Who are the winners and losers in this new Purpose Economy?
The Evolution Of Differentiation
Looking back over the past few decades, the winners have typically been companies that have beaten the trap of commoditization, which is a process where one product or service is indistinguishable from competing products or services, and is therefore evaluated by consumers on price alone. What’s more, the exponential growth of technology has also spawned the trap – and spread the curse — of commoditization.
In their seminal book The Experience Economy: Work Is Theater & Every Business a Stage (Harvard Business Press, 1999), authors Joseph Pine and James H. Gilmore argued that the only way to save our economy from devolving into one dominated by commodities was to evolve from selling products and services, into packaging and delivering experiences. And they were right!
Starbucks and other premium cafés are simple examples of this evolution in practice. There’s a reason why everyone from “tweens” to seniors are spending $5 (often more!) for a product that they can buy from a conventional coffee shop for $1 or $2, or make at home for even less. Yes, the quality of the product matters; but it’s essentially the experience that commands the premium.
However, evolution is by definition not a static phenomenon, and now, nearly 15 years after we embraced the Experience Economy, it’s time to embrace the next chapter in differentiation: Purpose.
The New Battle
One of my favourite books of all time is Positioning: The Battle For Your Mind (McGraw-Hill 1981) by Al Ries and Jack Trout.
The premise of the book is that in an over-communicated society, the way to succeed is not to focus on more communication, but to create a position in a prospect’s mind.
That is, the winners of the new Purpose Economy are the businesses that are perceived to care for, and love, their clients and community the most; i.e. the ones perceived to have the MOST heart.
On the other hand, the losers in the new Purpose Economy are the businesses that are perceived to care for and love their shareholders and profits the most; i.e. the ones perceived to have the LEAST heart.
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