The economics of intangibles
(Provided by Diego de la Torre – Partner, Aleteia Capital)

The dawn of the information society is approaching, even before we had a chance to adapt to its demands as individuals and businesses. We have lived as hunters and gatherers, we have worked in factories and now we are living in an information society, the icon of which is the computer. Nevertheless, we are faced with the beginning of a new type of society: the society of emotions. We are beginning to detect its effects in our employees, our consumers and our lifestyle.
Now is the time for change, the time for beginning to add emotional value to our products and services. The products of the future will have to appeal to our hearts, not merely to our heads. It will not be the best technology or the newest product what clients will prefer, but the story behind the product that will produce differentiation. Consumers will pay for the story that ignites their imagination, one that reflects how they see themselves and how they want others to see them.
As competitive pressure and technology cause products and services to become commodities, businesses will have to be different from their competitors by creating credible and convincing accounts that appeal to the hearts of consumers about who they are and what they believe in. Some of the most successful companies in the world, such as Disney, the Body Shop and Rolex have long recognized the consumer’s appetite for a good story. As said by Rolf Jensen of the Copenhagen Institute of Future Studies, "businesses need to imagine their businesses in the same way in which good novelists imagine their stories".
In another area, we live in a CNN world. Technological changes allow us to have access to information about world events in real time. Now an English consumer of shoes from a developing economy knows whether they were produced with manual labor by enslaved children, and incorporates this intangible aspect of the product into his purchase decision. Due to an increasing social and ecological conscience among consumers, intangible variables such as good corporate citizenship and social responsibility are the factors that increasingly decide the preferences for a certain good or service.
Also, due to the competitive pressure of globalization, all products tend to become commodities, whereby quality and price are standardized. For that reason the key to differentiating our products is found in a multiplicity of intangible aspects, foremost among them being the company’s social responsibility, which is nothing more than the contributions that it makes towards improving its social and ecological surroundings.
There is a neo-protectionism based on an ethical tariff that is not generated by a ministry of economy, but rather in the mind of the consumer, becoming a very subtle and effective para-duty device. A media report on the working conditions at Nike subcontractors in Southeast Asia sufficed to make this company’s shares suffer dramatic declines during the early nineties. A simple photo of a pregnant Peruvian female harvesting asparagus made it difficult for this product to get access to the European market.