The current issue of Harvard Business Review has a fascinating article by former business school professor and brand consultant Douglas Holt. He advises companies looking to innovate successfully to worry not just about objective product features (the “better mousetrap” paradigm), but also on how a product makes consumers feel (the “cultural innovation” paradigm). He uses the example of minivans vs. SUVs and traditional dog food vs. the Blue Buffalo brand (bought by General Mills in 2018 for $8 billion) to illustrate his argument.
As Holt tells it, the early SUVs of the 1990s weren’t an engineering marvel or even especially affordable, but they had one very important advantage—they weren’t minivans. They created a mental image in the minds of consumers that threw off the dreary, unglamorous associations that young parents associated with the minivan lifestyle. SUVs gave confirmed suburbanites just enough excitement, while still being practical, to elevate their mood, even when hauling groceries and dropping off the kids at soccer practice.
That positive emotional association was worth billions, and launched a massive change in the auto industry that is still playing out today. In a world where even Lamborghini, Rolls Royce, and Maserati have enthusiastically crowded into the sport utility light truck space, it’s safe to say the revolution is here to stay.
In the case of dog food, Holt charts the last century or so of evolution from table scraps to commodity kibble to scientifically engineered nutrition to today’s all-natural and holistic meals that are, in many ways, the equal of human food. While such products may have any number of objective advantages over competitors, ultimately the value created by premium dog food is in the mind of the owner, not the digestive tract of the sheepadoodle. Blue Buffalo’s advertising was able to convince millions of pet owners that by switching brands, they “could ditch their newfound guilt and claim an enlightened identity” as a loving and protective dog owner.
Holt’s observation is not entirely new, of course, and has been the source of plenty of anti-capitalist commentary. The idea a corporation can plant “false desires” in people’s minds, for a product they hadn’t previously expressed interest for, paints consumer product companies as wizards of cynical manipulation. Firms are frequently attacked for launching new products that are only superficially different from existing ones rather than focusing on “real” innovation. Is the alleged ability to inspire a subjective emotional state a valid reason for a billion-dollar investment?
But the reality is that people have all kinds of needs and desires that neither they nor the market fully understand. Culturally innovative firms offer a lifestyle and self-image they hope will resonate with buyers, but only customers themselves can infuse those new products with meaning. In a market economy, individuals and families have a dizzying array of choices. They can grant or withhold their buying power from whatever products they like, and switch brands and lifestyles without warning or rationale. And unlike the technocratic critique that only “objective features” should justify a new or more expensive product, in the real economy, the customer is sovereign.