Imagine two products standing next to each other in a store. One solves a real social problem, saves resources, improves the environment, and has been developed over many years by skilled engineers. The other actually adds very little. Maybe it’s just a new version of something that already exists, packaged in a stylish design with an appealing name and a well-produced commercial. Which one sells best? The spontaneous reaction is that the best product should win. But history shows time and again that reality works differently.
We don’t always buy the product that has the greatest functional value. We often buy the product whose value we most clearly understand. That’s a crucial difference. Value is about two different things at the same time. On the one hand, there is the value that is actually built into a product or service through its function, quality, and utility. On the other hand, there is the value that people perceive it to have. The latter is shaped by stories, design, communication, marketing, social norms, and our previous experiences.
It is at the intersection of these two forms of value that the market emerges and that is where many innovations either succeed or fail.
Functional value and perceived value
We often talk about creating value for the customer, but we do not always mean the same thing. The engineer often thinks about function. How much energy does the product save? How long does it last? How efficient is it? How safe is it? The marketer thinks instead about the experience. How does the product feel? What does it signal? How easily can the customer understand the benefit? What story does the product tell? Both perspectives are about value, but they describe different parts of the same whole. A product can be technically superior and yet fail because people never understand why it is important.
Similarly, a product with quite limited functionality can become a huge sales success because people feel that it adds value that they identify with. This does not mean that marketing is manipulation. It means that people must first be able to see the value before they can choose it. We rarely choose what we do not understand, no matter how good it actually is.
The washing machine that solved a problem no one saw
An interesting example is the development of washing machines that can filter out microplastics from the wash water. The technology has been around for several years and some manufacturers have developed solutions where the filtration is built into the machine itself. From an environmental perspective, this is a very valuable innovation. Each wash can release large amounts of microfibers that eventually end up in lakes, oceans and ecosystems. Capturing them already in the washing machine is therefore a logical and effective solution. The problem was that the market did not react as the engineers had hoped. Most consumers did not see the value. Microplastics are invisible. They are not noticeable in everyday life. The laundry does not get cleaner. The machine does not make less noise. The customer does not receive any immediate reward.
Then independent companies started selling separate microplastic filters that could be connected to existing washing machines. Suddenly the value became much clearer. The product had been given a name, its own packaging and its own story. The consumer could now actively buy a microplastic filter instead of a washing machine with a function that almost no one knew existed.
The fascinating thing is that many people are simultaneously asking themselves why the filter is not just in the washing machine from the beginning. That very question shows how perceived value works. When the function is hidden inside a larger product, it becomes invisible. When the same function becomes its own product, the value suddenly becomes visible. The function has not changed. Only people’s understanding of it.
When the story becomes bigger than the product
The reverse phenomenon is at least as interesting. History is full of products that have sold fantastically despite their actual benefit being limited. A clear example is many products in the beauty industry where creams, serums or other treatments are marketed with advanced scientific expressions, exclusive packaging and stories of youth, success or exclusivity.
In some cases, there is good science behind the products, but in other cases the actual difference compared to significantly cheaper alternatives is very small. Despite this, people are prepared to pay many times more because the perceived value has become significantly greater than the functional value. The same pattern recurs in fashion, technology and lifestyle products where identity sometimes sells better than function. The story has become part of the product. This does not mean that the customer is irrational.
The story has value. The problem only arises when the story becomes significantly greater than the actual benefit.
Double Diamond shows that creativity is needed twice
The Double Diamond design model describes innovation as two alternating processes where you first explore and then focus. First you try to understand the problem from many perspectives before defining the right challenge. Then, many possible solutions are developed before the best one is chosen and implemented. Often, the model is considered complete when the product or service is fully developed. But in practice, there is another creative process that rarely receives the same attention.
Once the solution is ready, the work of making it understandable begins. Communication also requires creativity. How do we describe the value? How do we visualize the benefit? What words do we use? How do we get people to understand why this innovation matters? The first creative process is about creating the right solution. The second is about creating the right understanding of the solution. Many innovations fail not because they are bad, but because the second creative process is never carried out with the same care as the first.
Storytelling changes systems significantly more than products
From a systems innovation perspective, this becomes even clearer. A product can of course change the world, but often only as long as people choose to use it. A story, on the other hand, can change how people think, what norms emerge, and which decisions are perceived as self-evident. Therefore, storytelling has much greater leverage than we often realize.
History is full of examples where new narratives have changed entire societies. The story of recycling didn’t just change how we sort our garbage. It changed our view of waste. The story of smoking went from symbolizing freedom and elegance to being about health and responsibility. Similarly, the story of fossil energy is changing from representing development to representing climate challenges. It is not a single product that creates these shifts. It is stories that gradually shift people’s worldview.
This means that systems innovation is not just about developing better technology or better services. It is also about developing new stories that help people understand why the change is needed. When a new narrative takes hold, many different actors start moving in the same direction at the same time. Companies change their investments, politics change their priorities, research asks new questions, and consumers start making different decisions.
A story can therefore function as an invisible coordinate system that makes many parts of society move in the same direction without anyone actually controlling the process.
Creativity builds the bridge between solution and use
It is easy to believe that technology and marketing are far apart. In fact, they are dependent on each other. The engineer creates the solution. The designer makes it understandable. The communicator makes it visible. The marketer helps people understand why it is important. If any of these parts are missing, the chain between innovation and societal benefit is broken.
From a systems perspective, this becomes particularly clear. Innovation does not create value until people actually start using it. This means that product development and communication are not two separate processes. They are two parts of the same innovation system. One creates the solution. The other creates the opportunity for the solution to spread.
From function to meaning
From a systems innovation perspective, value therefore becomes something significantly greater than the product itself. An innovation does not change the world when it is invented. It changes the world when people start using it and when it starts to influence how other people think. For this to happen, two things need to develop simultaneously.
The product must create real value and people must understand this value. If only the first part exists, innovation risks staying in the laboratory. If only the second part exists, the market risks being filled with products that promise more than they deliver. It is only when functional value and perceived value meet that real societal benefit arises.
The most important innovation may be the story
Perhaps this is why we underestimate the importance of stories. We often see them as something that comes after innovation, when the product is already finished. But perhaps they are just as important as the invention itself. For the best product in the world changes nothing if no one understands why it is needed. At the same time, a strong story can make people change their behavior, their values, and their visions of the future.
The real challenge is therefore not to choose between technology and communication, between engineers and creators, or between product development and marketing. It is about letting them work together from the very beginning.
Because when functional value meets perceived value, something greater than the sum of its parts emerges. Not only does innovation have a chance to succeed, but the solutions that actually make the world a better place also have the opportunity to change entire systems instead of individual products.
