This article introduces some ideas explored in detail in Naked Value: Six Things Every Business Leader Needs to Know About Resources, Innovation & Competition. Contact dMASS Inc. for more information (info at dMASS.net). At one point while we were writing our new book, Naked Value, we used the working title “The End of Products.” But we knew the title wasn’t quite right. We weren’t simply talking about the shift away from selling products to providing services. And while we were observing more and more physical products being replaced by invisible innovations, like the change from CDs to MP3 files, we also knew that physical products wouldn’t disappear altogether. We saw something bigger going on with innovation.
Innovation is moving in a clear direction, and it has been moving in the same general direction for a long time. The difference today is that several factors are forcing companies to innovate in this direction to stay competitive - factors like population growth, increasing demand for resources, resource supply uncertainties and price fluctuations. Meanwhile, scientific knowledge is exploding. Discoveries in biology, nanotechnology, and materials science are opening up enormous possibilities for creating products that do better with less.
This isn’t simply about increasing efficiency or about managing environmental constraints. It’s about a different approach to delivering benefits to customers using the least amount of resources possible to manage risks, control costs, and differentiate in the marketplace. For example, what if you could take the most resource-intensive aspect of your product and not only reduce the waste associated with it, but eliminate it entirely while retaining your product’s functionality? What if, instead of improving an existing product to capture a small share of the market, you established a new market with a product that delivered the same benefits in an entirely new way with a fraction of the resources? What if you could design a product that delivered exactly what your customers needed without anything they don’t need, and in doing so you were able to stop purchasing many of your company’s inputs?
As we talked more about these ideas, we started using the phrase “naked products.” We talked about stripping away resources from products. But we eventually realized that products shouldn’t necessarily be the focus. Products are delivery mechanisms; they deliver benefits. The real focus should be on value. That’s what matters to customers, companies, and investors.
Value is fundamentally about the relationship between the amount of benefits customers receive and the amount of resources it takes to deliver those benefits, everything from mining raw materials for a product to the fuel it takes to transport it. Anything a company can do to increase benefits (move up the Y axis on the chart below) or decrease resource mass (move across the X axis) is consistent with the direction of innovation. Of course, it doesn’t make sense to reduce mass by increasing toxicity; that would have a negative impact on benefits.