The Innovative Brain Archive
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Business and Culture: The Inside v. Outside PerspectiveBy Margaret J. King, Ph.D. and Bret H. Rigby, Center for Cultural Studies and AnalysisThe Inside Perspective: The Business SystemWhen leading executives are asked to define the purpose of their business, many say it is to show a profit, to increase shareholder value, or to produce a specific product or service. On the surface, they are correct. But all miss the mark because these are not purposes but outcomes. Cause and effect are in reverse order. The true purpose of business is to provide ongoing and recognized value — and to continue to stay in business by providing it. David Packard (cofounder of Hewlett-Packard) declared, “Profit is not the proper end and aim of management — it is what makes all of the proper ends and aims possible.” *
“Re-focusing on value to the customer as the purpose of the business can have a direct and immediate impact on the profitability, creativity, and durability of a company.” Businesses and many company and product failures can be tied directly to the failure of businesses to provide value to their customers. This is Priority One. All performance outcomes flow from how well businesses understand this job. The shortsighted focus on outcomes, and the confusion of outcomes with reason for being, are fatal errors. They lead companies to make vital mistakes in how they are organized, how they develop their compensation policies and structure executive compensation, and how they decide what product and service offerings to make to their customers. Why do businesses continue to use outcomes to define their purpose? Because it is natural for companies to focus on those things they know best and control the most. They understand the immediate system in which their business operates. Knowledge and control of operational dimensions such as input costs and the 4 Ps of marketing (price, product, package and promotion) are believed to lead in a straight line to market success. This is the kind of rational but limited vision that supports making decisions on the basis of past practices, internal agendas, what Wall Street wants, or stockholder pressure. This “insider mentality” assumes business operates within its own universe, independent of the culture at large. The Outside Perspective: Value to the CustomerThe framework of business problems must first be on the consumer’s terms, not those of the business. The solution is applied by business methods, but the problem is framed by culture, the world of consumer needs, wants, and values. It is the customer, not the business, who makes the business successful. Business should therefore work at understanding everything possible about the consumer mind; do that, and the money will follow. This is the “outside ethic” that says the business system operates within a larger system — the larger culture (shared group values and experience, with a small “c”), driven by consumer needs and values. This is the all-inclusive system into which every other human system fits.
ApplicationPotential solutions to business problems can be very different depending on the perspective used to frame the problem. For example, falling or lackluster profits are never the problem by themselves. They reflect a far more serious situation: consumer disconnect with the product or brand.
Results of this disconnect are landmarks in business history. On the beverage front, Coke lost touch with buyers with New Coke; because 200,000 taste tests, all in favor of the new product, did not reflect the huge cultural equity in the old Coke. In food service, McDonald’s introduction of the Arch Deluxe, made to adult standards of taste and preparation, was a failure. The chain discovered that the deal-breakers who make the where-to-stop decisions were not the parents, but the children in the car, who preferred the standard kid-meal menu. In transportation, the Segway, hailed as the machine to replace walking, ignored “human factors” such as sitting, carrying, and the surrounding driving environment, so as to remain a specialty technology. Evidence of the Segway’s inability to catch on were reported by the Wall Street Journal article (2/12/2004) describing sales that are significantly less than anticipated, resulting in a second round of fundraising and a mortgaging of the factory). Brand performance erodes whenever perceived value fails to measure up to public expectations. In many cases this is because those expectations aren’t understood by the brand’s own company. The Disney Company, which the public regards as almost a public property, is under fire as its park design draws further away from Walt’s original value proposition: that the parks should be a capsule distillation of the prime cultural values in American life. Even the recent investigation into the Columbia shuttle disaster in February 2003 concluded that it was cultural factors at NASA, not just engineering ones, that resulted in the systems breakdown. The mind of the buyer is always at the base of the brand’s image: know how to read it, and you know where your product fits, up or down. Knowing how to find the “gravitational center” of a product, as marketing consultant David Wolfe has termed it, calls for in-depth study to yield intelligence-level analysis. We have found that such knowledge, which goes well beyond data and information, is not the result of statistical reviews of what people buy, nor of buyer demographics, but of analyzing the deep patterns behind the numbers for insight into why they buy. Asking and answering “why” is a far different framing of the problem from what or how, because it looks at the general culture and at human history, rather than the product itself, to describe the universe in which everything is sold.
Conclusion
*David Packard’s quote comes from the third chapter of Built to Last (James C. Collins and Jerry I. Porras, 1994) entitled, appropriately enough, “More than Profits.” |
Many of the difficulties that businesses live with are a direct result of operating under the wrong rationale. The current scandals among large
Re-focusing on value to the customer as the purpose of the business can have a direct and immediate
impact on the profitability, creativity, and durability of a company. Having the right purpose as a
baseline leads you to correctly define your business problems. This is more than half the battle;
Einstein said, “The formulation of the problem is often more essential than its solution….
If I had one hour to save the world, I would spend the first 55 minutes defining the problem and the last
five minutes solving it.” Applying Einstein’s formula to business leads us to conclude that the
overriding task of leadership is first to determine the value of the company’s product, service,
or experience to the mind of the customer and second, to bend all company efforts to providing that value.
Yet the “raise profits”
mantra continues as the battle cry of business for the next quarter or fiscal year. Seller profits (high and
low) reflect performance and their performance is the direct result of interaction (positive or negative)
with their buyers.
The cultural set of any business problem can be identified by asking what cultural values are
involved, in what context and ranking, with which groups of people, of what age development stages, gender, and
affiliation groups. Our research into Cultural Analysis (the study of how people make decisions) reveals solid
intelligence about the ways we use space, experience time, express our identity, make decisions, and relate to
our needs and relationships — all aspects of the buying process. For example, mobility in the American cultural
system — physical, mental, and social — is a primary “cultural imperative” or cultural value: a preferred
state of affairs. The mobility imperative often outweighs the basic biological security impulse and the stability
principle of conservatism that is the active ingredient in more traditional cultures. Many successful products
— from the SUV to portable food, the backpack, skateboards, the Walkman, PDA, and the cell phone —
are direct outcomes of the drive to detach at will from location and community in order to extend one’s
“range of motion’ in the form of social and environmental control. 
To be in business has always been to live and work within a fascinating paradox: the seller’s wealth
comes from giving the buyer extraordinary value. The basic unit of free market commerce is, and always has been,
the exchange of value between supplier and consumer. Those values are deeply ingrained in culture. Consumer
economics (is there any other kind that counts in a mass consumer society?) is the study of the “demand behind
the demand“: what drives people to want, need, and buy — or not. Only when this most basic unit of consumer
motivation is in place can businesses design products and marketing messages to speak clearly and directly
to the only motivations that count: the buyer’s.