The Iconic Business - Maximising Value

An icon is an object that is revered; an object that is worth much more to one or more people than the cost of the materials contained in the icon or the cost of producing it.

Such an object is valued highly not because of its own merit, but because it represents something that that person or those people value. In other words, the "meaning" of the object goes beyond the object itself to something else.

Religious icons are valued because they are thought to represent God or something else regarded as holy and good. And because God or whatever the icon represents is valued, people value the icon. This value is also reflexive: the valuing of God through the icon affects the person doing the valuing - that person enhances his/her self-valuation by feeling that he/she takes on some of the value of what is being valued through the icon.

For example, we affirm the sense of our own "goodness" by valuing an icon that represents goodness. After all, no one but a good person would value what is good. And as we live in a social world, our publicly valuing an icon which represents goodness enables us to be associated with goodness and therefore be seen by others as being more good than we would otherwise have appeared.

In summary, then, icons are valued because they "stand for" or "mean" something that is valued beyond themselves; and this valuing is reflexive: it enables us to affirm to ourselves and others our self-worth by associating ourselves with the values represented by the icon.

Works of art illustrate this.

A drawing or a painting may be almost worthless or worth millions, depending not upon the cost of producing the drawing or painting, or the materials used, or even the intrinsic artistic merit of the drawing or painting, but upon the extent to which the drawing or painting has meaning for the viewer or purchaser beyond the painting itself. Two indistinguishable paintings, one by an old master and one by someone from that old master's studio, or even a modern fake, can have wildly differing valuations.

In the case of the old master's genuine painting, it is perhaps valued highly because there is felt to be a connection between the viewer/purchaser and "genius" - an outstanding artistic talent who did things in certain ways for the first time. Through valuing that original painting, the viewer/purchaser is saying something about his/her valuation of genius - it takes someone special, after all, to value genius, and maybe by valuing it we can allow ourselves to think there may be a little bit of genius in ourselves. Thereby, we increase our sense of self-worth - it changes our self-perception for the better. In other words, a work of art is ultimately valued for what it does for us.

Of course, many people value art, and invest in it, because of what it can do for their bank balances. But it can only do positive things for bank balances because many people value the same things for the same reasons - for what the valuing of that piece of art does for them and their self-perception. So high or rising values shows that there is a consensus in the community about what does good things for people's self-perception. And anyway, a healthy bank balance in itself does good things for people's self-perception, so investing in art can give a double benefit - improvement in self-perception through investing in art and improvement in self-perception through gaining a healthier bank balance.

Luxury cars are also marketed as icons - on the basis of their having a value above and beyond the mechanical components they are made from. By buying a particular luxury car, you are making a statement to yourself and others about what you value. By valuing "sportiness", "modern looks", "traditional looks", or "good quality engineering" you are telling yourself something about the person you are, or wish to be. Therefore buying a luxury car boosts our self-perception. It also boosts the perception of us in the community - we send out messages about our "taste" and "discernment" by choosing to buy a particular car.

We can go further than the art and luxury goods markets, though, as nearly everything in the commercial world is susceptible to being or becoming iconic. A product or service which becomes iconic - valued for more than it is in itself because it takes on some of the value of something beyond itself - almost by definition becomes worth more in pound or dollar terms as well. And one of the key objectives of business is to sell things at as high a price as possible; making a product or service iconic is a route to doing this.

The explicit activity devoted to making products, services or companies iconic and therefore worth more in pound and dollar terms than they would otherwise be worth, is branding.

Branding seeks to associate certain people, products, services and companies with certain values, such that people want to be associated with those products, services, companies and people to a greater degree than they otherwise would on the basis of their adherence to (and their wish to publicly demonstrate their adherence to) those values. And, therefore, people spend money on those people, products, services and companies to a greater degree than they otherwise would.

The values which we associate with the product or service we are selling must be as closely aligned as possible in order to make it easier and cheaper to make that association stick and be effective - it is not worthwhile to associate any random value with any product.

It goes without saying that on a more mundane level the product or service must satisfy a particular need or desire and must meet basic levels of quality, skill and fitness for purpose, and that it does so (ideally) at least as well as other products or services. But just producing a product or service that satisfies a need is rarely enough in the modern economy, and is not where the focus should be in attempting to gain competitive advantage.

The essence of using the icon approach to business is to get people to buy what they wouldn't otherwise buy, and pay more than they would otherwise pay (see the white paper What is Management? An Introduction for more on getting people to do things they wouldn't otherwise do). What makes the approach different from plain deception is that it attempts to identify on a deeper level what will make people willingly and knowingly pay more because what they are getting provides them with more. Rather than just satisfying a mundane need, the icon approach changes people's self-perception and self-valuation at the same time - because icons are self-reflexive - and so is providing more than before to the person buying.

Getting people to pay more than they would otherwise pay for a product or service is obviously a fundamental objective for businesses, particularly when there need be little or no increase in the cost of providing that product or service. But it does require a rigorous application of the icon concept and an ability to think things through from the fundamentals.

Going on further from just talking about the supply of products and services to individual consumers or businesses, it would not be going to far to say that the whole of our economy is based on the identification and exploitation of differences in value ("value" here being an economics term - nothing in this context has intrinsic value, the value of something here is what people individually or collectively value something as and what therefore they are prepared to pay for it). Different people value things differently to others, different social groups and societies value things differently to other social groups and societies, and individuals and groups value things differently over time - at one time something will be valued highly and at another time valued very little and vice versa.

Many of these differences in valuation cannot be put down to the underlying needs these differently-valued things meet; they are owing to variations in iconic status of products and services between people, between groups and over time. Some of the time this will be owing to conscious branding attempts by businesses (think of the latest boy band), but many others will be owing to changes in culture, changes in society or demographics, and so on. In other words, many changes in iconic status are not under the conscious control of any one individual or business.

Every business should monitor these differences and changes over time, wherever they may impinge on the company's activities and success. Identifying differences in iconic value and then orienting the business around exploiting those differences is a fundamental part of what all businesses should do in order to maximise success. By, for example, selling in one area and buying in another, by focusing sales efforts on particular people or groups, and also by taking advantage of changes in the valuations people give to things over time - in other words, to be ready to supply what is becoming more valuable, and cease supplying what is becoming less valuable.

Further, businesses can take advantage of a multiplier effect when they tap into an increase in value, while at the same time branding a product or service to ensure that that change in value accrues to the product or service to a greater extent than it would otherwise do.

In summary, the aim of businesses should be to first create value by focusing on the icon concept, and second to exploit differences in value over time and between people and groups, with the ultimate objective of getting people to buy what they would not otherwise buy, or pay more than they would otherwise pay. But this need not be done cynically; the icon approach enables people to get intangible benefits from purchasing goods or services that they would not get without the icon approach - and therefore they will still feel they get fair value.

However, not just products or services attract iconic value - all aspects of a company's activities can be valued higher than they otherwise would, or lower than they otherwise would, depending on how much or little those activities tap into reflexive values.

This even applies to the human resources function of a business. Our society values certain people more than others, and so we have to pay a premium in order to recruit and keep them. When purchasing anything, including people's time as employees or contractors, it is always important to attempt to exploit differences in value - by using people that others would shy away from using (older people, for example) or by using people who are located away from core centres of economic activity (in third world countries, for example), or even using people that have fallen out of the employment net, or are under-valued for some other reason. When doing this, it should be borne in mind that effort will be needed to extract the extra value, and that the extra effort needs to be less than the extra value extracted.

On the subject of human resources, one of the most powerful means of recruiting talented people and then retaining them is to create an iconic company: one that employees see as having greater value than the sum of its parts, perhaps by fulfilling a vision in the employee or triggering a yearning for something bigger and better than mere work. Apple Computers is an example of an iconic company in this regard.

Iconic values apply just as much to us as individual employees. We should aim to orient ourselves around our iconic value. In other words, we should aim to increase our value in the eyes of colleagues and superiors by seeking to offer things that tap into what those around us value, so that they get something out of our presence over and above the job we do. And ideally, just like businesses, we should aim to do this at as little cost to ourselves (effort or time expended) as possible!

In summary, the concept of the icon is a powerful one for businesses and individuals, and helps illuminate the strategic approach we should take in order to maximise the success of both our companies and ourselves.

© Martin Ludlow 2009

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