The Importance of Desirability in Sustainable Consumption

As Tesla attempts to scale, it’s likely to discover that its internal impediments, combined with competitor responses, make it much harder than anticipated. The symptoms of these problems will manifest as product launch delays, cost overruns, and higher than expected prices. Better approaches would be either to focus exclusively on a high-end niche that is too small to entice incumbents or to enter the bottom of the market with a low-price product and disruptive business model.

Thomas Bartman, Why Tesla Won’t Be Able to Scale, Harvard Business Review 2015

Tesla has faced conflicting reception in the market since its inception. There are those that are bullish on Tesla and its ability to disrupt the automobile industry, and then there are those that eagerly point to every single misstep that Elon Musk and his company take along the way to serve as proof that the company is doomed to failure.

Personally, I’m pretty bullish on Tesla for one core reason: they have changed what success looks like by creating an environmentally-beneficial, aspirational product. They didn’t just create an electric vehicle. They created a sexy, fast electric vehicle.

The debate around Tesla is heated, but there is one element to the company that fascinates me, and I’ve noticed companies like Impossible Foods have also been able to tap into incredibly well: human desirability.

The surest strategy for replacing the most destructive
technology on Earth is to deliberately create foods that deliver
greater pleasure and value to consumers of meat, fish and dairy
foods, then simply offer them as a choice — and let market
demand take care of the rest.

Impossible Foods Sustainability Report 2018

Impossible Foods understood something critical about human nature that had a profound influence on their ability to scale: people will only change their habits if they want to change them. There were a number of variables that they could play with to crack their business, but the two that stick out to me are the product and the go-to-market strategy. The way they tapped into human desirability is hugely important here.

Credit: Impossible Foods

The Product. Core to Impossible Food’s product is their plant-based heme, a protein that gives meat its umami and ‘meaty’ taste and texture. By combining a series of plant-based proteins from soy, yeast and wheat, they are able to not only replicate the mouthfeel of meat in texture but also taste (almost there). A few years ago when I was back home visiting family, I dragged my parents to a great restaurant in town that just launched the impossible burger, eager to try the burger out and see if it lived up to the hype. My father and I ordered an Impossible burger, but my mother decided she wanted the real thing, not ‘that fake stuff’. When our food came, both my father and I took our first bites. As my father said, “you know, it’s not the best burger I’ve ever had, but if you never told me it wasn’t real beef, I wouldn’t have noticed a thing”. My mother tasted the burger too, and was impressed. A few years later, whenever my parents go out for burgers, it’s my mother that always gets an Impossible Burger. It tastes good, it’s healthier and she feels better for making a good choice in her consumption.

The beauty of the product is not only in its environmental impact, but in the fact that Impossible Foods clearly understood how attached humans are to their food choices. By creating a product that mimics what consumers love, they help to bridge the gap in what people want and improved sustainable consumption.

The Impossible Go-To-Market Strategy. Humans are fickle creatures and are averse to habit change by nature–we change when we must, but by god, we’ll fight tooth and nail for the status quo. When it comes to diet, resistance to habit change skyrockets. Unfortunately, we are at a point in the Anthropocene that we cannot ignore how our own consumption has affected the planet. We must change, not out of compassion, but for our own survival. The team at Impossible Foods understood this, and they planned for it through brilliant market execution.

When they started on their path towards scale, there were two core obstacles in their journey: cost of production and market reception. While their ultimate goal is to have Impossible products consumed across the socioeconomic strata, the cost of the burger would remain too high for the mass market as they didn’t have the production capability nor subsidies of the beef industry. Additionally, it was highly unlikely that the majority of beef consumers in the United States would leap at the chance to purchase a plant-based ‘beef’ patty at their local Walmart even if it was affordable. Even worse, what if their first experience with the burger was bad, simply because they didn’t cook it properly? These potential customers would get turned off for good.

To counter these issues, the company launched an ambitious, yet incredibly savvy market strategy: rather than selling direct to consumers at first, they partnered with high-end restaurants in urban areas, taught these chefs how to prepare the burger and created an element of scarcity around the product. They were able to target the types of progressive, environmentally-conscious consumers that would be early adopters (who, conveniently, also had higher disposable incomes) to try the burger. They were able to control the experience these customers had with their first Impossible Burger by working with the chefs to showcase the product. They were able to create hype and excitement around their product, and when the Impossible Burger arrived at a new location, endorsed by a famous, local restauranteur, the hype only intensified.

Impossible Foods has been able to achieve the impossible: they made a health conscious, environmentally-beneficial decision desirable––but they’ve only just begun. From 2017 to 2018, Impossible Foods expanded from selling their burger in 40 restaurants in the US to 3,000, including several new international hubs. They have successfully tapped into huge opportunities to crack the mass market as well through fast food chains like White Castle and now with Burger King. Incredible? Yes. Impossible? Apparently not. And they’ve only just begun.

Can Tesla crack the market through desirability alone, or are market forces poised to hold them back for good?

Market forces change with scale, especially when a product is forced to reconcile receptiveness in its early adopters and greater resistance in the mass market. When this happens, desirability can only go so far. That said, time and time again, Musk and Tesla have proven its critics wrong, as if he thrives off the satisfaction of doing so. I remain bullish on Tesla because of their ability to create a profoundly aspirational and desirable product.

In the Harvard Business Review article Why Tesla Won’t Be Able to Scale, the author highlighted some important barriers to scale in Tesla’s future. I fundamentally disagree with the author’s argument that starting the product in the upper echelon of the market was a bad choice. It’s worked incredibly well for Impossible Foods. Only by attacking their market through this approach were they successfully able to tap into a customer base that could afford their product and create this element of desire. I think it would have never been possible to build an aspirational product through a bottom-up market approach. Perhaps this does not align with the original theory of market disruption from Clayton Christensen’s Innovator’s Dilemma, but does that make Impossible Food’s impact and success any less valid and powerful? That seems pretty ridiculous to me.

Impossible Foods is achieving the impossible in front of our eyes, and this strategy of creating desirable, environmentally-beneficial, premium products is key to shifting society towards sustainable consumption. With the need to dramatically shift our consumption patterns to create a more sustainable and just world, Impossible Foods and Tesla are only scratching the surface of opportunities to disrupt our own consumption.

Achieving the Impossible: The Impossible Burger cracks into the mainstream

What’s the perfect storm for market disruption? A great product, a huge market need, and an impeccable execution strategy. What binds this all together is desirability and usefulness. More on this later, but big news! The Impossible Burger is tying up with Burger King to launch The Impossible Whopper.

Burger King’s chief marketing officer, Fernando Machado, said that in the company’s testing so far, customers and even employees had not been able to tell the difference between the old meaty Whopper and the new one. “People on my team who know the Whopper inside and out, they try it and they struggle to differentiate which one is which,” Mr. Machado said….“I have high expectations that it’s going to be big business, not just a niche product,” Mr. Machado said.

Behold the Beefless ‘Impossible Whopper”, The New York Times 2019

This is huge validation for the alternative meat industry, and should be terrifying to all US beef/meat lobbyists. This is the beginning of what can only be a radical shift in human consumption patterns–hopefully for the better.

Read the article here: https://www.nytimes.com/2019/04/01/technology/burger-king-impossible-whopper.html

-Unknown Artist

The Climate of Consumption

A few years ago, I was working at an NGO in Rajasthan where I was researching the incentive structures promoting human trafficking in the local villages. While I was working at the NGO, there was a group of students from the US who were developing a curriculum for school students in the villages on how to reduce their carbon footprint. One day, I simply posed the question: “Do you guys realize that the flight that you took over here probably created a higher carbon footprint than most anyone in this village would ever have throughout their entire life?”

That hit a nerve–and for good reason. The biggest problem that we face in confronting climate change is confronting our own unsustainable consumption.

Fun fact: The wealthiest 10% of society contributes over 50% of the world’s carbon emissions. The world’s poorest 3.5 billion contribute just a tenth of all carbon emissions.

There are many people that point their fingers at capitalism as the greatest evil in the fight against climate change. While I agree to some degree, I think we need to come to terms with the fact that our own consumption, our desires, our greediness is the fuel to the fire for the capitalist system that is exacerbating our climate crisis today. The system would not exist without us because it was built by us. This also means that we can redefine the system as well.

I may be crazy, but I’m not alone. Generation Investment Management is on a mission to shift the world towards “sustainable capitalism” (I’ll dig into this one later). The $18 billion dollar (AUM) fund, founded by the one and only Al Gore and David Blood, has been pushing this agenda for years. While their portfolio has seen above market-rate returns, they have been falling short on one of their most important goals: getting others to take up their mission and get their skin in the game. While Generation is ahead of the curve, it is imperative that the rest of us get on board, and quickly too.

I like to joke that the best way to confront climate change is for everyone to become buddhist monks, or for us to dramatically change the way we engage with capitalism.

Here are some starting points that I’m exploring:

  1. Public interventions to improve regulatory practices that promote–not inhibit–technological innovation and appropriately incentivize smart environmentally sustainable decisions for businesses and consumers.
  2. Greater cleantech penetration in high-carbon emitting businesses. This spans everything from shifting towards alternative energy, utilizing more sustainable construction materials, reducing inefficiencies in production processes in nearly every industry from agriculture and textiles to heavy metal mining. Cleantech innovation should become the most cost-efficient choice for any business. Mass disruption is on the horizon, but there is definitely an overwhelming degree of affordability and scalability obstacles in our path
  3. More efficient, streamlined supply-chain systems. Not only are the resources we consume unsustainable in process and quantity, there are massive gaps that must be filled in our global supply chains in order to improve sustainability. Some key sectors are agriculture, textiles, energy. Consumer-driven companies are the key drivers in supply-chain inefficiencies (McKinsey & Co).
  4. Sustainability integrated into urban design and mobility. 75% of carbon emissions can be traced back to our urban centers, and the “ecological footprint of the cities is tens to hundreds of times larger than the actual urban area occupied”
  5. Savvier consumer decisions. The most well-off in the world are the most wasteful because they can afford to be so. It is easy to ignore wasteful consumer decisions, especially when we hide our waste from ourselves. Consuming responsibly, reducing waste, improving capabilities for better recycling and being discriminating in the sustainability of consumer goods must become mainstream.
  6. A “come to Jesus” moment for the wealthiest 10% of society. The consumption patterns of the wealthiest people in society have spillover effects in terms of environmental impact, but also in influencing the consumption of the rest of society. Consumption is aspirational, so anyone coming into wealth naturally wants to consume in the same was as the wealthy do. This problem is exacerbated as wealth grows throughout the world.
  7. Making sustainable consumption desirable. This involves redefining what “success” looks like in society–which is happening, slowly but surely. Public policy can only go so far; people have to want to change and it has to be exciting and attractive for them to do so. Personally, I find this part of the problem the most important, and most interesting to solve.

Ultimately, in order to counter climate change, we need to confront the climate of our consumption. We need to make sustainable consumption desirable and wanted, versus looking at it like a burden and a restriction on people’s lives, desires and goals.

Personally, I think that #6 and #7 hold the key to unlocking big opportunities. There are some companies out there that are getting this done–and I’ll be exploring them in later posts.

If we can do this, the opportunities are boundless. We just need to focus on building our system correctly this time around.

The Benevolence of the Butcher and the Baker 

“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”

Adam Smith, The Wealth of Nations

“How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.”

Adam Smith, The Theory of Moral Sentiments

Ayn Rand and Atlas Shrugged. Gordon Gekko and his infamous “greed is good” line from Wall Street: Money Never Sleeps. Profit over people. Efficiency above labour. These are the images, personas and principles that fuel our perceptions of capitalism and how we build businesses today. What if we got it all wrong? What if we’ve been building businesses on a flawed model that wasn’t the one intended in the first place?

Most people are familiar with The Wealth of Nations, which sets the framework for what today’s capitalist system has evolved into. It includes infamous passages about the invisible hand that guides the free market economy, the butcher and the baker’s self-interest and the efficiency of the division of labour. Smith’s five-volume work is about efficiency, pragmatism and the way that we as human beings interact with consumption and production.

Adam Smith­­, the Father of Modern Capitalism, was an economist, but at his core, he was actually a moral philosopher. Before he even set out to write The Wealth of Nations, he wrote another book––one that I believe is of far greater importance: The Theory of Moral Sentiments. The entire premise of this book is about empathy, compassion and how we treat one another as human beings.

It’s hard to imagine that the same person wrote such different books. But what if they were supposed to be read together? In that same sense, what if we were supposed to build our economic system by respecting both works––there is a place for pragmatism and profit, but the way that we treat the people around us matters just as much, if not more.

We are facing a crisis of epic proportions: inequality is on the rise as economies grow, our natural resources are quickly becoming depleted, sea levels are rising and are putting our major cities at risk of flooding, weather patterns are changing and are creating dire circumstances for agriculture-reliant communities, and our waste, especially plastics, are piling up with no efficient means for removal.

These are the problems that have been passed down to our generation, and they are the problems that we need to solve. The capitalist model is the core driver of many of these issues, but I caution people to villainize business. The fact is, the reason the capitalist system exists the way it does today is because of our own consumption habits, our desires, our greed and our wanting of a more comfortable world for ourselves and the people we love. Some of these things cannot change, but the question I pose is: how can we use business as a tool to solve these problems? How can we create businesses that reduce our consumption, our environmental impact and help to create a better world?

In the same way that a person needs to read both sides of Adam Smith to see the full picture of who this person was, we need to look at business holistically as well to understand what business can be. Business is one of the greatest tools we have to drive change, we just need to be wary of the changes that it creates.

I don’t have the answers today, but I have some ideas. This blog is a place where I am starting these conversations. I’ll be writing about capitalism, impact investing, entrepreneurship, climate change, design, moral philosophy and how all of these things fit together. Feel free to join in.

Can our butchers and bakers be benevolent in their actions? I believe so.