As participants in today’s diamond industry we are all caught in a belonging paradox, torn between a desire for personal coherence and autonomy and our actual situation of near total dependency on others.

Typically, we respond to this belonging paradox through repression.  We assert that “I am right” but “they” are wrong. I am no exception to this.  None of us is immune.

This false belief that we “know” best leads to very real tensions once the results of our decisions fail to show up – when we start to realise that the others are right as well, in their own way and on their own terms.

The diamond industry is de facto, bankrupt.  But the answer to its future is not to be found in economics, but in psychology.  Psychological forces are more important than economic ones.  While economic forces keep on changing over time, psychological forces are stable; what we see today could be identified yesterday and will still true be tomorrow.

More importantly, as the recent economic events taught us, there are economic factors that we do not have control of or cannot change. Psychological factors are within our reach and once we understand them we can certainly try to cope with them.

A typical reaction to this ‘belonging paradox’ is through projection – the transferring of the conflicted feeling onto a scapegoat or a repository of bad feeling.  Martin Rappaport is one, the economic situation is another and maybe I, with my statements of doom will be seen as another.

But I must stick to my guns, even while acknowledging others’ opinions.  The fact is that the old engagement “dream” identified with diamonds has steadily declined. The socio-demographic fabric has been changed since this “dream” was conceived sixty years ago. Instead this universal dream has been replaced with technical marketing approaches which have commoditised diamonds and eroded their luxury status. From the moment we started to ’sell’ diamonds rather than dreams, the market has been in decline.

The way out of the belonging paradox (and a return the glory days to the diamond market), is to transcend our dependency on ‘them’, by discovering a new message, a new form of leadership and a new diamond dream.

We need: New independent market research, based on solid principles of luxury marketing

We need: New dreams, based on modern society’s aspirations and challenges and desires, not on nostalgia.

We need: New, more intimate channels of communications need to be considered with each new “dream” conceived.

We need: Proper metrics should be put in place to measure success step by step, to provide diamond producers with actionable information.

None of this is impossible.  And none of this is costly compared to the billions that have been spent in overseeing decline.  The key lies in human psychology not market economics.

Our future is in our own hands if only we can transcend the belonging paradox.

Ahh, wine. Beginner and expert connoisseurs alike can appreciate it for different reasons. I was reminded of this earlier this month when I saw this story about wine psychology in the New York Times. Food writer Robin Goldstein has written a book called "The Wine Trials" in which he found, in a survey of 500 volunteers, that less expensive wines were being rated higher than more expensive wines in blind tests. However, there’s more to the story than that–he found that novice wine drinkers don’t appreciate the same things as more experienced drinkers, and that, as Eric Asimov notes in the article:

Most people in the wine trade understand that consumers have any number of reasons for their buying decisions, whatever their psychological and financial state. Some are reassured by easy-to-understand labels with friendly animals. Others want only naturally produced wines or bottles with a modest carbon footprint. Some are status-seekers and score-chasers, while others are contrarians, or only drink red wine.

The story also mentions how people seem to appreciate wine more when they think it’s more expensive (something we’ve noted on Janus Thinking before). When people are interpreting an item and figuring out it’s value for themselves, how much should the price matter, and how much will this differ among beginners and true connoisseurs?

[Photo by rpeschetz]

In this paper it is argued that human interpretation is an inherently paradoxical and complex mechanism.

Human interpretation is underpinned by values, preferences and contrasts, and assumptions, and surfaced through an idiosyncratic combination of personal choice and logic (Pinker, The blank slate: the modern denial of human nature, 2003). In order to find ways through interpretive diversity, Janusian thinking is a conscious and purposeful mechanism (Rothenberg, Creat Res J 9(2–3):207–231, 1996) that allows each one to think paradoxically.

Coping with paradoxes is not only a cognitive challenge in trying to resolve the irresolvable but also an emotional one, as emotion might distort the paradox. Janusian attitudinal mapping allows individuals to face the true paradox and to review the assumptions behind it. Such review may modify or even abolish certain assumptions altogether.

However, Janusian attitudinal mapping is an emotional undertaking that should follow the three elements involving social reform for advancing and fostering knowledge: shock, open communication and experimentation, and paradox leadership (Lewis, Acad Manage Rev 25(4):760–786, 2000).

Mostovicz, I., Kakabadse, N. and Kakabadse, A. (2008), ‘Janusian mapping: A mechanism of interpretation’, Systematic Practice and Action Research, published online. http://www.springerlink.com/content/1xj3t0gqj223v52j/, March 4th, 2008, DOI 10,1107/s11213-008-9092-x.

It’s not fit. It’s feelings.

says a recent article in Forbes on the continuing appeal of very exclusive items with very expensive price tags.

Perceived high quality, a similar (but higher) price compared to the nearest luxury competitor, a desire to impress peers and create the reputation that comes with ownership of certain luxury goods–these things combine to create greater demand for objects not everyone can access.

This is particularly true when items are given as gifts, according to Professor Jagmohan Raju of the Wharton School at the University of Pennsylvania:

If an item is given as a present, then the price is a demonstration of affection and consumers will often justify a higher price.

I have difficulties equating price paid with level of affection for the recipient. Of course spending more money on a gift will buy you “nicer” things, but the value of the gift in emotional terms will depend on how the recipient interprets it. The price of the gift could be $1.80 or $1.8 million–what matters is whether it will mean something to the recipient and whether he or she will truly appreciate it.

The growth of masstige products is a well attested phenomenon–bringing luxury goods within reach of the hoi poloi. Porsche boxter, mercedes c class, jaguar x-type… the list is endless.

Edwin Collyer makes a really good summary of the phenomenon, over at brandchannel quoting a variety of experts….

Robin Koval says:
bq. There always has to be some sense of scarcity and being out of reach. Yes, you can buy a Mercedes for $30,000 or so, but the really cool one that you dream about is there next to it on the floor for $100,000…. It depends how well you can tier your offerings and reserve a special place for the true luxury consumer.

This is a typical problem with all masstige conversations. They tend to focus obsessively on the price of an item at the lever of luxuriousness, when price is just one facet of their exclusivity (you can add scarcity, sparse distribution, sourcing difficulty to this list). Exclusivity itself is just a tiny facet of luxury, and is primarily appealing to challenge-seekers, who find self-esteem in achieving their goals.

This sort of price-centred analysis fails on two levels. At a basic level it fails to acknowledge the alternative unity-seeking motivation of luxury, but also, at a much deeper level, it fails to recognise that ALL luxury is personal and relative. The masstige conversation falls headlong into the trap of seller-centric thinking, believing that producers can be manufactured.

Koval does clarify his point later in the article, when he says:
“Luxury is now more about emotion than price points. I think it will be more about mindset than wallet size or class. There will always be people for whom certain indulgences provide great meaning—whether for their badge value or intrinsic reward. And there will always be the millionaire bargain hunter as well. It’s all a matter of where your own definition of pleasure comes from.”

As Collyer says, Luxury can be a cream cake instead of a sponge.

Luxury can be a single chocolate with your evening coffee…

But the same chocolate can be emergency rations in the jungle…

The critical point is the brand owner does not determine luxury, the luxury is determined through the personal moments of intention, choice and consumption and remembrance…

Luxury starts well before the purchase, and ends only when memory fails.

The paradox here is that luxury is both utterly universal and entirely individual.