This is the third of several ‘Innovation Perspectives‘ articles we will publish this week from multiple authors to get different perspectives on ‘What product or sector is in desperate need of innovation?‘. Here is the next perspective in the series:
by Tim Kastelle
We are facing the best innovation opportunity in the history of business right now, and everyone is missing it. The sector that provides the best opportunity for innovation right now is older adults. And you can tap into this market with one fairly simple change to your business model.
My wife Nancy is a geropsychologist. When she asks her students at the start of each semester what words come to mind when they think about aging, and nearly everything is negative: sick, alzheimer’s, nursing home, dementia. These thoughts dominate our thinking about business opportunities in this sector as well. Everyone knows that all of the populations in developed countries are aging rapidly. People that are 65+ are going from 10-15% of the population in 2000 in most countries to 25-40% of the population by 2025. So what opportunities does this present?
A recent cover story in Business Review Weekly here in Australia talked about how the baby boomers can make you rich. Their suggestions: invest in nursing homes and health care.
This is wrong!
Most firms start with an older adult business model based on the assumption that these people are sick, and they need care, and that is where the opportunities lie. In most western countries, how many older adults are in nursing homes? About 5%. How many are sick? Less than 10%. Why are we building our business models around less than 10% of the biggest segment of the population? This is insane. So my prescription is this: start with a simple business model innovation – your target market is actually the 90% of older adults that are healthy and active!
Tom Peters has been talking about this for a while. So has Ken Dychtwald. Here are some facts about older adults:
- There are lots of them, and soon there will be even more.
- The overwhelming majority of them are active and healthy.
- They have TONS of money (70% of the wealth in America, according to Peters).
- They see more movies, buy more clothes and more cars and more, well, everything than any other segment of the population.
- They have time on their hands and they want interesting things to do.
- They’re the fastest growing age group on Facebook, and their use of other social media outlets is also growing rapidly.
Whatever you do, change your business model to target these older people, not the sick ones. Once you have done that, do what Saul Kaplan suggests and start learning what they want. Then start innovating.
We need iPhone apps for older adults. We need movies, vacations and consumer products that meet their needs. We need them in our social networks and focus groups. Peters recounts a number of cases of firms that have successfully made a product or two targeting older adults then says:
“These are all great cases. But they are just… cases. Isolated events in a Grand Marketing Narrative that continues to treat Youth as its hero.
They are a far cry from Strategic Realignment. And anything less than Strategic Realignment – that is, reorienting your enterprise from the ground up to serve the emerging [older adult market] will you in the cramped, low-growth world of ‘niche’ marketing.
Review the numbers: If a group controls the vast majority of wealth and discretionary income, then it is the market.”
He’s right. It’s the best innovation opportunity ever. How will you take advantage of it?
You can check out all of the ‘Innovation Perspectives‘ articles from the different contributing authors on ‘What product or sector is in desperate need of innovation?‘ by clicking the link in this sentence.
Tim Kastelle is a Lecturer in Innovation Management in the University of Queensland Business School. He blogs about innovation at the Innovation Leadership Network.