Michael Lenox and Stuart MacDonald discuss the challenges and opportunities in changing consumer behavior.
Stuart MacDonald (00:10):
If you were to weigh innovation from a technology standpoint or innovation from a behavior standpoint, which one would you favor?
Michael Lenox (00:20):
My bias is towards technology for a number of reasons. From the business side, that’s typically where their mindset goes. I use that term broadly. There’s business model innovation. There are leveraging new technologies to deliver value in just uniquely different ways. You think about how Uber and Airbnb have upset the taxi business and the hoteling business. There’s a technology part of this, but there’s also a business model part. I think clearly on the consumer side, consumers can drive a lot of change within business as they change their preferences. I worry a little bit if our solution to things like climate change is a sudden grand awakening of consumers to suddenly buy green or buy low carbon products. And I say that not to be cynical, but just because the evidence is not strong, that we will have some type of massive awakening to these issues. If you think about some of the examples we have, they tend to be more niche. They tend to be higher income individuals who can make the trade off to buy green versus others. I think markets become really powerful is when on the current dimensions of merit, a new technology or new product or service is preferable and has this spill over benefit of being sustainable or supporting things like reducing carbon footprint. That’s what excites me about a company like Tesla. Again, there are probably many consumers who in part are buying Teslas because of that appeal of being “green” vehicle or electric vehicle. But there’s many who are just buying it because it’s a high quality vehicle with a lot of interesting attributes to it. Similarly in the electric generation renewables, the idea is that if you can get this to be the low cost solution, the market will take over and these will diffuse hopefully relatively quickly, some challenges, there’s some barriers there that we need to recognize. I am supportive of kind of behavioral change on the consumer side, but I also recognize that might be a even tougher level to achieve, especially when you think about the challenges of something like climate change, which is a global challenge that would require shifts in markets and consumer preferences across the world at all income levels. That’s a tough lift.
Lenox is the Tayloe Murphy Professor of Business Administration, Senior Associate Dean, and Chief Strategy Officer at the University of Virginia Darden School of Business.
MacDonald is the Vice President of Product Development at Minneapolis-based 2DegreesCooler™.