Weekly I/O: What makes luxury different from premium, Break the Four-Billion-Year Chain of Life, Candor over Honesty
#74: Luxury and Premium, Evolution and Breaking Chain of Life, Candor over Honesty, Luxury and Art, Aware of Decision
Hi friends,
Greetings from Mountain View!
This week, I briefly delved into the world of luxury, something I don’t know much about. While wandering in Paris some weeks ago on a trip, I was so curious about the economy of this city and how the luxury industry works. Therefore, I listened to the fantastic podcast episode LVMH: The Complete History and Strategy from Acquired, which leads to the book introduced in this I/O.
It is an interesting learning, and I hope you enjoy it!
Input
Here's a list of what I'm exploring and pondering on this week.
1. Premium purchases offer enhanced functional benefits at a higher price, while luxury purchases symbolize the buyer's ability to afford items beyond practical necessities.
Book: The Luxury Strategy
Here's a quote from The Luxury Strategy that encapsulates the difference between luxury and premium goods:
"Premium means pay more, get more in functional benefits. Luxury is elsewhere: it signals the capacity of the buyer to transcend needs, functions, or objective benefits."
You pay for a premium because it provides more utility. On the other hand, you pay for luxury precisely because it adds no additional utility, which other people know. Therefore, it symbolizes that you have the wealth to afford non-essential extravagances.
Consider the car industry as a more tangible example. Brands like BMW and Lexus exemplify premium. They offer cars that deliver superior functionality and utility at a higher price. In contrast, Ferrari is a luxury brand. Many things about Ferrari are way worse than a Toyota in terms of practicality and functionality.
However, opting for a luxury car broadcasts a message. It's not a premium choice to upgrade from a Toyota to a Lexus for better functionality. It showcases one's abundance of wealth and a particular level of taste, even if it means compromising on certain functional aspects.
2. Any individual who chooses not to or cannot have children, ends an unbroken chain of life that stretches four billion years.
Book: The Ape that Understood the Universe: How the Mind and Culture Evolve
According to evolutionary theory, every species evolved from an earlier species, which itself evolved from an earlier species. If we trace back the genealogies of existing species, they soon begin to converge like tree branches.
Chimpanzees and bonobos share a common ancestor around a million years ago. Humans share a common ancestor with them around seven million years ago. This interconnectedness extends across the whole spectrum of life: humans and whales, whales and dogs, dogs and mushrooms. Ultimately, all life on Earth traces back to a simple, self-replicating molecule that appeared around four billion years ago.
This view of life implies a somewhat mind-blowing fact: Any individual who chooses not to have children or who has childlessness thrust upon them, brings to an end an unbroken chain of life that stretches back four billion years.
That said, no one should feel bad about this observation (unless there's a cultural or personal factor) because, in fact, most organisms throughout Earth's history died before they ever reproduced.
3. To foster a creative culture of open communication, encourage candor rather than honesty. It's easier to be candid because it removes the moral barriers often associated with honesty.
Book: Creativity, Inc
Ed Catmul talks about the story of founding Pixar and his management philosophy in his book Creativity, Inc., which is the best book I've read on cultivating a long-lasting creative culture.
Open communication without withholding is essential to foster creativity. It also forms the foundation for psychological safety, the most crucial indicator of successful teams. However, our intrinsic fears and instincts often make us hold back our thoughts and expressions. Catmul notes:
"Ask anyone, "Should people be honest?" and of course their answer will be yes. It has to be! Saying no is to endorse dishonesty... But the fact is, there are often good reasons not to be honest."
Telling the truth is hard. Therefore, Catmul suggests:
"One way to do that is to replace the word honesty with another word that has a similar meaning but fewer moral connotations: candor. Candor is forthrightness or frankness— not so different from honesty, really. And yet, in common usage, the word communicates not just truth-telling but a lack of reserve. Everyone knows that sometimes, being reserved is healthy, even necessary for survival. Nobody thinks that being less than candid makes you a bad person (while no one wants to be called dishonest). People have an easier time talking about their level of candor because they don't think they will be punished for admitting that they sometimes hold their tongues."
Candor removes the moral barriers often associated with honesty. Because our self-preservation mechanism gets less triggered, it is easier to be candid than honest. Therefore, shifting from honesty to candor can facilitate a more creative environment where people feel more comfortable expressing genuine thoughts freely.
Thanks to Xinyi Zhang for recommending this book to me.
4. Luxury is superlative, never comparative. It's art that happens to have a little bit of functionality.
Book: The Luxury Strategy
Luxury is superlative, never comparative. For a luxury brand to have lasting financial success, comparisons must be avoided at all costs. Luxury thrives on uniqueness rather than mere superiority.
Luxury is like art that happens to have a little bit of functionality. Luxury and art both embody a dream and convey abstract concepts, but a Hermès Birkin bag happens to be capable of storing stuff (but not many). While the price of any non-luxury product must be justifiable by its utility curve, hedonism takes precedence over functionality for luxury.
In The Luxury Strategy, the authors highlight six defining attributes of luxury goods:
A very qualitative hedonistic experience or product made to last
Offered at a price that far exceeds what their mere functional value would command
Tied to a heritage, unique know-how and culture attached to the brand
Available in purposefully restricted and controlled distribution
Offered with personalized accompanying services
Representing a social marker, making the owner or beneficiary feel special, with a sense of privilege
5. We make better decisions when we know we are making decisions. Therefore, the first step to improving decision-making is to be aware of the decision.
Shane Parrish and his work, Farnam Street, offer some of the best resources for improving decision-making. When asked, "How would you suggest people get better at making decisions?" Shane started with a simple observation.
When we know we're making a decision, we tend to do reasonably well. Being conscious of the decision-making process makes us more rational and directionally accurate. For instance, when marrying our partner or buying a house, we know we're making a decision. Therefore, we utilize the information better and make more deliberate decisions.
However, challenges emerge when we are unaware that we are making decisions. In the context of relationships, unlike the clear-cut decision of choosing a partner, numerous subtle decisions are often made without explicit awareness. These include communication styles, daily interactions, and even mundane tasks like loading the dishwasher. A lack of consciousness in these decisions often results in mistakes, leading to conflicts and frustrations in relationships.
You can make the best decision by marrying the best person in the world. Still, if you don't consciously navigate the subtle decisions in a relationship, it can all multiply by zero. Therefore, the first step towards getting better at decision-making is knowing you are making a decision.
Output
Here's what I've published since the last time we met.
1. How Many More Times Will I Watch the Full Moon Rise?
Some thoughts after reading the book Ryuichi Sakamoto wrote in his final days reflecting on life, music, and approaching death.
That's it. Thanks for reading. Please share which input you found the most helpful or intriguing. Just reply to this email with a number—it's quick and easy!
And as always, feel free to send me any interesting ideas you came across recently!
Looking forward to learning from you.
Cheers,
Cheng-Wei