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Single Bottom Line Sustainability
When Will the Citizen Mind Go Shopping?
Automakers claim a responsibility to consumer
mind reality, but they better pay close attention to the citizen
mind that's emerging.
by paul gilding
Working in the day-to-day reality of
corporations, simplistic assumptions that I developed outside get
grayer. Discussing these issues with friends, you start sounding like
a corporate apologist: “Well, it’s actually more complex
than that.”
As a case in point, I was discussing this column with my wife Michelle
and she said, “Tell the auto industry to make more efficient
vehicles—we all know they could if they wanted.”
So let’s examine that. First, to declare interest and acknowledge
an insider view: Ecos has worked with the auto industry in small interactions
with Toyota, General Motors and Honda and, in a substantial way, with
Ford.
The challenge is this: The auto industry’s main product—the
car—is a major cause of climate change, creates most of America’s
energy security problem and makes its cities unhealthy and unpleasant
(not to mention that it kills tens of thousands of people every year,
but we’ll leave that for another column).
While they might not put it that bluntly, U.S. auto companies understand
the problems. However, when it comes to fixing them, however, (and
yes, Michelle, they could), they blame the customer. The challenge
is that solutions involve internalizing externalities, i.e. the customer
paying directly and short-term to fix problems that are costing them
indirectly or long-term—health costs, military conflict, inefficient
cities and climate change. And customers are not showing signs of
wanting to pay.
So it’s the customers’ fault, right? Well, no. Toyota and
Honda are significantly in front of U.S. companies. The hybrid Prius
is an example—better mileage and lower emissions without compromising
safety, fun or reliability. Subsidized by Toyota? No—a clever
investment. Its brand is being positioned as “responsive to customer
concerns” and “technologically advanced” while they
shape the market to suit their technology.
But it is not easy for the American auto industry. Japanese companies
have home demand pushing them. U.S. companies have home demand saying
they care about environmental impact, but with little effect on purchase
decisions. This dilemma is a constant cry of companies with which
we work. “We can deliver solutions, but the customer won’t
pay.” So where are the “green” consumers? Do they really
exist?
We have two responses for companies that raise this argument.
Firstly, this is an emerging issue and it’s hard work. The opportunity
is leadership, and it is a complex path to navigate. However, if you
wait for customers to push you in a new direction, you’ll be
the victim of the market, not the leader of it.
Secondly, think differently about the consumer. There is no “caring,
sharing, green consumer” any more than there is an “environment
destroying, forest munching, SUV consumer.” We all have a bit
of both in us. It’s like different parts of our mind operate
at different times. Citizen mind sits at home answering surveys about
intent. Consumer mind goes shopping.
So can a company ignore these deeper concerns and just sell to consumer
mind? Yes, if they only plan on staying in business for a year or
two. If they have a longer view, they’ll see citizen mind as
an insight into the emerging future of consumer mind. They’ll
also see citizen mind as an insight into voters’ likely influences.
Over 80 percent of Americans think the auto industry should face tougher
regulations on fuel economy. Ignore that at your peril, Detroit.
However, it is complex. Consumer mind does not send a consistent message.
Why are Toyota and Honda increasing U.S. market share while Detroit
is losing it? Not because they’re committed environmentalists,
which they’re not. They’re winning because they’re
responding to consumer mind reality, but listening to citizen mind
emerging. They’re producing bigger SUVs for the U.S. market while
selling hybrids and making their whole fleet more efficient. They’re
playing to both sides of the purchaser’s mind.
So the way forward for the U.S. auto industry? Three guiding rules.
* First: Ignore the coming change at your peril. The mass consumer
might not yet be demanding change, but given the climate, science
and consistent public environmental
concern, the world is going to have dramatically more efficient vehicles
before long. Are you sufficiently hedged for the risk of a discontinuous
shift?
* Second: Stop blaming customers. They know what they want.
Yeah, yeah, I know—they want it all, they want it now and they
don’t want to pay for it. Sound like your teenage children? Welcome
to the customer of tomorrow. It’s the market, stupid. They demand.
You supply.
* Third: Shape the market. You say no to Kyoto and no to U.S.
fuel economy regulation. What’s your better idea? Toyota’s
is hybrids. So stop whining and do something! Find out how to turn
your customers’ citizen mind on while they’re shopping.
Toyota and Honda are selling high-tech, fun cars that go fast, drive
safe and reduce the conflict between the consumer and the citizen.
Their market share’s increasing. How’s yours?
Or you could take a more measured strategy. Wait and see. Stand back
and watch sea levels rise and then . . . maybe sell boats? Sounds
like a dinosaur strategy. Hope you can swim.
Paul Gilding (paul.gilding@ecoscorp.com)
is the founder and CEO of Ecos Corporation, which provides strategic
advice to corporations on how to create value through sustainability. |
