Innovating business for the future

From Materiality to Immateriality

By Jussi Tapio & Miikka Leinonen March 5th, 2018

— Partners Jussi Tapio and Miikka Leinonen explore what the immaterial world can do for businesses today.

If you look at Maslow's famous motivational theory of the ‘hierarchy of needs’, you’ll notice that the pyramid can be split roughly in two: there’s a material component (the so-called ‘basic needs’) and an immaterial one (the ‘psychological’ and ‘self-fulfillment needs’). The first one can be found at the bottom, while the second is on the top. By applying Maslow’s theory to the world’s economy, it’s easy to notice how business has throughout the ages focused on solving the material problems and fulfilling the material needs.

However in the last few decades human needs have been shifting towards the immaterial: rather than needing more ‘stuff’, we have started craving more happiness, emotions, creativity, sense of belonging, — all of which are not tangible. At the same time, competition in business has become more global, leading companies to look for new ways to create competitive advantage from the intangible aspects such as branding or customer relations. Alongside this, the disruption caused by technology has blurred the line between the tangible and intangible, leading to new ways of making business. Just think of how Facebook has made our emotions more perceptible and profitable than ever: the “heart” emoji is not just a cute way to express a feeling, it’s a gatherer of data — data which can now be collected and monetized in ways that wouldn’t have been possible in the past.

We believe that the future of business lies within the immaterial, and that the tangible-to-intangible needs-shift that we’re experiencing in our daily life, thanks to technological advances, are deeply disrupting the way global business works. Ghost, our innovation company, was founded a year ago with the aim of helping companies get through this transformation process and be successful in the business of the future: the immaterial and digital market, which is where the real value lies now.

This also serves our bigger purpose. Companies are one of the strongest forces this planet has ever conceived after nature — and shifting their focus to more immaterial is crucial for our well-being and even survival.

How to do this? The first challenge when approaching a company is to take these concepts to a practical level. Typically it is impossible to take giant leaps to the immaterial future. But often even a small nudge in the mindset can set the company apart from its rivals.

If the company has a product-centric business model we’ll begin the shift journey towards the immaterial, for example by proposing the building of a digital service on top of a product that they already sold successfully.

If the company has a service-oriented business model, we discuss the core of their future – data. Firstly, a company needs to figure out what kind of data they can get from their processes and clients and and how it obtains it. This typically requires creating new service components that offer something valuable for the clients in exchange for the data. Then, we have to understand how this data can be converted into new services and business models.

A service strategy is a always a good place to begin.

In order to challenge the existing and traditional view that companies have, they need to understand that around every product and service, in addition to the material data sources, there are immense immaterial flows (i.e. a client’s emotions and competences). These flows can’t be owned, so the company needs to figure out how to gently guide and combine them to create new business opportunities.

One of the main issues involves the concept of ownership, which is central to our vision. If something’s immaterial, it’s inherently abundant and constantly evolving. These qualities make immaterial elements virtually impossible to own: you can easily own a product, but how can you own an intangible element? Due to their material legacy, companies intrinsically have difficulties in understanding this.

A company, for example, can never “own” the feelings of a social media platforms community — the issue is how can it then make a profit out of something it doesn’t own.

It seems complicated, but as people start “seeing” these data flows it’s as easy as making profit out of a piece of furniture.

Resistance to change is nothing new, especially when it comes to old and traditional businesses. In order to help our clients reach a shared vision and strategy, we rely on the power of visualization to make the material-immaterial journey more tangible. This is done by creating new internal tools and processes to make the transformation more ground-level and self-evolving.

As a company foresees the high costs for change, it is important to concentrate on its growth and upcoming profits in order to understand that the projects are future-oriented. We don’t immediately talk about the necessity of transforming the business into the immaterial: we prefer to move them in the right direction incrementally, step by step, with trainings and workshops.

There is no silver bullet which works for every company — hence, the processes are tailored depending on our client’s history. Big changes take time and patience: before digitalizing their business, the management needs to deeply understand why it is necessary and what is the bigger picture. Ultimately, we empower the employees to take on a proactive role in the process: because without them, no genuine change can happen.

The end.