Sixteen Basic Human Needs And Business Strategy
Anatomy of demand and supply
How many video calls do you make per week? I bet a lot.
Video calls are an integral part of our lives. Perhaps too integral. At least, that’s what I was thinking a week ago as I sat at the airport and unintentionally overheard a video conversation between a man next to me and a woman who seemed to be his girlfriend.
They were delving into details of their romantic relationships that I found overly intimate. Maybe I am just old-fashioned.
But you may not have known that when Skype introduced its solution in 2003, it was not the first attempt in history.
In 1964, when my father was just dating my mother, AT&T presented Picturephone. It was the first video conferencing service ever. The company tried to commercialize it a few times but fell flat.
Why did Picturephone fail while Skype, Zoom, Facebook, Apple FaceTime, Google Meets, Teams, and WhatsApp succeed?
It’s tempting just to say that Picturephone was ‘ahead of its time.’
However, it explains nothing from a business perspective.
Isn’t an innovative product you’re about to launch also ‘ahead of its time?’ What makes ‘big things’ what they are?
Success occurs when the value a company offers aligns with customer needs, transforming these needs into demand.
Let’s dive deeper into the issue.
Why do you want what you want?
Human needs
Ages ago, a creature you wouldn’t yet call human figured out how to use sticks and stones to enhance their quality of life. It sparked what we now call ‘evolution.’
Evolution is a process of learning. Over the years, Mother Nature has added new cognitive features to our brains – like developers adding features to a mobile app.
The ones that helped us survive have taken hold. The ones that didn’t have disappeared.
Our brains are the result of this long process.
Two important points:
Brains evolve at a snail’s pace. Even a slight change takes centuries to take hold.
Evolution has taught us by giving us needs to push us in the right direction. Put simply, we can only want what has helped us survive as a species.
So, if you want to learn something new or talk to a friend right now, it’s because your primeval ancestor survived by wanting the same things.
The Maya tribe lived in Central America ages ago. They played religious games with heavy rubber balls. They’d bind infants’ heads with a cloth to elongate them – a trendy head shape back then. They also bent their teeth to show off their high status.
You, most likely, live in a city, use a smartphone and computer, travel, drive a car, and watch Netflix. You want your teeth to be straight and white.
And yet the same sixteen basic needs as ancient Mayas had determine your thoughts and actions.
Sixteen basic needs
Steven Reiss, an American psychologist, conducted research that involved more than 6,000 people on four continents. Reiss and his team identified 16 basic desires that all humans share:
Acceptance – the need to be appreciated
Curiosity, the need to gain knowledge
Eating, the need for food
Family, the need to take care of one’s offspring
Honor, the need to be faithful to the customary values of an individual’s ethnic group, family, or clan
Idealism, the need for social justice
Independence, the need to be distinct and self-reliant
Order, the need for prepared, established, and conventional environments
Physical activity, the need for work out of the body
Power, the need for control of will
Romance, the need for mating or sex
Saving, the need to accumulate something
Social contact, the need for relationships with others
Social status, the need for social significance
Tranquility, the need to be secure and protected
Vengeance, the need to strike back against another person
So, we all, regardless of our sex, religion, social status, age, place of living, and other factors, share the same set of basic human needs.
But then, what makes us so different? We prioritize these needs differently.
Those who prioritize power and social status often become leaders. Those who don’t – freelancers or ground-level workers.
People who focus on saving rarely become entrepreneurs. Others who value order can develop into good managers.
You and your ugly neighbor have the same set of needs yet value different things. This set is like pre-installed software in our brains.
But we are what we prioritize.
As we discussed previously, doing business is about balancing the interests of six stakeholder groups. These groups consist of people. And they all have basic human needs.
Hence, doing business means satisfying all these needs – to an extent.
“A healthy corporation acts on the interests of its stakeholders and customers.” Ari Melber
Below, I will illustrate this thesis with an example of customer needs. They are the most critical stakeholders, the sole source of a company’s profit. However, we can also apply this approach to other stakeholders.
Customer needs and customer value
Every business must satisfy customer needs by creating customer value.
It’s a no-brainer. However, many still confuse customer needs and customer value.
It’s easy. Customer needs exist solely in their brains. And we can do little to change their priorities. No, we can’t create a new customer need – read more below.
Customer value is what a business creates for customers.
When customer value, or, rather, multiple customer values, meet customer needs, demand emerges.
20 years ago, Marc Zuckerberg offered you customer value – Facebook. And when you found out that it could satisfy your needs #1, 2, 5, 13, 14, and, maybe, 6 and 10, you created an account and started posting.
Picturephone (1964) vs Skype (2003)
What is a millisecond? It’s a time span between the moment I ask students in my lectures if we can create a new customer need and the moment somebody firmly answers, “Yes, of course.”
No, we can’t do it. And Steve Jobs also didn’t do it by creating iPhone.
Ages of evolution have shaped human needs, and no marketing genius can invent a new one. However, businesses can articulate a need or create a new way to meet it.
What Steve Jobs did with the iPhone in 2007 was to offer consumers a new customer value.
It works this way:
People have needs and satisfactory ways to meet them at any given time. Let’s take the need #13, Social contact. In the 19th century, sending a letter was the only way to communicate with distant friends. And people were fine with that. Post services and businesses that sold paper and ink generated value for them.
Imagine that some company focuses on this need and offers a new way to fulfill it. For instance, to send a telegram or make a phone call. The company builds a new value for customers and tries to persuade them to pay for it.
Customers may react differently. They can instantly fall head over heels for a product, which rarely happens. In 2008, a year after launch, Apple sold only 11,63 million iPhones – not that much. Sometimes, users see no value in a new solution. Founders of failed startups can tell you a lot about it. In most cases, it takes years for new products to gain value in the eyes of millions. That happened with the Internet, smartphones, online shopping, social media, and many other solutions that now seem so familiar.
When a new product emerges, potential consumers make a subconscious cost-benefit analysis. Basic human needs often contradict each other. For example, the need #2, Curiosity, may conflict with the need #15, Tranquillity, or safety. The new solution is exciting and has some advantages. On the other hand, the old one is so familiar and safe. Should I send Bob a telegram, or would I better write a good old letter?
We call those who prioritize Curiosity, Innovators, or Early Adopters. We snidely refer to those valuing safety as Laggards.
But if the stars align, the new customer value meets some needs, and if multiple users are willing to abandon their familiar solution in favor of our new one, demand emerges.
So, what happened to Picturephone in the 1960s?
People wanted to communicate. They had satisfactory solutions – phones, telegrams, letters.
AT&T offered them a new value that seemed so obvious. With Picturephone, they could call their parents and see their faces on the screen.
The company stumbled across three challenges:
It was pretty expensive.
If you wanted to make a video call, your recipient had to have the same device.
But most importantly, not all potential customers were interested in making video calls. I wish that man at the airport was one of them.
It turned out that most users simply did not like being seen on the telephone, or, at best, found it added little value.
Even today, 21 years after the launch of Skype, 20 years following the start of Facebook, and 17 years after the release of the iPhone, fewer than 50% of users utilize smartphones for video calls:
Moreover, 65% of all video calls are done with audio only. Can they be called video calls?
Skype, Zoom, and other video conferencing services outperformed Picturephone for several reasons:
They all offered free versions, at least as an option (it meets the need #12, Saving).
Users didn’t need to buy a distinct device to make video calls.
They offered many additional features (rooms, whiteboards, screen sharing, etc.)
When they emerged, people were familiar with computers and the Internet. The need #12, Saving, is not only about money. We like to save mental energy and rarely want to learn how to use new products.
So:
In 1964, people had a need #13. AT&T tried to create a new value for them.
And although few potential customers liked the idea, many others believed Picturephone violated their privacy (need #15).
Customers had to change their routines to use Picturephone, but they didn’t want to waste energy on learning.
Skype and the like offered more convenient and cheap solutions (so they provided more customer value). But they also haven’t managed to replace conventional phone calls completely.
Conclusions
Traditional strategy books teach us that we need a strategy to achieve our goals. But this approach puts the cart before the horse. It helps a small group of people succeed by treating key stakeholders – customers, employees, business partners, etc. – as assets.
Every company is part of the Value Ecosystem, and it thrives only when it considers the interests of all stakeholders equally.
To do so, the company leadership must:
– Have a list of all stakeholders’ needs
– Decide which stakeholder values the company plans to create for each stakeholder group.
– If the chosen values meet stakeholder needs, demand emerges. And the company can benefit from it.
A company can’t create a new customer need. But it can emphasize the one of the 16 existing ones.
“Hey Bob, if you don’t start saving some cash every year, you’re gonna end up broke in your old age. Check out our new savings account with some sweet interest rates!”
Customers can’t have a need to buy a smartphone, a sofa, or a car. All these things are the ways to satisfy some of the 16 basic needs.
Even in the B2B world, people remain human. When they buy servers, excavators, or bearings for their company, their behavior is also driven by 16 basic needs.
What we call ‘competition’ is businesses’ struggle to create more value for customers.
“Hey, Susie, take a look at our new software! It’ll save you a lot of money and will make doing your job easy and enjoyable.”
When customer value a company proposes satisfies customer needs, demand emerges.
A company can’t manage customer needs. But it can manage demand.
I will cover this in more detail in future articles. Stay tuned.
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Agree, everything should trace to an enduring human need.
The things that could satisfy those needs aren’t always accepted unless they get the right push. COVID brought many things to the forefront that might not have otherwise succeeded.
Matching the need to a solution and getting the timing right based on social norms, etc. is key.
I agree that strategy should start with customer needs. Too often, companies create products or services that people do not want. Even more often lately, executives forget about their customer's needs and alienate them. Examples include Gillette (Toxic Masculinity), Bud Light (Trans Influencer), Hertz (100,000 EV fleet target), and GM (All EVs by 2035). These companies now say that they will listen to the customer's needs. Amazing that they had to learn this lesson the hard way.