J. Walker Smith
Growth has shifted to places beyond the reach of companies unable or unwilling to get uncomfortable
Growth is found now in uncomfortable places.
The literature on growth is vast, but almost all of it presumes that growth is a matter of following well-known principles of business as usual. This succeeds when growth is found in comfortable places. For decades, this has been the case, but it is true no longer.
Growth has not been squeezed out by adverse conditions. Rather, growth has shifted to places beyond the reach of companies unable or unwilling to get uncomfortable.
Growth in uncomfortable places is the clarifying lens that companies must bring to planning for the future. Thus, it is critical to know more about uncomfortable places. Five key facts about the global marketplace bring this into sharper focus.
Fact No. 1 is that real income per capita grew 43% from 1980 to 2016 for the middle four income deciles of the global population, according to the “World Inequality Report.” Essentially, this is the traditional middle-class. Contrast this with the bottom half of the population, which enjoyed 94% real income growth over that same period. In other words, the strongest growth is outside the traditional comfort zone. It’s true that incumbent brands have doubled down on this emerging middle class, but it’s not the same consumer.
Moreover, the top 10% of the income distribution grew 70% over this period. So growth is strongest at the top and the bottom. This idea of an hourglass economy is not new, yet the disappearance of a robust middle-class mass market is something that many brands have yet to adapt to.
Economic bifurcation is emblematic of the broader splintering of the mass market into niches of all sorts, including economics, culture, religion, identity, social engagement and—especially nowadays—politics. Every splinter requires a different strategy, and this is uncomfortable because it means grounding the economics of scale in a conglomeration of distinctive niches rather than the efficiencies of mass production and mass marketing.
Fact No. 2 is that in the 2017 Edelman Trust Barometer, for the first time ever, global trust declined year over year for all four of the institutions tracked—government, media, NGOs and business. The 2018 report was more of the same. Over the past decade, there has been an inversion of trust globally from institutions to individuals, from the status quo to reformers, from official statements to leaked information, from data to personal experience, from politeness to bluntness, from advertising to social media.
Consumers have lost connection with a broad, shared narrative and are turning instead to smaller worlds of influence and guidance. The worst of this has been described as post-truth, but it’s actually post-trust because truth requires a trusted authority to validate it, and that’s what has drifted away.
The issue is not so much corruption and incompetence as it is a lost sense of shared interests. People have come to understand that experts and institutions have their own agendas that don’t always protect or prioritize what matters to people, so they are turning to more intimate connections that offer a greater assurance of shared interests. Influence is now found in intimacy, not authority. Brands must find more intimate ways outside the comfort zone of traditional practices to convey transparency and honesty about shared interests.
Paralleling the shift to smaller worlds is an evolving view of digital technologies. Typically, the future is envisioned as more and more digitally immersed. However, the paradox is that the future is both more digital and more analog. Just as companies are getting comfortable with digital technologies, consumers are demanding more human-scale engagement as well, and not simply as a respite from digital technologies but as the very essence of digital engagement itself. In effect, consumers want an analog upgrade to their digital lives.
Voice technologies are deepening the appetite for analog interactions. Inherently, voice technologies require a conversation at human scale, thus with the rise of voice technology, analog engagement is the coming interface for digital systems. Consumers are responding in human ways already. Half a million people told Alexa “I love you” in the year after it was introduced. A JWT Intelligence/Mindshare study of U.K. consumers found that 36% love their voice assistant so much they wish it were a real person—context for fact No. 3: 26% of consumers admitted to having had a sexual fantasy about their voice assistant. Nothing is more human-scale than that!