A lot has been written about blockchain’s impact. From solving longstanding issues in supply chains to creating entirely new economic systems with cryptocurrencies, organizations continue to explore its disruptive potential. However, blockchain’s impact depends largely on how closely its use is tied to increasingly sophisticated consumer needs and that those needs are best served by multi-party ecosystems.
In this two-part blog series, we’ll first present a framework for understanding consumer needs and how blockchain enables the sophisticated nature of the new consumer. In part two, we’ll introduce two growth paradigms that correlate to consumer preferences and can guide blockchain strategies.
Blockchain and the New Consumer
To understand how blockchain empowers the new consumer, we used a behavioral psychology framework similar to Maslow’s hierarchy of needs to analyze consumer preferences and categorize them into four societal shifts. These shifts collectively represent the needs of the new consumer where the first two primarily focus on individual needs and the latter two on societal needs.
1. Convenience & Personalization:
The consumer desire for convenient, personalized products and services is not new. But when the nature of industries forever shifted from brick and mortar product companies to hi-tech platforms with the rise of e-commerce, the level of convenience and personalization in consumer experiences accelerated. This shift has continued as mobile, cloud, AI, and IoT technologies combine to enable highly personalized, mobile first, on-demand experiences that generate billions for companies whose platforms become ingrained into people’s lives. Google and Amazon’s virtual assistants, Amazon Prime, and Netflix are a few of the many platforms designed to make life simpler, automated, personalized, and connected to everything, anywhere, anytime. This trend has powered a shift from product consumption to experience consumption as platform companies compete to incorporate every aspect of peoples’ life experiences into their platforms.
2. Sharing & Democratization:
The internet empowers people to connect, share and exchange value across geographies in ways that were previously difficult to coordinate. Craigslist, eBay, Facebook, YouTube, Uber, Meetup, and Airbnb have all created platforms that act as intermediaries for sharing content or trading goods and services with anyone, anywhere. For these companies, their users are the product as they democratize a market by monetizing peer-to-peer connections.
In the first two shifts mentioned, blockchain is mainly applied as a complementary technology because these areas require network speeds that blockchains haven’t yet scaled to provide. However, blockchain can still be used to save time and cost by sharing data and automating multi-party processes like manual record-keeping and payments, tracking the movements of goods, and creating immutable records.
The next two shifts represent a significant change in preferences as consumers move from focusing solely on their individual needs to be mindful of societal needs and the impact their consumption has on others. These shifts represent a momentous leap from businesses innovating independently or with their business partners for competitive advantage, to collaborating across stakeholders to solve societal problems that open new business opportunities.
3. Economic Inclusion & Mindful Business:
This shift arises from consumers’ desire for providers to balance purpose with profit. Here, consumers begin to care that their purchases contribute to a larger purpose, help workers progress their socio-economic status or provide equitable opportunities for all. This demand is being met with proactive organizations balancing profit and purpose and in reactive actions calling for improvements. Wikipedia, Fair Trade Coffee, Rainforest Alliance Certified, and Ace hardware’s cooperative model are examples of proactive organizations that positively impact communities, create fair and equitable standards, or empower employees. Some reactive examples include the Arab Spring uprisings, rideshare drivers striking for better compensation, and cities creating legislation against the negative effects of home sharing. The new consumer’s awareness that business affects individual and community wellbeing create another dimension for businesses to differentiate their offerings on.
4. Social Impact & Sustainability:
People are realizing that many global problems will require business, not for profits, government, and citizens to change how they operate and create solutions. Far-reaching, multi-faceted problems require broad collaboration and a multi-stakeholder approach that includes those affected most by the problem, those contributing to it, and those needed to best solve it. For example, the Global Solutions Network with a mission to understand, create tools for, and better connect loosely coupled groups working on a common problem; the Self Sovereign Identity (SSI) community spanning technology and local stakeholders working to provide every person on earth a SSI; and the Level One Project addressing the socio-economic development challenges of the unbanked by pulling together technology experts, funders, and local stakeholders to create economically sustainable financial services. As more people recognize the importance of this shift to social problem solving, it becomes an essential element to what consumers want from the business. Activities along this shift will create new markets by incorporating previously underserved populations and addressing inadequately solved problems.
These last two shifts illustrate the need for businesses to address the larger problems in society that can become a threat and opportunity, beyond meeting consumers’ individual needs. In part two of this post, we’ll explain how blockchain is being used as a core technology for creating open, inclusive platforms that address these two shifts. Blockchain’s shared infrastructure is the next-gen tool for solidifying common standards, methodologies, and protocols that are transparent and secure so that everyone can then build on top.
About the author(s)
David is a strategist and social entrepreneur, consulting on the impact of decentralization and blockchain on business and society, including the transition of industries into platform ecosystems. He collaborates across the business and social spheres to create life experiences that enable people to thrive.