I read something brilliant recently. It’s a piece by the business historian, and Harvard Business School professor, Nancy Koehn. It’s from the Harvard Business Review, and titled : American Consumption and the New Normal. I subsequently spoke with Nancy by phone, and also went to see her deliver a talk at HBS. I’ve long been a fan of hers, I loved her book Brand New, and once helped organize an HBS alumni event in Dublin at which Nancy was the guest of honor. But our recent interactions made me realize, anew, that she is one of the strongest consumer thinkers I have ever met. Her professional lens, as a business historian, and her native capacity for making sense of the consumer zeitgeist, give a structure to her thinking that is unparalleled in my world.
Beyond what she wrote in the above linked article, Nancy expanded her observations:
- In an era when big institutions have lost trust (financial, large corporations) and government can’t get out of its own way, consumers will increasingly look to their own purchase power as the most fundamental way they can effect change. And at 70% of the American economy, there is a lot of power there. Nancy says businesses and institutions think overly much about supply side opportunities and economics, but the real insights, and disruptive opportunities, are on the demand side of the equation.
- There will be a flight from the Wal-mart discounters of the world, in which cheap stuff cheapens our lives, to companies and products that support enduring and deeply-held personal values. The growing trend against mindless consumption (which was somewhat of an earthy-crunchy underground and younger mindset until the recent recession), has been greatly and permanently accelerated. She believes it is effecting lasting and gigantic change in the American approach to consumption, unlike anything we have seen in the history of the US.
- Business does have the power and motivation to effect meaningful, positive change in areas of great concern: environment, social responsibility, technology advances, job creation, etc. It has the capacity more than ever, and is our best hope for a needed and more nimble response to the very pressing problems of our age
- The Millenial generation has an appealing blend of pragmatism and idealism in its approach to business. This generation creates both demanding and unconventional responses to business and our ideas of individual responsibility.
- Information overload is endemic and people in western societies are pressed beyond the limits of human capacity to absorb. Businesses which provide a true curating function for the unwelcome flow of unwanted information will have enormous and unprecedented opportunities.
- There is going to be a flood of innovation and entrepreneurship like one we’ve never seen before. And the middle of the US, which tends to be forgotten by the coasts, needs to be both remembered, supported, and encouraged in that trend. Happily, the playing field for innovation is being levelled, geographically, anyway.
- Social media makes it possible to act on many of these opportunities in a powerful way that cannot be overstated. What might have been, in prior decades, a passing fancy of the press, or activists, or disaggregated consumers (Like, let’s demand more organic food, or more social responsibility from big companies, or better safety standards) can now be amplified and informally institutionalized in a way that was never before possible in human history. Nancy calls it the consumer equivalent of “taking back the night.” It’s no longer about thought leaders getting occasional moments in the sun to slowly effect change. It’s about leading thoughts being passed and percolated very quickly and broadly among regular people. Buy less. Use your purchases to effect change, etc. Expect more from business.
- Trust will, more than ever, be a driving factor in consumer behavior. Nancy has long understood how brands and companies build this (and can easily lose it). She believes a social media-driven era makes trust a more central driver in building economic value than ever before.
I could write a personal response to each of these very forceful points of Nancy Koehn’s and I probably will. She knows of what she speaks. (I’m also reading her newest book, The Story of American Business.)
I’ll close with my favorite quote from Nancy’s “New Normal” piece:
So despite the immediacy of the internet, the “new normal” actually means that consumers are abandoning the “next new thing” mentality that powered so much spending for the past 20 years, in favor of more enduring priorities. We are using tools at our disposal to save more but also to discern which companies and brands are worthy of our loyalty, and establishing notions of value distinct from those that prevailed for the past decade. After losing so much ground so quickly to the forces of global capital markets, households are looking to “take back the night” of their own financial futures.
This means that households will research not only the price and attributes of product or service, but also in many cases the larger story behind it—where did the offering come from, what kind of company created it, how their are employees treated. It is simply not enough to be the best racehorse on the track anymore (as Tiger Woods has learned). In the 2010s, how an individual or an organization shows up in between races will matters even more.