The risk in introducing new company product lines
As we are reaching 2020, innovation is almost a worn-out concept in today's business. While we have been touted that companies need to innovate to survive, we are also seeing that innovation is not a straightforward choice. After all, it's not like you are handed a book of the future and then you choose what to start innovating within. Rather the contrary, innovation is to many a black box of mysteries, and opening this Pandora's box can lead us all astray.Studies have shown that innovation can be costly and time-consuming. A company can risk wasting resources before developing something that earns the resources spent. In the extreme, companies can lose their reputation by entering new areas or launching products that fail.In recent years IKEA has launched many new corporate changes. One of these has been to enter the renewable energy market. But how would customers respond to this new change? Would they understand and be interested in the offers suggested by IKEA? Would customers see renewable energy as a natural part of what IKEA was offering? To get answers to this, IKEA turned to consumer neuroscience -- and to what we offer as NeuroPrototyping.,
In 2018, Neurons CEO Thomas Z. Ramsøy published "Leading Transformation" through Harvard Business Review Press, co-authored by the innovation expert Nathan Furr and innovation genius Kyle Nel. Here, they described how Lowe's Home Improvement, a Fortune 40 in the home improvement area, used a combination of storytelling, science fiction, uncommon partnerships, behavioral science, and applied neuroscience to drive their innovation process.The book was also in part a story about how Neurons came to be. One side of Neurons' background was the strong academic side, through the Copenhagen University Hospital and Copenhagen Business School. But an equally important part was that Neurons went through an incubation process with Lowe's, and was a major co-player with the creation and growth of the Lowe's Innovation Labs.During this time, Neurons built a protocol for testing subconscious responses to new products and services. Going under the label NeuroPrototyping, this approach uses eye-tracking, brain monitoring and other methods to measure how we respond to completely new ideas and products. NeuroPrototyping was, therefore, the method of choice when IKEA needed to understand how customers in different regions would respond to their new renewable energy product offers.,
Green decisions as intertemporal choices
One crucial element to consider for environmentally friendly choices is time! The majority of the choices we make as consumers are here-and-now choices: whether and what to eat, whether to do one task or another and so on. But some of our choices are between the here-and-now and some future outcome. We may choose to exercise now to become more physically fit in the long run. We can choose to eat a bar of chocolate at the cost of future weight loss expectations.
Choosing to "act green", such as choosing renewable energy or sorting one's trash, is the same type of choice. It entails choosing to make a costly choice in the moment to obtain a benefit later on.In academia, this is often called "intertemporal choices" -- how an individual's current decisions affect what options become available in the future. It's tightly linked to the battle between the brain's direct response and more sustained, considerate response. This battle is often referred to in behavioral sciences as the battle between System 1 (subconscious, direct, emotional) and System 2 (conscious, deliberate, rational).When IKEA wanted to understand how customers responded to their offers of renewable energy, they were basically interested in how the offers could trigger a dissociation between emotional and rational choices. At best, a solution could satisfy the head and the heart.,
The IKEA energy insight
Consumer interest in renewable energy could be seen as in a global decline between 2009 and 2014, but seems to slowly rise again until present day. Interestingly, markets such as the Netherlands and Poland differ dramatically in their interest. While Dutch consumers tend to follow the global annual trends in interest for renewable energy, Polish consumers seem generally less interested.
With this as an offset, Neurons ran a test of customers' responses to renewable energy offers in the Netherlands and Poland. In each country, 30+ participants from a mixed-gender sample were recruited in each country, with an average age of 37.1 (std = 7.8).Among the main findings, the study showed that:
- there was a clear conscious/rational winner in each country
- there was also a clear subconscious/emotional winner in each country
- conscious and subconscious responses did not converge -- all concepts had disagreement between conscious and subconscious responses
- visual scan paths showed the reasoning that customers went through
- the title was key to set the stage and convincing customers
- there were substantial differences between the two countries in which concepts worked best
Based on these findings, IKEA could move forward with how to communicate to customers in terms of their new offers. The results confirmed that there was indeed a stated need in customers in each market. However, the choice of the offer, naming, and communication strategy would initially have to be different for each of the countries.Importantly, although this study focused mainly on the "rational" and cognitive arguments, we found that emotional responses could also impact the end choice in customers. Therefore, aligning emotional and cognitive responses is as crucial as ever when making choices of how to offer renewable energy solutions.,
Further reading & learning
Harvard Business Review: "Neuroscience is going to change how businesses understand their customers"
Also, here is a video where Neurons Founder and CEO, Dr. Thomas Zoëga Ramsøy, explains some of the basics of neuroscience in innovation.