The power of a story to communicate value
I like the definition that Saul Kaplan uses in his book The Business Model Innovation Factory, about what a business model is.
He says, A business model is a story of how you create, deliver and capture value. I add that in the context of Humanomics, it is change and impact that we are after in terms of value creation. That story-telling is the power that the business model provides rather than just being about revenues, customers, costs and partnerships.
When Walker put the objects, along with their accompanying stories, up for sale on eBay, the results were astonishing. On average, the value of the objects rose 2,700%. That’s not a typo: 2,700%. A miniature jar of mayonnaise he had purchased for less than a dollar sold for $51.00. A cracked ceramic horse head purchased for $1.29 sold for $46.00. The value of these formerly abandoned or forsaken objects suddenly and mysteriously skyrocketed when they were accompanied by a story.
The project was so successful (and so interesting) that they have now repeated it 5 times and put all the results up on the web. It is also a book.
Walker’s experiment reminds us in a clear and extremely tangible way how the concept of value works in the human brain: a can opener is a can opener is a can opener until it is a can opener designed by Michael Graves and a part of the permanent collection of the Museum of Modern Art. A shoe is a shoe is a shoe until it is a pair of TOMS shoes. For every pair that I buy a child who has never been able to afford shoes gets a free pair as well. Suddenly, these objects are part of an inspiring narrative — one that I can use to reveal something meaningful about myself to others. That’s something I am willing to pay for.
That’s where real pricing power comes from.