We know a few things about the future. We know that the use of carbon fuels will – indeed, has to – drastically reduce in the next decade or two. The consequences for the energy, transport, manufacturing and construction industries, and their employees, are immense. We know that more people will have better digital devices, and they will be more skilled at using them. The continuing rise, and occasional destruction, of internet and media businesses testifies to this. Not much else is predictable. The last few years have shown how fast things can change, and it would be risky to assume the coming period will be any different. But recent innovations from businesses around the world hint at one more trend that looks unstoppable.
When you log onto Twitter, Facebook or Instagram, you already see the future. Your experience – based on your friends, their opinions, the brands you have followed – is different than that of anyone else in the world. A part of that uniqueness is merely cosmetic: your local coffee shop shows up on your feed, mine on mine. Another part, however, is more fundamental. The feeds that make up your social media timeline generate a worldview that links you with those you have chosen to engage with. This worldview is a lens through which everything else is filtered and interpreted. It changes your experience of events in the world, the products you buy and the people you know. Everything becomes subjective. The future of business is in embracing and catering to that subjectivity.
As long as brands have existed, they have had stories associated with them. McDonald’s has its origin story of the Kroc brothers in the 1950s, Tesla and Apple have the stories of technology entrepreneurs, Chanel its legendary designer and Coca-Cola has a whole series of stories from I’d Like to Teach the World to Sing to their cartoon pandas and the Coke trucks delivering Christmas branding to the world.
The difference now is that the story is going from mere background associations to becoming a part of the product that is sold. The customer’s own life story and worldview have to be compatible with the brand, otherwise they won’t get on together. Companies can craft a part of that subjective lens which influences the preferences of their customers.
The story that shapes other parts of your life may now guide the products you choose to buy. In Britain, Leave and Remain voters buy a distinct portfolio of brands 1 with values such as ‘traditional and straightforward,’ defining Leave brands, while the values ‘innovative and socially responsible’ describe Remain brands. In the US, Nordstrom, Citibank and Walmart are seen as Republican, but Nike, Apple and Starbucks are 'Democrat' brands 2.
It is easier than ever for companies to copy the physical attributes and advantages of their competitors' products. Even a brand can be cloned, with data-driven advertising and A/B testing allowing new competitors to quickly find ways to establish their own brand as a peer. Once, market leaders could easily defend their positions with the advantageous patents, trade secrets, technology of their products, long-established reputation and retail distribution of their brands. No longer. The businesses with sustainable competitive advantage in the future will be those who invest in creating a story in which the customer is a protagonist, creating a distinct subjective experience. Companies as big as Lego and as small as the part-time craft sellers on Etsy are already on this path.
A growing understanding of neuroscience and behavioral science underpins this shift. Researchers are learning more about how people gain value from the products they buy, not just their material attributes but the way we interpret the products, the signals those products send to us and others, and the memories they evoke. Neuroscientists Darwin Guevarra and Ryan Howell 3 discovered in 2015 that experiential products, purchases which combine the attributes of physical products and intangible life experiences, provide more wellbeing than either purely material products or experiences alone. Examples include musical instruments and digital devices, which are not bought only ‘to have’ or ‘to do’ but possess elements of both, enabling new life experiences when acquired. Smets 4 cites a photograph of his grandsons as an example of a product that provides joy through the thoughts that it triggers. And an episode of Seinfeld relates character George Costanza's excitement at owning the car once driven – as he believes – by actor Jon Voight. It is not the car but the story behind it that he has purchased.
Psychologists Emily Falk and Christin Scholz of the University of Pennsylvania 5 examined how subjective values for choices are generated in the brain, and they found that this process encourages people to both share and consume stories which create greater reward for them. This neural chemistry creates the desire to reshape the story we ourselves, and others, live through. It is hard for most businesses to directly work with neuroscience research, but a number of them are learning how to take advantage of the consumer’s need to script their own narrative.
Bookseller Barnes & Noble is copying a successful model from the UK by abandoning national book lists, economies of scale and big promotional deals with publishers. The staff of local branches will have autonomy to curate the books that work in their local market. You can imagine that hipster customers in the Brooklyn Heights branch might choose very different titles than customers in Utah 6 .
Although this strategy is partly designed to compete against Amazon’s globally efficient low-cost model, it is also adopting one of its competitor’s strengths. Like every customer, I have my own personal experience of Amazon, through its recommendation engine and what it knows about me from 20 years of orders. If I’d walked through the door of a Barnes & Noble last year, I’d have had the same experience as any other customer in any of their stores. Now, the neighbourhood I live in – part of the story I narrate through my life choices – can be reflected in my Barnes & Noble.
The benefit for bookstore employees in helping create the unique stories of their own shop are borne out by experiences in the UK's Waterstones chain (whose CEO James Daunt is now running Barnes & Noble). Staff enjoy recommending books they love, the opportunity to talk about books to colleagues and customers, and the passion for the subject that is apparent in the company 7.
Cities too are curating their own stories, distinct from the global narrative that has influenced them in recent decades. Barcelona, where mass tourism has become particularly controversial, is changing laws 8 to encourage visitors rather than tourists, people who will participate in and enrich its culture with their own stories instead of diluting it with a universal story built on cheap flights and cheap beer.
We even see this form of entrepreneurship in politics: the Trump campaign has monetized stories about election fraud to raise $200 million in donations since the US election. The Biden campaign told its own stories to its own audience, raising over $1.7 billion during 2020 9. Nigel Farage, promoter of Brexit, has launched a financial product aimed at people who buy into his story of 'taking back control' – in this case not from the EU, but from the banks. Whatever your view of the objective truth of these stories, they have a clear hold on their audience.
Smaller companies are also part of this trend – in many ways they are leading it. Sujan Patel 10 quotes the founder of jewelry brand Dannijo saying that companies must 'create narratives that are so compelling to consumers, they want to build your products into their lives.'
Automating the Narrative
The trend of automation has historically been a phenomenon of the production side of the economy. The agricultural advances of the Middle Ages, the industrial revolution, car assembly lines, mass computerisation from the 1970s onwards, all made industry more efficient at creating stuff. Now, as the story becomes a bigger component of what is purchased, a part of the production process takes place inside the mind of the customer, where that story unfolds. The product is an intangible creation that emerges from a joint effort – the company's invention, and the customer's participation in the narrative.
Just like any other production process, the process of interpreting this story is starting to be automated 11. Companies are now shaping their investment stories, not for human readers, but for computers who are downloading and reading their investment reports and processing them with AI. A computer, like the human brain, processes and interprets information. As computers become more intelligent, the information they need will transcend simple data, and they will begin to respond to what humans respond to: stories.
At the most fundamental level, almost every production process has its counterpart in consumption, with value being created and passed along the supply chain in a series of transformations. One company’s output is another company’s input. Perhaps then it is not surprising that subjective storytelling would be incorporated into both sides of the supply transaction. Industrial buyers are human beings too, and they too consume stories about the goods and services being sold to them. As buying and trading become more automated, stories that appeal to computers – narratives that fit the distinctive, accelerated ways that computers 'see' the world – will become as important as those that appeal to humans.
This growing overlap of roles and identities between human and machine raises questions about employee wellbeing. Might communications tailored for AI make work less meaningful for humans? Or will an algorithm that can make well-informed decisions reduce employee stress? Imagine your role is to design new stories for an audience of computers – a fascinating challenge to be sure, but empathy with the customer is an important source of purpose for many workers, and it might be tough to empathise with a software program. Managers should involve employees in conversations about these changes, and let them contribute to writing these new stories.
The long-term results of this trend are only starting to become visible. Some researchers posit that society will move beyond shared universal stories to fragment into groups that share and create their own narratives. Some companies will be able to bridge these groups, with products that remain relevant to everyone. But a growing number will find more success in creating a story that is less generic, more authentic to a smaller set of customers. These products and services will create a more intense kind of value, more meaningful to each buyer, but can only do so by forgoing other customers with whom the brand story no longer resonates.
As economic history has unfolded, each society in turn has written three chapters. In the first, the basic needs of humanity were fixed, and farmers, traders and artisans gradually worked out how to satisfy them. In the second chapter, industrial inventions, productions and trade gave people an opportunity to learn that they could develop desires for new products. In the third, businesses used marketing to learn about new potential desires before developing products to meet those needs and narratives to sell them.
In this postmodern economy, the fourth chapter opens. Now it is the narratives themselves that sell. The stories we buy today create the landscape in which tomorrow’s stories will be demanded. In your business, are you responding to the shifting stories – or are you writing the myths that everyone else will be buying in the future?
Leigh is a cognitive economist, mathematician and founder of Irrational Agency (www.irrationalagency.com), a research consultancy that develops strategy for brands and companies based on measuring the unconscious behaviour of consumers. He is author of The Psychology of Price (2012) and the knowingandmaking.com blog.
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