Companies need to think about both positive and negative consumer perceptions when launching greener products, says Jonatan Pinkse.
The fact that global sales of electric vehicles (EVs) have risen sharply over the past year is a good example of how consumers are becoming ever keener to buy green products.
But despite this rise the share of EVs in the market still has a long way to go to catch up with traditional combustion engine models, with many consumers yet to be convinced by the merits of EVs. To some the vehicles are still viewed as too expensive, to others there remain concerns that they won’t be able to travel longer distances because national charging infrastructures are not sufficiently developed.
The EV market is therefore a good example of just how difficult it can still be to sell green products to sceptical consumers, partly because people still need to change their behaviour when they want to use green products.
This then begs wider questions. How can you package green products in a way that really makes them attractive to customers? And how do you market products when they might not be delivering exactly the same thing as existing products?
Sustainable innovations, such as EVs, can be viewed as disruptive innovations. Namely an innovation that reinvents a product by introducing new features as a new source of competitive advantage. Yet disruptive innovations initially tend to underperform on product features which are considered key features of mainstream, traditional products.
This creates a problem because improving a product’s technology can be very time consuming and uncertain. Yes, over time through R&D you can improve a product, but that can sometimes take decades. The issue here is that with sustainability and climate change goals we simply don’t have the luxury of time. We need to make change happen much faster.
The answer to this considerable challenge is for companies to change products in a way that they don’t rely completely on technological innovation, but as much through changing their business model. In short, they have to reframe their value proposition to address the problem of underperformance. How do you change a product so it is still very attractive to the customer, even though you know it might not be quite as good as what consumers enjoy already?
In other words, companies need to not just think about how great their product is, but also how people might consider it not so great and how you are going to deal with that.
Blue ocean thinking
As a new innovator, a key strategy for an incomer is to move into a gap in the sector which the market leader is not addressing, but which customers will value. Indeed when companies have a sustainable innovation they do have a certain freedom to move into new directions and can find that there can be unexpected users of their products.
Employing such a ‘blue ocean’ strategy is where there is probably most potential for sustainable innovation. In other words where innovation is not necessarily always a replacement, but instead a new way of conveying an experience to consumers.
So instead of consumers seeing your sustainable solution as ‘not as good as what I’m used to’, they will instead see it as something new, refreshing and bold that is really capable of changing behaviour.
To adopt a successful blue ocean strategy it is, however, essential that companies find ways of talking to people outside of their own organisations. They have to engage with people who might not really understand what they are trying to do.
So when companies come up with a sustainable innovation they have to think about all these different strategies because consumers won’t necessarily buy a product just because it is greener.
Going back to the EV market, Tesla is an example of a company that has delivered an excellent strategy in this regard. What was clever was that the company didn’t just set out to create a vehicle that had great green credentials. It also set out to create a vehicle that still had a ‘wow factor’ – i.e. fast acceleration and great design – and was therefore considered just as good as any premium car.
The result is that virtually every major car player across the world is now scrambling for their share of the EV market in the wake of Tesla’s success.
This blog is based on a recent lecture Professor Pinkse gave at a Spark summit hosted by Bruntwood Works. Jonatan’s lecture appears at two hours 30 minutes on the film. You can also read about his work on value propositions for disruptive technologies.
Jonatan Pinkse is Professor of Strategy, Innovation and Entrepreneursip, and Director of the Manchester Institute of Innovation Research.