On externalities of good UX design and some traditional brands saved by the web
Business models are changing. Good for some, less so for others.
An externality in economics is a negative or positive effect of actions of one party to the other party that didn’t choose to be a subject of it. For instance, manufacturers can cause the pollution to their local community (negative externality), but can bring an educated and satisfied workforce to the community, as well (positive externality).
The evermore increasing convenience may not always be without other unwanted consequences.
A facile externality is an idea that claims friction in the processes is central to the progress. As The Economist observes, central to the idea is the notion that too much convenience can lead to bad side effects and results for the users, and for the society in general. For instance, paying with a credit card results in spending more money than paying with cash, or having an option to buy a product with a single click may lead to impulse buying — something you don’t need.
It’s a matter of either finding the balance between two concepts or deciding which one is appropriate in each case. Streamlined processes enable the user less hassle and offers instant gratification, but can lead to a “value erosion.” Some economists even argue that in the long run this may eliminate the ‘persistent need,’ that is the force that keeps the economies going. On the other hand, there is a so-called “Ikea effect,” meaning we have more appreciation for the product into which we have to invest our time and labour.
It’s not only the case of behavioural psychology, but the business model as well. Ikea — by getting its users to assemble the flat packed furniture — transfers the cost of labor of one part of its production process (the assembly) to the users, and at the same time reduces the cost of shipping the flat pack instead of full volume furniture. The value saved, in this case is transferred to the pockets of the customers, in the form of lower price, taking it from the local manufacturers, logistic companies, and infrastructure who would get the difference in the case of the usual production process.
Saved by the web
The development of digital technology and the web has given a boost to “non-digital” and more “traditional” companies as well. On the other side of the spectrum of the furniture industry from Ikea is Vitsœ. A Danish-named, British-owned company, has sold the same German designed products since the 1960s. Their products are prohibitively expensive, and their design and quality of manufacture make them last for generations. They follow their designer’s Dieter Rams’ motto “Weniger aber Besser,” “[Own] less, but better [stuff].” They encourage their customers to repair their products rather to buy new ones. In a Monocle 24 interview the owner and managing director Mark Adams said the web gave a second life to their very analog products and business model. Thanks to the web, Vitsœ now reaches a wider audience, and their niche market of demanding and well-off customers got substantially bigger by a web-enabled global reach.
There is a number of other traditional brands that took the chance to grow their businesses substantially by re-building their brands on the web and increasing their niche market sizes. Two of them are British apparel maker Sunspel and classic shoemaker Grenson, who took the opportunity and reinvented their classic brands, reinvigorated their customer base, and set-up their business models in the online/offline space.
Additionally, there are numerous new brands that built completely new business models by integrating craftsmanship and production methods from traditional industries with web technology and reach. One of them, a custom footwear service Undandy, lets users design their shoes online, and has traditional craftsmen make them. By cutting a number of middlemen between the producer and customer, the quality of handmade shoes has become more affordable.
VITSΠDIRECTOR MARK ADAMS:
“The Internet allows us to manufacture very high quality, in the UK, sell around the world, at a price that is quite a bit cheaper than the equivalent competition by the major brands. That is because in 2013 we were 100% direct to all of our customers worldwide, and it’s the internet that allows us to do that. It’s the internet that we use to bring us as close to our customer in Singapore, Hong Kong, Tokyo, as in Southwest London.”
Not every consequence of the progress is positive, for certain, but that is the nature of it. Developing technology enables previously unimaginable business models, value propositions, and redistribution of value. Traditional jobs are lost, but new ones are created, industries are disrupted, traditional companies are endangered, but there is more value for customers and traditional companies have to adapt themselves to new standards by reinventing themselves. This might destroy them or give them unprecedented possibilities for growth and development.
The Brand Ecosystem Design Blog is a part of a book in the making. In the coming months, we’ll build up our case from looking at where we are and how we got here, to develop the framework, tools, and language to understand and manage the brand ecosystem.
