The Relationship Between Consumers and Business is Changing From the Bottom Up

January 26, 2012
  • Aron Cramer portrait

    Aron Cramer

    President and CEO, BSR

When most people think of Davos, it is highly unlikely that the image that comes to mind is senior business executives and NGO leaders on the floor building models from materials that can be found in an average pharmacy. But that was exactly the scene Wednesday afternoon during the workshop I ran entitled "Consumers as Innovators."

Much of the debate at Davos centres on what big institutions can do to restore economic vitality and growth. The "bottom up transformation" is equally important to economic recovery, and consumers may well be part of that. Consumers have unprecedented opportunity to be active shapers of the products and services they buy and use, rather than passive receivers, taking whatever companies provide.

Signs of this are everywhere. Just as everyone connected to the Internet can tell the world what they're thinking via Twitter, consumers can make their own products using 3-D printers, or by designing their own version of consumer products like Nike shoes. Just as citizens can express their own views about restaurants or political candidates, they can make choices based on social and environmental criteria using resources such as the Good Guide. And just as people self-organise on Facebook or Google+, they can engage in the sharing economy through mechanisms such as Zipcar, the car-sharing company that provides an alternative to individual car ownership. Examples like this show that this is not a vision of the future, but actually a present that is beginning to emerge more powerfully.

The one-way relationship that companies have grown used to is collapsing under the weight of digital technology, decentralised power, and a taste for individualised products and services. The increasing urbanisation of the world's population creates a density that enables the sharing economy to thrive. Digital natives are growing up with the expectation that they can create or customise their products and services, and "like" the things they love. This is causing companies to think differently about how to capture the youth market that businesses crave.

Yesterday's workshop explored this fast-changing relationship between businesses and consumers. The question on the minds of many of the business executives in the room was "is this good or bad for business". The answer to this particular either/or question is undoubtedly both. Companies that stay ahead of this curve by involving consumers in product design; providing transparent information about the social and environmental content of these products, and looking at new models to provide value in new ways will prosper. Those that don't will find growth hard to come by.

The debate in the room delivered several useful insights. One person noted that in engaging with consumers, companies had to "learn helplessness," by which he meant that companies had to restrain their traditional role of presenting all the answers, and engaging more fully in a listening exercise. Another participant observed that the life of companies could be shortened with consumers shaping more of the products they buy: "The average life of a company in the Fortune 500 is 15 years; the consumer shaped world could reduce that," like "pop-up stores" that are designed to come and go.

Many of the concepts thrown around in the workshop were considered easy to adopt in a Davos session and harder to integrate into company processes. But that may be exactly the point: one representative of a large multinational consumer goods company was delighted to think how consumer-led innovation could erase the normally bureaucratic process her company takes: "consumer-led processes are better than filling out endless forms."

As the six groups worked on their projects, it also became clear that some things never change: Half of them designated celebrity spokespersons for their products. Even in a consumer-led world, it seems Lady Gaga will still have lots of endorsement income.

This was originally published on the Guardian Sustainable Business Blog.

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