Here’s a simple thought experiment for you. Let’s say only two consumer packaged goods (CPG) companies exist in the world, and each of them has a 50% market share in every product category — from cosmetics to cleaning products, it’s an even split.
Now, let’s say the innovation team at Company 1 decides they’re going to re-imagine their products. They ask themselves two questions:
- Will more people want to use this product for the benefits it offers them? (Utility Value)
- Will more people pay us to use this product? (Monetary Value)
Meanwhile, Company 2 is also planning its product roadmap. They ask themselves the same two questions as above, and they add in two more:
- Will this product make people’s lives better? (Human Value)
- Will this product make cities and communities stronger or healthier? (Ecosystem Value)
If we fast forward five years, and no new CPG companies have entered the market, how will our two companies split the market? Well, if Company 1 innovates in categories Company 2 doesn’t touch, Company 1 will dominate. They’re creating more utility and monetary value with their product, and more people paying more money for that product means more profit.
However, if Company 2 innovates in the same categories as Company 1, Company 2 will absorb more market share. Maybe they’ll gain 10%, maybe it’s 20%, but we’d all say that Company 2 gains ground over Company 1, because they’re creating a certain human and ecosystem value, too.
The Four Kinds of Product Value
So what does our thought experiment tell us?
- Our products can create multiple different kinds of value.
- Markets trend toward the products that create the most total value.
And therefore, corporate innovators charged with carving out a stronger market position in the long-run need a new lens for evaluating their products — and the partners they work with to build them. So, how should we think about the different kinds of value our products can create?
Through the Values-Driven Product (VDP) — a product that embodies all four of the value dimensions we just raised:
- Utility Value — Will more people want to use this product for the benefits it offers them?
- Monetary Value — Will more people pay us to use this product?
- Human Value — Will this product make people’s lives better?
- Ecosystem Value — Will this product make cities and communities stronger or healthier?
You Can Have it All
Human value and ecosystem value are, by nature, abstract. If you’re like me, you don’t believe it until you see it quantified. Give me the data! It’s tough to put a dollar sign on this kind of value — but let’s do it anyway, referencing a couple of market studies from the past few years:
- Unilever reported that its “Sustainable Living Brands” grew 69% faster than the rest of its business, and delivered 75% of the company’s overall growth.
- Cone/Porter Novelli found 66% of consumers would switch from a product they typically buy, to a new product from a purpose-driven company. (91% among millennials.)
- IBM’s research found consumers are willing to pay a roughly 35% price premium for products that are sustainable and built for a bigger purpose.
- Deloitte found 30% higher levels of innovation among companies led by authentic, human-centered purpose.
- These stats are generally consistent in emerging markets, too.
So, if we’re only measuring value by profit to remove any abstractions, it’s still reasonable to say you’ll have (1) acquired more customers; (2) the ability to command higher prices; and therefore (3) more total profits (i.e. value) created by incorporating a purpose beyond profit in your product.
The point here? You can have it all. By giving human livelihood, prosperity, and progress equal consideration as profit when planning your innovation roadmap, you’ll create more total value. And that pays off over the long run.
A Case Study: How Values Drive Partnerships
My job gives me a front-row seat to watch innovators build new (or rethink stagnant) products. Increasingly, I see corporates working with startups to source tech and creatively solve customer problems. The challenge, though, is there are thousands of startups out there. Finding the right partner to stake your time, money, and reputation on is hard. Really hard.
But every once in a while, the right partner comes along. They stand out because they not only have a solid, profitable business case behind them, they’re adding value to humans around them. That was the case for Craig Dubitsky, a serial startup founder who I recently “Zoomed”. He founded Hello Products, and has repeatedly turned commodities into highly-desirable products and brands by incorporating human and ecosystem Value into everything his team does.
For example, they created the Dental Pass — a $99 annual pass that saves you 20-50% on most dental procedures. It’s a product that creates profit, for sure, but it also creates access for under- and un-insured people who need dental care. (Oral health is directly linked to overall health, by the way.) It also enables a whole ecosystem of dentists to find and connect with more patients.
Colgate-Palmolive took notice of what Craig’s team was doing and it acquired Hello Products last spring. When I asked Craig how he knew they were the right partner (or should I say, “parent”), he said they were totally values-aligned.
Colgate-Palmolive is committed to the same vision, and the acquisition opened up a whole new world of opportunities. I learned that, amazingly, Colgate-Palmolive brands are found in 62% of households in 200 countries, across dozens of categories. So matching Hello’s products and brand with Colgate-Palmolive’s scale is creating incredible value for our world.
“The idea that we could bring our naturally-friendly offerings to people all over the world was beyond exciting… now we can scale in ways we could only dream about before the partnership,” Craig said with a big smile.
How to Build a Values-Driven Product
Ready to build your next product, or find your next partner to help? Let’s bring this home with a set of simple steps you can use to apply this thinking to your innovation roadmap:
- A Values-Driven Product is your vehicle for bringing about an external, empowered vision, so make sure to step back and begin with vision.
- Identify what your customers need to live out this vision, what your products do today, and where the gap exists. (e.g. our vision is a zero-cavity future for 2 billion children, and our products help children prevent oral issues like cavities, but they don’t help restore damaged or decaying teeth)
- Develop a series of value propositions that map to each of the 4 different types of value covered above. (e.g. get access to the professional dental care you need, without paying insurance premiums)
- Create a series of hypotheses that state how a new or redefined product will enable that value proposition. (e.g. dentists will agree to discount their prices in exchange for access to net-new patients they wouldn’t otherwise see)
- Determine if you have the resources you need to pilot and prove your hypothesis in-house, or if you need a partner. (e.g. has someone already tried this? Can we partner with them, or do we have to start from scratch?)
- If you need a partner, find or build a startup that can pilot something with you, to try to validate or re-formulate that assumption. (e.g. who’s the “Hello” to your “Colgate”?)
We look forward to seeing how you use your products to not only generate profit but also build a world of prosperous, thriving people and ecosystems.