Counsel - New Value Shift

FUTURE SIGNS LOWE COUNSEL LOWE + PARTNERS MARCH 2012

New Value Shift: Rethinking Traditional Value Models


The combination of the online revolution and global recession is causing people to re-think fundamental principles of economics and shared value.


Drivers and Cultural Energies

- Future Low / No growth economic predictions - ‘Occupy Movement’ - Rise of Social Networks - Expansion of Online Worlds and Behaviours - Dematerialization of Products - Increasing Appreciation of Holistic Well-being


The End of Business as Usual

With many traditional business models being overturned (power of the internet), we are in the midst of a consumer revolution that is changing the future of business, media and culture.

What is clear is the future of business will be different.

There is much serious talk about ‘rethinking’ or ‘rebooting’ capitalism. Even the Dean of Corporate Strategy at Harvard has pronounced the need to ‘reinvent capitalism’.

“The End of Business as Usual” by leading business writer, Brian Solis

One thing is clear. People are questioning the current value models:

“We are waking up to the fact we can no longer carry on business as usual. If the industrial revolution gave power to the company, digital revolution gives power to the consumer.” [1]

- David Jones, CEO of Havas Advertising Group.


Challenging Traditional Value Models

One of the most interesting effects of the current global economic situation has been the extent to which traditional value models are currently being challenged and rewritten.

This gradual shift in what people value most will have a significant impact on how people live their lives and what they consume.

Value is now seen as representing a much broader spectrum of associations.


Evolution of Value Models

Traditional Value

- Traditional ‘production functions’ (labour, capital, materials and energy; knowledge and technology)

- Profit Maximization

- Managerial Capitalism / Creating value for shareholders

- Optimizing short term financial performance

- Profit at expense of community

- Outsourcing, downsizing, relocating and globalizing

New Value

- Decentralized value generation

- Relationship with a diverse stakeholder community (employees / customers / users / suppliers)

- Focus on broader influences which determine success (assessing the monetary value of things outside the traditional economic sphere)

- Connection between competitive advantage and social issues

- Dealing with wider external factors (Social / environmental impact)


Reassessing Business Value

Current evidence suggests there will be a change in how we define prosperity, progress, success and wealth in a post / low growth world.

One of the many new approaches gathering momentum assesses progress in terms of levels of happiness and well-being.

Constructive Capitalism redefines the value equation at the heart of capitalism. It is built on a better economics that creates ‘thicker’ value: value that's meaningful to humans - not just value that pumps up spreadsheets and bonuses.

“We will start measuring our progress as a country not just by how our economy is growing, but by how our lives are improving, not just by our standard of living, but by our quality of life.” [2]

- David Cameron, Prime Minister of Great Britain.


The Rise of Personal Online Value

Individuals are beginning to recognize that new ‘value’ may come from alternative sources such as the ‘value’ of the data they generate from search and social networks.

Contemporary theorists like Douglas Ruskoff are particularly vocal in their pronouncement that when it comes to Facebook and Linkedin, users are the product not the consumer.

Personal online behavior is so valuable to brands and marketers that it is likely that they will pay to access personal recommendation and publicity via social networks.

“The hours Facebook users put into their profiles and lists and updates is the labor that Facebook then sells to the market researchers and advertisers it serves. On Facebook we're not the customers. We are the product.” [3]

- Douglas Rushkoff, Author of ‘Program or be Programmed’.

[4] [5]


Leveraging Personal Online Value

A whole new industry is emerging to provide people with the tools to control and effectively price their online data.

These services will grant people power to demand that companies play by a fair and transparent set of rules if they want to access your data.

A new user-centric marketplace is emerging that respects the sanctity of your data, time, privacy and identity (anonymity is the default).

“Personal data - digital data created by and about people -- represents a new economic 'asset class,' touching all aspects of society . . . Granting individuals control over their data is necessary to create a balanced personal data ecosystem.” [7]

- World Economics Forum Report.

“Data is a new form of currency.” [6] - Shane Green, Chief Executive of Personal Inc.

[8]


Refocusing on What is Important

All over the world people are questioning and reprioritising what is most valuable to them.

In São Paulo an underground movement has emerged around the theme of ‘lack of love’, questioning the values of the city’s workaholic society, where time spent in traffic jams reduces time spent with the family.

The disconnection that comes from ever longer hours in-front of screens or commuting is making people think about what is REALLY important in their lives.

Graffiti in São Paulo reading “Love is important. Damn.”

“The work-a-holic life and time spent in traffic jams made people very anxious and aggressive in São Paulo. So a concept of ‘lack of love’ was born. It’s not related to a specific brand, but involves an iconic product that represent the “haters” from São Paulo such as owners of SUVs.”

- Counsel Thought Leader, São Paulo.


Business for a World with New Values

Even corporate multinationals are gradually beginning to adapt to future demands from consumers.

2011 saw Unilever launch its sustainable Living Plan, which is committed to creating products that genuinely improve people’s lives.

‘We have to develop new ways of doing business which will increase the social benefits from Unilever’s activities while at the same time reducing our environmental impacts. This is why we have created the Unilever Sustainable Living Plan.’ [9]

- www.sustainable-living.unilever.com


Buy Less, Buy Used

Patagonia‘s ‘Common Threads’ Initiative – “buy less, buy used” reflects changing value models by presenting a new ‘value chain’.

Patagonia have set up an online marketplace in collaboration with eBay where customers can buy and sell used and unwanted products.

“This program first asks customers to not buy something if they don't need it. If they do need it, we ask that they buy what will last a long time – and to repair what breaks, reuse or resell whatever they don't wear any more. And, finally, recycle whatever's truly worn out.” [10]

- Yvon Chouinard, Patagonia's founder and owner.


New Value Business Models

‘One for One’ is emerging as a revolutionary new business model which offers an alternative value exchange that addresses and successfully balances the sustainability issue.

New brands like Warby Parker and TOMS are reinventing the rules of what constitutes business success.

“A huge driving force for our entire founding team has been this concept of really being a force for good in the world.” [11]

- David Gilboa, Co-founder of Warby Parker.


Implications


Movements – Embracing Happiness

Another approach to the New Value debate is to focus on ways of monitoring and increasing personal happiness levels by finding out what truly makes us happy.

Urban planners are taking the idea of sustainability in the suburbs a step further by designing entire car-free communities to encourage suburbanites to use more sustainable types of transportation.

Brands need to find ways to spread a little happiness, restoring the feel good factor by promoting the values of well-being and sociability.

“We have gone through a huge financial crisis and there has been a re-evaluation of priorities for everyone. Suddenly you are talking about young people’s lives never being as prosperous as their parents’ have been.” [12]

- TCA (The Communications Agency) Planning Director James Champ.

With so many (young) people unemployed marketers need to be sensitive about how they promote goods to this group. Offering some services free of charge and emphasizing the sociability element, marketers can keep young people engaged regardless of their income levels.


Welcome to a New Era of ‘Human’ Brands

Accessibility – Facilitated by the advent of social media interaction – has encouraged brands to become a bit more “human” in the age of new value.

Honesty is important in a world where consumers doubt the integrity of business. Companies who are able to demonstrate authenticity, humanity and a willingness to admit mistakes will be embraced by customers.

Domino’s Pizza has recently taken brand transparency to a new level by running an unfiltered customer feedback billboard in Times Square, broadcasting both positive and negative reviews.

[13]


New Value Business Practices

More and more companies are realising the benefits of reflecting changing values such as readdressing people’s work - life balance.

Its not just radical start-up, even established corporations are introducing unlimited vacation and found it actually increases productivity.

“Rather than hoard days for times when they really need it then scramble to take days at the end of the year Hubspot’s open unlimited vacation policy makes these problems go away… Employees take the vacation when they need it and we don’t have a spike of vacations at specific points of time.” [14]

- Dharmesh Shah, Co-founder and CTO Hubspot.


Leveraging Personal Online Value

More brands are now helping customers leverage their social capital by rewarding them for promoting through social networks.

American Express recently introduced the social credit card which syncs to twitter to enable savings.

Uniqlo has its Lucky Counter system - The more tweets, the lower the price.

[15] [16]


1. Jo Confino . (2011). Time for advertising to steer consumers towards sustainable choices. Available: http://www.guardian.co.uk/sustainable-business/david-jones-advertising-sustainable-consumer-behaviour.

2. David Cameron. (2010). Britain's Well-being to be Measured. Available: http://www.number10.gov.uk/news/britain’s-wellbeing-to-be-measured/

Rethinking Capitalism: An Interview with Michael E. Porter [Video]. (2011). Available: http://blogs.hbr.org/video/2011/01/rethinking-capitalism.html

3. Douglas Rushkoff. (2011). Does Facebook really care about you? Available: http://edition.cnn.com/2011/09/22/opinion/rushkoff-facebook-changes/

4. Sara Kabiri. (2011). What are you worth to Facebook? Available: http://prote.in/feed/2011/06/what-are-you-worth-to-facebook

5. Sara Kabiri. (2011). What are you worth to Facebook? Available: http://prote.in/feed/2011/06/what-are-you-worth-to-facebook

6. Julia Angwin and Emily Steel. (2011). Web's Hot New Commodity: Privacy. Available: http://online.wsj.com/article/SB10001424052748703529004576160764037920274.html

7. World Economics Forum. (2011). Rethinking personal data. Available: http://www.weforum.org/issues/rethinking-personal-data

8. Klout, http://klout.com/home

9. Unilever. (2011). Unilever Sustainability Plan:Small Actions, Big Difference. Available: www.sustainable-living.unilever.com

10. Warren McLaren. (2011). Patagonia Says, "Buy Our Stuff On eBay". Available: http://www.treehugger.com/sustainable-fashion/patagonia-says-buy-our-stuff-on-ebay.html

11. Noah Robischon. (2011). The Vision Thing: Warby Parker's David Gilboa Disrupted An Industry And Improved The World's Sight. Available: http://www.fastcompany.com/1797996/dave-gilboa-co-founder-of-warby-parker


12. Lucy Handley. (2011). Brands need to spread a little low-cost happiness. Available: http://www.marketingweek.co.uk/analysis/features/brands-need-to-spread-a-little-low-cost-happiness/3029892.article

13. Honest By, http://www.honestby.com/

14. Lydia Dishman. (2012). Unlimited Vacation Doesn't Create Slackers--It Ensures Productivity. Available: http://www.fastcompany.com/1823415/why-unlimited-vacation-policies-ensure-productivity

15. American Express ‘Tweet your way to savings’, https://sync.americanexpress.com/twitter

16. Uniqlo ‘Lucky Counter’, http://www.uniqlo.com/uk/luckycounter/


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Counsel - New Value Shift

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