The following is an excerpt from the book, A Whole New Strategy.
Rick is a middle manager in his finance company. He’s in his late 40s and has two kids in elementary school. He’s worked his entire life, and he and his wife bring in a decent living. They’re comfortable but by no means wealthy. Rick sees himself as a “rational guy” who is good with numbers and research. He’s done his homework before he walks into the car dealership (he’s just not that comfortable buying something like a car online). He knows the area prices of the sedans he’s interested in as well as the depreciation and ownership costs. He discusses his needs with Rachel, the salesperson he sees when he walks in: the two models he’s most interested in, the option packages, the colors, the wait for delivery, etc. But, the entire time, he can’t help but glance over to this little red, sporty convertible on display in the glass corner of the showroom. He’s admired that car since he was in college and it’s even better than the model he admired then.
This doesn’t go unnoticed by Rachel, who sees this a lot. She knows Rick’s type: a self-identified stick-to-the-facts, rational guy. She answers all of his questions but while they’re waiting for information on inventory to come back from the system, she walks him over to the—many of you have already guessed it—convertible. Fast forwarding to the end: as he’s driving his new sports car through the foothills (he’s taking the long way home, of course, to enjoy his new car), he is grinning as wide as his face could possibly allow.
He. Is. Loving. Life!
He pulls into his driveway, gets out and walks the path to his front door with an excited gait, and turns back to look lovingly on his new acquisition just before he opens the front door to his home.
And, then it hits him.
What has he done!? He’s definitely gone over the budget he and his partner set for the car and it dawns on him that it doesn’t even fit the kids (being a two-seater)! Where is he going to put his family? How did this happen? He’s a rational guy, after all!
Now, this isn’t by any means a rarity. People buy cars like this every day—and not just cars. For some, it may be computers or consumer electronics, sporting equipment, hunting equipment, handbags, shoes, jewelry, makeup, or homes. We don’t all do it for every category but we all do it for some categories. They represent the things we most care about.
Traditional economics and businesses say that we’re “rational actors” and looks on this behavior (even as they profit from it), as an aberration of some kind—a weird, unreliable quirk. Even Rick thinks he’s made some kind of mistake as he’s a calculating guy—literally. It’s his job! (By the way, everyone knows people aren’t entirely rational yet it’s still taught ad nauseum in economics course sand business programs and the people who most need to understand it’s falsity, this helps them ignore what is obvious to everyone but them.)
Even some psychologists still call this “irrational” behavior. But, has Rick truly been irrational? He may not have recognized that he had unfulfilled needs and desires—perhaps, to feel more accomplished, more virile, more successful, even younger. These may have been unconscious aspects of his self but they are very real, very normal, and very powerful—almost always more powerful than decisions about prices and performance.
So, why does traditional business only focus on price and performance: Financial and Functional value? This approach misses many important factors and leaves significant value on the table? I find this to be one of the biggest missteps in business. Salespeople already know that if the price and performance adage were true, they wouldn’t have a chance to make a sale (and wouldn’t be needed). They would be mere order-takers and order-fillers.
But what if I tell you that’s not even the only or most important “missing” value from business? There are two other kinds of value that are more personal, more hidden, and more enduring than emotions (which typically fade after 30-120 seconds anyway if not continuously stimulated).
Identity value is about how we define or envision ourselves. It’s more than just emotions. It’s why there are Coke people and Pepsi people, Windows people and Apple people, iOS and Android, Real Madrid and FC Barcelona. In fact, it’s the reason sports is as big an industry as it is. It’s why brands have any value at all (and, believe me, those companies with valuable brands understand this well). It’s where our values reside, whether they’re about freedom, expression, religion, or any other institution in our lives.
Read more in A Whole New Strategy
Or, watch the video on the 5 Kinds of Value
Or, read more on the 5 Kinds of Value
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