the core value base of the organization. Since they may well be playing with challenging ideas it makes sense to put them in a safe place, far enough from the rest of the organization to explore and simulate, but they also need to be close enough to drive change and not confined to the quarantine ward.

  1. Unfreeze the rest of the organization. Value shifts can be challenging, not least to the dominant business model in the organization.  So unless there’s a capacity to ‘think the unthinkable’ there’s a risk that the immune system will reject the incoming signals.  Setting up a specialist exploration unit is fine but they need to have the licence to break taboos, to call into question the very basis on which the business was originally founded.

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