Value creation in the age of the empowered consumer

Power is changing hands. Connectivity is changing how we communicate, the kinds of products we find valuable and the services we prefer. For a long time, audiences chose a product not because it was superior but because the switching costs were too high. Users were ‘locked in’ – not because of active choice, but because of the effort in actively choosing not to.

Connectivity has changed all that. This has been a lucrative space for startups to disrupt traditional business models and lure consumers with the convenience of sidestepping authority in favour of the underdog. Disruption hit phone companies in the shape of the comfort of Skype; Facebook took over from MySpace only to be challenged by Whatsapp and now Snapchat. Small enterprises find their prospects through IndieGoGo and Kickstarter and commit to sales before the products exist. Kiva has disrupted charities to connect directly with local entrepreneurs. For a while now, consumers in the UK have also had the choice of borrowing from their peers through Zopa rather than the banks.

From Company Controlled to Distributed Peer-to-Peer Conversations.

Moreover, political or corporate authorities are losing their power not just because of offers of greater convenience and freedom offered by disruptors – but also because connectivity has made the barriers to making, sharing and selling virtually disappear. Consumers have become makers and creators of their products and brand contributors. Take the example of LEGO®. As of September 4th 2014, 20 million LEGO stop motion movies have been uploaded to Youtube, growing by about a million a week, making LEGO content one of the largest subcategories of brand-related content on Youtube. LEGO fans organize conventions worldwide that attracted more than 10 million visitors last year alone. Countless photo-sharing platforms and blogs are full of user-created content – LEGO models and creations with the capacity to inspire and impress. Most importantly, the above is entirely done without company resources or influence. From these examples alone, it is clear that consumers’ ability to inform the LEGO brand outstrips the company’s ability to control it.

From broadcast to dialogue

Connectivity shapes products into services, services into relationships, and relationships become networks that evolve into communities and cultures. Connectivity also undermines the control companies have traditionally had of their message. Owned media channels and paid-for media are increasingly distrusted by connected consumers, who turn to one another for advice, recommendations and the ‘real’ verdict. This ‘earned’ media entails a different approach, a more transparent and authentic voice that can be hard to master.

Companies have realized this, and the NetPromoter Score (NPS) has become one of a new breed of business metrics, attempting to quantify a company’s likelihood to succeed by keeping tabs on consumers’ willingness to recommend a service or product – seen as a better predictor of actual value creation than satisfaction alone. The confluence of the owned and earned dimensions of human interaction entail rethinking relationships companies have with consumers to build shared value. Shared value leads to much richer, more profound and longer-lasting relationships with consumers, where consumers get more than just products and companies get more than just money.

The deadening effect of repetition in the age of connectivity 

Another implication of this change is that the consistency that previously helped companies build trust with a brand has also become disrupted. Consistency in the Owned and Paid media era was primarily created through repetition – predictable performance of products, messaging and images. As the sheer scale of this repetition could far outweigh the limited connectivity of individuals of yesteryear, influence could be guaranteed. On the contrary, in the age of connectivity, repetition has become the poster child of everything wrong with advertising and big business. The video below illustrates the sheer deadening effect of the countless clichés that make up generic brand communications and only serve to distance us and breed further distrust between companies and consumers.

Some more on this here

While companies are trying to find their way through the valley of death known as repetition, some examples of this are the mass-customization initiatives that garnered visibility in the late 00s (M&Ms etc.) and Coke now offering a hybrid of mass customisation and mass production through its “Share a Coke” campaign, where the company puts popular first names on bottles, assuming consumers at the point of sale will choose the name they want, thus ‘customizing’ their experience on the fly

While these are successful, consumers’ appetite for self-expression is far more extensive: Apple has, through their design language, spawned a speculation industry around what their following product will look like, almost pre-empting product launches and making Apple’s products look rather ordinary compared to some of the more wild concepts out there. In both cases, there is an extent of value conferred from the consumer to these brands in that awareness is aided. Still, neither has allowed these contributions to influence value creation truly. My question is: where would Apple be if it had found a way to harness the fact that 99% of the most intelligent people in the world don’t work for Apple?

Creating thriving conversations 

In the age of connectivity, consistency is becoming harder to maintain. Therefore, the capacity to engage is not through repetition but through the opportunity of consumers to create and express themselves around the brand.

In the case of the LEGO brand, the brand has a pattern – not in its messaging, but in the fact that the LEGO brick, and the countless variations in how it is assembled, create both a surprise in the things users make, as well as recognition (the LEGO brick) that make each contribution part of the collective language that is LEGO. That pattern is something that consumers can contribute to and be part of the conversation through their creations. LEGO bricks are not just a toy but a tool for expression, a medium in its own right, a language spawning countless memes and metaphors, and part of the memories of millions growing up, as well as a brand and a product. Marc Shillum, in his Design as Patterns paper, describes this phenomenon very well and helps tease apart how consistency can be achieved through a recognizable pattern yet combating the challenge of stale, inflexible repetition.

The opportunity facing brands is finding ways to enlist the empowered consumer, not as a passive consumer where in return for products, the consumer hands over money – but realising that this incredibly one-dimensional view of the creation and transfer of value is the single greatest thing holding back companies in the 21st century from re-inventing their business to harness the disruption in their favour.

In my next post I will outline how value creation can be shaped and nurtured to enlist consumers as empowered partners in networks and proactively engineer eco-systems of value creation that provide opportunities to weather competition, speed up innovation and find new routes to market.