Storytelling and Emotional Innovation for EU companies to Get Ahead of Asia and the US

There are stark differences between the American, Asian and European innovation approaches, and right now Europe is in its best competitive position in decades. So today I'd like to discuss the opportunities and blind spots from both a storytelling and innovation perspective for the EU. We'll look at three approaches: functional, societal and emotional innovation. And we'll conclude that the EU should focus less on functional efficiency and more on emotional effectiveness in order to get ahead. Storytelling it is... Let's have a closer look.

(image credit: meme-arsenal.rv)

The Types of Progress and Innovation

While there are nuances and exceptions, the US tends to innovate more through incubating startups that either grow very large or get gobbled up by the existing big boys. In Asia, especially China, quite a lot of innovation is more government-led. And by and large, the EU innovates more within existing companies and structures. Let's call these rough innovation practices the following: external progress (startup-led), policy progress (government-led) and internal progress (company-led).

Now that the US is falling behind on their otherwise successful startup culture at the time of writing, and South-East Asia have found their own successful course, the question is how EU companies can step up their own innovation. And while we're at it, let's also establish three types of innovation that we can use for reference: functional innovation (tech-motivated), societal innovation (group-motivated) and emotional innovation (personally-motivated).

US - The Quick and Dirty Low Down

We'll start with a broad overview of the US because right now. The US has always had an incredibly successful start-up focus that have made them leaders for decades. It's part of the resilience and freedom focus of its society, overcoming hardship and establishing free practices. This has led to a culture that favors the new, and has build structures that stimulate getting to it.

However, this long focus on business innovation instead of societal and emotional innovation - the 'all-mighty-dollar-attitude' - is now catching up with them. The list of problems is growing by the day and is hampering its growth perspectives.

It's not just the tariffs, it's also health-care, tech-bubbles and anti-democratic movements... you can fill in the rest for yourself. The problems aren't as new as you'd think and have grown over time. The one I'd pick out right now though, is its growing corruption. I'm not here to give a moral judgement per sé, but I do want to point out that growing corruption is one of the - if not the most important - indicator of a coming downturn. To quote Mark Baum (in the real world this is investor Steve Eisman) in The Big Short: "Fraud is a bad business strategy".

That's not to say they won't get out of it of course - Americans have always been resilient in the face of trouble - but at the very least it will take time to fix the social and emotional innovation side. It also means that their economic story will have an internal focus, which means trade with the rest of the world will slow down. We're seeing clear signs of that already. Not to mention that the US tends to 'innovate' its societal problems with uprisings as compared to bureaucratic compromise (EU) and government edicts (Asia). Again, not a judgement, but it will mean more societal upheaval in the US in the coming times.

Asia - The Quick and Dirty Low Down

Jumping to Asia, it is clear that these markets will continue their growth of the middle-classes. There are many positives to give to China for instance, as they have evolved from 'copiers' to 'creators'. Yet it's not just China's growth we need to consider. Japan may still have stagflation and an aging population, it has a very sturdy economy with products and services that are still top-of-the-bill.

South Korea is especially noticeable, since their growth started in the '90's with a government-led push to get glass-fiber cables everywhere, decades before others, exploding their internet. They also build an unprecedented public transport system that allowed commutes that would have otherwise been impossible. These two innovations elevated them from a developing country into a world leader.

These and other nations are driving growth as they expand their influence across their neighbors and strengthen ties in the world such as China re-establishing the Silk Road to the South, connecting to the Middle-East and Eastern Europe. All the while the entire continent has established a very strong position on natural resources too, with China leading the way into the ever-increasing lucrative green energy markets, which is worth dozens of trillions of dollars, as the Earth warms up and demand for sustainability and green energy will rise dramatically.

Europe - The Quick and Dirty Low Down

Yet while Asia will likely continue their drive on the functional side, their emotional innovation is still quite far off. European companies have traditionally lagged behind on business and technological innovation compared to the US and Japan, and now also China. They have innovated sure, just not in the same tempo and with the same success rate compared to the others (broadly speaking, leaving out exceptions). Yet, their societal innovations since the '70's have created a sturdy backbone that is about to pay off economically.

And not only that... pushed by the US pointing out its weak defense spending, a huge boost of economic value is now created through the defense industry. After decades of unwillingness to do much with military industries - in fear of a repetition of the world wars - Europe has made an emotional turn-around; thanks to the Russians invading Ukraine, the military is all of a sudden considered 'cool' again.

In other words, Europe is about to get an economic boost from many different sides: the defense industry, the green industry (especially now that the US seems to have abandoned that for the time being), the connections to Asia's growing markets and the higher tier services and luxuries, to name just a few.

Yes, bureaucracy is an existing problem, with no end in sight (if you're not from here, you wouldn't believe the red tape). And yes, resources in minerals, metals and the like is also a problem still. Yet government, company and individual debts are more than manageable compared to the others. And there is financial room to spare because of the sturdy societal base, that favors building a strong foundation towards the weakest aspects in society. In sports-terms: compared to the US and Asia, the EU has the best defense.

From functional efficiency to emotional effectiveness

The question for the EU becomes more on how to spend its resources on innovation. How to go on the offensive essentially. To get to the right offensive strategy, we need to address this European blind spot; efficiency being favored over effectiveness. To quote Peter Drucker: "Efficiency is doing things right, effectiveness is doing the right things."

Now, there is nothing wrong with a strong efficiency drive. It brings you cost reductions, it makes your markets smoother and it takes away many of the irritation points that life can bring. When you go too far however, it takes you away from what is traditionally Europe's strong point: emotionally engaging businesses and brands. Fashion, culture, design, art, music... it's always been the EU that has created an emotional value that drives top-line profits.

And even in entertainment, things are shifting. The US, to its credit, may dominate more on the entertainment content still, but the many moves we see on the US legacy companies with mergers, cash injections and acquisitions are arguably very, very defensive: in the arts and entertainment, the US legacy companies are squandering their advantage, leaving plenty of space to newcomers from across the globe (see here the article on the AI-bubble discussing the legacy player problems).

And yes, of course, the efficiency drive has given the EU a competitive advantage too. Just think of great car manufacturing from Germany especially, life-long experiences in the tough construction fields (old houses, infrastructure and buildings...) in both Southern and Eastern Europe or best practices in green industry from the Rürhgebiet and beyond. So yes, it is understandable to have an efficiency drive in Europe.

Yet I'd argue there is no substitute to Italian shoes. Greek food. Polish vodka. Nor is there is much discussion on the powers of Northern-European design practices that cover the low-end (Ikea anyone?), middle-end (Dutch Design) and high-end (Danish Design for instance). The french fashion and cosmetics are still the worlds' leaders, with for instance Louis Vutton Moët Hennesey (LVMH) going bonkers on their revenue in recent times (read my blog on their Sephora secret sauce for that). And have you watched Spain lately? It's Europe's most roaring economy at the moment, with their service-economy being top tier.

You're catching my drift: if Europe wishes to push their sudden - and unexpected - advantage, it should focus far more on its core on the emotional innovation side.

From functional efficiency to emotional effectiveness

This is the moment I need to point out that 95% of our decisions are based on emotions (sources: Harvard University, Nobelprice winner Daniel Kahneman in Thinking Fast & Slow, among others). As the Americans have shown us over the decades, building emotionally relevant stories are what ultimately gets you to success. The old guard, such as Nike, Apple and Coca Cola, have led the way on that for decades. The entertainment industry has done so as well.

Of course, US brands and entertainment content are losing some steam because of that plethora of internal problems and a general anti-USA sentiment these days. And since Asia is taking such a lead on the functional innovation side, it seems as if the remaining gap in the market really is on that emotional part. Who better to fill that in than Europe, with its already established societal innovation foothold?

If you're on board with my reasoning, than the main question becomes: 'Are European companies stepping into that gap?'. The answer is simply this: 'Not enough'.

Three Practices to Solving the Blind Spot

To solve this challenge, we need to understand how we can stimulate storytelling, branding, social innovation and meaningful content from the inside of existing companies within Europe. Because again, while most progress in the US is established through external start-ups and most progress in Asia is government-driven, most business progress in Europe comes from within already big and established companies and structures.

Quick disclaimer: of course I'm not disregarding European startups, nor the power of good government-led legislation and economic stimulus. I'm just saying that the bulk of the advantage would come from its existing practices, which means stimulating the existing structures, mostly from within.

The best emotional approaches that we have found through our storytelling practices that stimulate this internal innovation in larger organizations are the following: Sustainable Storytelling Culture, Cool Concept Scans, Community Building and Content Creation.

Sustainable Storytelling Culture - Solution number 1

The first step is to strengthen the willingness to innovate within your existing teams through storytelling. The key to great storytelling is to embrace frictions and not avoid them. The human mind remembers challenges and hardships through its oldest and most basic brain functions - the ones we need to survive. As such, it disregards any form of communication, including storytelling, that does not embrace friction (or as we like to call it in artistic storytelling; conflict).

This means that if you want to both be remembered and trusted, you should not be afraid to discuss the elephants in the room. In a still post-World War 2 Europe however, there is a tendency to brush frictions under the rug , meaning a missed opportunity at emotionally impactful communication. And the trick to solve this conundrum is this: show the journey, not just the goal. That will ultimately establish a better innovation culture within.

Historically, storytelling is used to convey relevant functional information in an emotionally relevant manner, so that the mind remembers it more easily and can use that information to make progress. As such, storytelling is 'equipment for living' (quote from Kenneth Burke) as it teaches us what we need to know about a relevant subject. We watch a romantic comedy to make sure we don't make the same romantic mistakes as the lead characters. We read a dystopian book to better understand our worst tendencies. And we watch the news stories to prevent us from going down paths we shouldn't. In other words, we seek out friction to learn from it.

Brands and companies do the same. Even a washing detergent commercial first shows the stains (ergo, friction), before it offers the solution. It's in that journey - and its lessons - where the value is. As such, that means that if you want to make a better and more sustainable (as in both the 'long-term' and 'green' meanings) you should show an imperfect path to get there, however counter-intuitive that may feel.

I'm always reminded of the chocolate brand Tony Chocolonely that fights for fair cacao-farming, who say this: 'Were on the path towards sustainability'. They never claim they've already reached it. And this is something that our minds recognize: that path is hard. Just as our lives can be. And being sustainable ourselves is also hard. As such, we connect and sympathize with the sentiment, because we recognize it. We then remember the brand and trust it for being honest.

Yet while Americans traditionally never shy away from a little friction, Europeans tend to do the opposite. If Europe wants to gain a competitive advantage, let's embrace friction too in our branding and our storytelling. That way you're building towards an aspirational goal... and your internal culture will gain a real purpose. This will create the right mindset for innovation.

Cool Concept Scans - Solution number 2

Now that the mindset is established, the next step is to create the innovations needed. The second practice we often use for this is to scan the internet for all the cool stuff that is happening within your category. You can find dozens upon dozens of inspirational things when you 'open the windows'. Try listening to different radio stations or podcast, or read up on great mission statements, seek out product innovations or best storytelling practices.

This is where a clear difference between startups and established companies comes in. You see, startups always have their own drive already. They've recognized some gap in some market and fight against the established order of that market. Yet when you already are the market - as in an established player - you need a different mindset. You don't need to rebel or upset the market as a startup needs to do... you need to make it better from within.

The best way to do this is to learn to understand your own category better. This is a fun exercise that doesn't put too much pressure on your people. Yet at the same time looking over dozens of inspirations from your own category - and preferably some adjacent ones - gives you a lot of quick and dirty first ideas to improve. Heck, you might even come up with a few solutions to bottlenecks you didn't see before.

Community Building - Solution number 3

Now that these two steps have been established - an innovative culture with purpose and a series of innovations - the third step is to reach out into the community. Now, I use this word 'community' as a general, broad description that you can fill in yourself. In essence I am saying this: don't innovate alone.

One of the key pillars that gives Europe a competitive advantage is that sturdy societal foundation. I'd argue you use it to your advantage.

The examples are numerous. In the highly competitive fashion space for instance, Milan is a cooperative hub where every Friday all these people from all these different brands have drinks together. The American example of Silicon Valley - although plagued by corruption right now - still holds up too in theory at least; everybody shares a common goal of technological innovation.

From Brainport Eindhoven, a collaborative community in the South of The Netherlands once established by Phillips, came companies like ASML. And the typically Danish practice of building extremely short ties between education, legislation and businesses have led to companies such as Ozempic.

You see, you don't need to create emotional innovations and story-driven brands per sé to be successful (although it is recommended), just as long as you build on that societal progress part, you'll already get that advantage. In the end, the European way to innovate is more through cooperation, and less about competition.

Content Creation - Solution number 4

Once this is established too, it leaves the communication aspect of things. And while media-efficiency is still very relevant here to create reach, there are many roads to lead to Rome. The best practices in content creation nowadays go beyond advertising and put brands in an active societal role. In Europe especially, branding, marketing and storytelling absolutely needs to be socially relevant. No research paper goes by without mentioning 70, 80 to even 90 percent of Europeans wanting brands to be inclusive, community-driven and sustainable (as in 'green'). European brands need to reflect this in their positioning.

The best way to convey this message to you is to address one of those elephants in the room: artificial intelligence. While the US is betting everything they have on AI right now (a bet I argue here they will lose), and China is following suit, the vast, overwhelming majority of people think it's a very negative development. People don't care about your artificial efficiency on your backend... they want real, human stuff. Everywhere. Always.

Especially in the realm of content creation, AI is simply loathed. Even a tiny piece of AI-art in a videogame these days for instance, has gaming communities attacking companies ferociously, to the degree that great games get stripped of their awards if even a single AI texture makes it into a videogame. And that is just scratching the surface (more on this in this article). So keep your content real, keep it away from AI and make the human connection first.

All in all...

Europe has for the first time in a long time a great economic outlook. This opportunity is there in part because of the mistakes of others, mostly the US, who are dropping the ball on their competitive advantage. Yet, it's also there because it has worked on a solid societal framework that in these uncertain times make it a haven for the innovation demands in the market today.

If it wants to press this advantage however, the story needs to innovate on that emotional side. It gets there by focusing less on efficiency and more on effectiveness.

A focus on the heart.

Luv, as always,

Rogier

And check out my latest book here: The Whole Story — The Ultimate Guide to Storytelling.

The Whole Story - The Ultimate Guide to Storytelling