The Experience Economy

The Experience Economy by Joe Pine and Jim Gilmore was published ten years ago by Harvard Busienss School Press this coming Tuesday, April 28.   

I'm raising my glass to Joe and Jim for this seminal contribution to creating a tipping point for acceptance of experience practice around the world.   200,000 copies and 12 languages later, The Experience Economy continues to be the best starting point for understanding the importance of creating intentional experiences to creating profitable growth and customer advocacy.

The Experience Economy gives us a great model to understand this progression of economic value to customers:

• Commodities.  Easily interchangeable and undifferentiated materials from the natural world.
• Goods.  Tangible offerings (products) you can mass product and hold in inventory.
• Services.  We'll do it for you - intangible activities for specific customers. 
• Experiences.  "Experiences are events that engage individuals in a personal way." (from The Experience Economy, pg. 12.)
• Transformations.  Game changers; life-altering engagements.

The insight that "The Customer is the Product" (chapter nine in the book) delivers a remarkably clear view of how to understand customers and the opportunities presented by re-perceiving markets. 

I'm a fan. 

Mutual Benefit

Mutual benefit is a multiplier effect in relationships. When mutual benefit is perceived (there's something in this for both of us), goodwill is created to nurture future interactions.

The attributes of mutual benefit are:

• Stage 1: Conditional. Simple transactions without ongoing relationships.
• Stage 2: Reciprocal. Formation of relationships and having a memory of the customer.
• Stage 3: Integrated. Sustainable interdependent relationships that fuel each other's growth.

Sensing mutual benefit or perceiving an obligation to act in kind is a powerful motivator and foundation for an ongoing relationship.

Context and its Role

Context provides the connection for a brand's relevance in specific cultural or economic situations. There are three stages of brand contextual maturity:

• Stage one: Reflects. The brand mimics the social and economic environment. (dependent)
  
• Stage two: Adapts. The brand actively changes in relation to the environment. (independent)
  
• Stage three: Projects. The brand creates new social constructs or economic rules for other to mimic or adapt to over time. (interdependent)
  

Brands in stage one that reflect merely imitate the competition - they live for the day with little regard for the future. Brands that adapt earn the right to survive over time. Brands that project themselves earn a position to thrives by changing the rules and the fitness landscape for everyone else.

Relevance

Every brand should be known for something - a reason for being - one customers understand and believe in. This is relevance.

Relevance can manifest itself in three stages of brand maturity:

Stage one: Personality. The brand works to become clear and compelling to customers (the brand behaves as a learning child). Dependence.

Stage two: Character. The reputation of the brand and its behaviors are known (the brand behaves as a young adult, sorting out priorities). Independence.

Stage three: Purpose. The brand has an ongoing reason for being that is widely understood and reinforces the brand's behavior (the brand behaves as a mature adult with a mission in life). Interdependence.

Unjustified Assumptions

One of my key roles in professional life is to rid people of unjustified assumptions.

I just watched again the catalyst for this core idea by replaying a segment of the series "A Glorious Accident: Understanding Our Place in the Cosmic Puzzle" by Wim Kayzer. In his interview with philosopher Stephen Toulmin the the phrase "unjustified assumptions" is evoked as the result of his experiences in the classroom of Ludwig Wittengstein.

What a tremendous professional tool. Stripping away assumptions that are no longer relevant, or in the context of use are weak or no longer needed -- and in setting these assumptions aside, provide the ability to focus on what remains.

The trick is to deliver this news (that a few things you thought were real, really aren't anymore) in ways that help people embrace a new fitness landscape. All too many times I've seen a heavy hand deliver a pronouncement about a "new reality" that is disruptive, while it is far more effective to do what the sculptor does: remove the excess stone (unjustified assumptions) to reveal the form within (the new streamlined business model and approach).

The Energy of Change

We are in the middle change that is releasing tremendous amounts of unguided energy. Think of the states of water: gas, liquid, solid. During dot.com bubble a lot of energy was absorbed and the economy became gaseous and a lot of value boiled off. We're now releasing economic energy and productive capacity and things are freezing.

If you've lived in a cold climate, you know the common advice is to turn on you faucets and let them drip just a little bit so the pipes don't freeze. Keep things moving just enough so the pipes don't freeze and burst. You push up your water bill a bit, yet ask anyone about the repair expense for burst pipes.

There are organizations out there where the pipes are about to burst. To survive they need to keep a trickle of activity going in some important areas that might be freezing right now: strategic intent, customer relationships and service, and end-to-end integrity.

Survive with intent to succeed another day.

Enduring Brands

Enduring brands have three elements: Relevance, Context and Mutual Benefit. I wrote about this in my book Brandscendence in 2004 and the principles still hold true.

Relevance is the organization's or product's (service's) enduring reason for existing - it's ongoing relevance to customers.

Context is the cultural or economic circumstance in which the brand appears - and adapts to a changing competitive landscape over time.

Mutual benefit is the perceived goodwill both the customer and company see in each other - and is a multiplier effect to nurture future interactions.