Understanding innovation and green marketing
Disrupting disruptive thinking
Thinking “disruptively”. Every entrepreneur claims to be at it, busily devising the next Uber or Spotify. Even non-entrepreneurs are expected to at least recognise such path-breaking innovation when they see it. Yet over the two decades that the theory of disruptive innovation has been knocking around in business circles, the idea has morphed, mutated and, in some cases, become hopelessly muddled.
So argue the authors of this fascinating Harvard Business Review paper. First things first, disruptive innovation isn’t just any old idea that happens to break the mould. It’s much more specific than that. “Disruption” describes a process whereby a small, low-resourced company challenges a larger, incumbent business in a very particular way. The pattern runs something like this: the larger company focuses on improving its products and services for its more demanding (read “most profitable”) customers to the exclusion of others; a disruptive business then comes along and creates a (usually cheaper) alternative for those who have been overlooked; after gaining a foothold in the market, the disruptor then starts going after the incumbent’s higher-end customers; disruption occurs when the larger company realises that it is out of step and so adopts the new entrant’s innovation at scale.
Strictly understood, Uber – heresy alert – doesn’t qualify as disruptive. The US-based taxi service (which now operates in more than 60 countries and is valued in the region of $50bn) falls short on several counts. First, it didn’t start by creating a “good enough” (i.e. worse than existing) service to a market segment that was previously neglected, thereby making non-consumers into consumers. Instead, it started in San Francisco (where taxi provision is high) and targeted people used to taking cabs (existing consumers). The smartphone-enabled service hit mainstream customers first by offering a better, more convenient alternative, then expanded into overlooked segments: the opposite to disruption theory.
For a supposedly disruptive innovation, incumbents also responded atypically. They quickly adopted similar tactics (such as introducing hailing apps) and challenged Uber’s legal legitimacy: in short, they took the upstart seriously from the off. Why? Because Uber was competing on their turf rather than as an outlier, and it was doing so with a service that was immediately equal to or better than what incumbents were offering. This is what the authors refer to as a classic “sustaining innovation”.
Is this just all semantics and sour grapes? Apparently not. The paper argues: “We can’t manage innovation effectively if we don’t grasp its true nature.” Not all breakthroughs are necessarily disruptive. How to succeed as a disruptive innovator and how to defend yourself against one both demand nuanced approaches. Does it matter that your new product is low-end? Do you ignore the minnow nibbling away at the periphery of you business or not? Remember, the paper concludes, disruption is a process, it doesn’t always succeed and it’s usually premised on a very different business model from what came before. Last nickel of advice, ditch the adage “disrupt or be disrupted”. It’s false. Respond to disruptors, of course. Set up an internal division to explore opportunities arising from the disruption. Invest in sustaining innovations to keep core customers happy. But don’t ditch a still-profitable business. Not immediately, anyway.
Christensen C et al. (December 2015), “Disruptive Innovation?”, Harvard Business Review, 44-53
Explaining the consumer attitude-action gap
It’s a wonder that marketing professionals bother conducting surveys about consumer interest in “eco” products. Only the most obdurate or ignorant is going declare that – all things being equal – they’d rather buy a shampoo or car, say, that will ruin the planet than a similar brand that won’t.
Far more interesting is to ask why we say one thing (i.e. “yes, I prefer green products”) and do the opposite (i.e. ignore green certification labels when shopping). It’s not a new question. Yet previous studies have tended to look at conventional factors such as price, product performance and brand trust. Others have focused on socio-demographic characteristics, cognitive linear progression (the more you know about the environment, the more you’ll act to protect it), and individual “motivational drivers” (think susceptibility to allergies, emotional affinity to nature, and suchlike). All contribute to our understanding of the discrepancy between people’s pro-environmental attitudes and anti-environment purchasing, but none explain it fully.
Although this study doesn’t crack this conundrum entirely, it succeeds in opening up a new and potentially lucrative line of inquiry. It does so by considering the key role that “perceptual judgments” and “perceptual interpretations” play in shaping consumers’ attitudes and behaviours. How do people perceive green consumers, for example: as preachy, sandal-wearing killjoys (the majority) or down-with-the-kids hipsters (the minority)? What do consumers think when they hear the phrase “environmentally friendly product”: worthy but probably sub-par (the many), or must-have (the few)?
The study identifies three major perception problems with eco products, consumers and communications, which its defines as “green stigma” (“I don’t want to get grouped into that big ‘we’re hippies’ … stuff”), “green reservations” (those who aren’t easily able to see how their actions might harm others, or see how a product may beneﬁt the environment), and, the strongest of all, “it’s too hard to be green” (it takes time, money and energy to be green, plus “one also needs to be knowledgeable, live in the right place, have self-discipline and be prepared to make personal sacriﬁces”).
For marketeers, the lesson of this study is to change tack. The hard sell for going green hasn’t worked; it’s merely fixed consumer perceptions in a way that is ultimately counter-productive. “Efforts should be concerted to making green appear easy, attainable, and non-exclusive,” the study concludes. A corrective to the over-emphasis on positive environmental outcomes is needed too. Better instead to focus on the immediate personal benefits for the consumer, such as emotional gratiﬁcation, rather than on saving the planet, where the gratification is delayed and the link to your private buying choice is not always obvious. Lastly, campaign for regulation or a green accreditation scheme, as consumers must be able to trust the label on the tin.
Johnstone M and Peng Tan L (December 2015), “Exploring the Gap Between Consumers’ Green Rhetoric and Purchasing Behaviour”, Journal of Business Ethics, 132 (2): 311-328.
The German CSR Forum is organising an Academic CSR Summit in association with the Darmstadt University of Applied Sciences and Cologne Business School on 5-6 April, 2016. The title of the conference, which will be held in Ludwigsburg (near Stuttgart) in Germany, is “Market Disruption: Driver for Sustainable Development?”
The National University of Singapore’s School of Design and Environment recently inaugurated a Centre for Integrated Building Energy and Sustainability in the Tropics (CiBest). The Centre’s mission is to develop cutting-edge expertise in designing energy efficient and sustainable buildings in the tropical climate.Academic news green marketing innovation