The experience is the thing. Joseph Pine has this story he likes telling, and uses to open Infinite Possibility: Creating Customer Value on the Digital Frontier. On a trip to Milan some years ago, he gave a boardroom presentation to executives from a variety of companies. The response, from the vice-president of a global coffee manufacturer: "There's been no innovation in the coffee industry in the last fifteen years". Pine needed only a single counter-example: Starbucks. Which, Pine goes on to say in Infinite Possibility, was dreamed up right there in that very city when founding CEO Howard Schultz encountered its coffee bar culture.
At the beginning of The Experience Economy, Pine runs the numbers. Coffee, the commodity: 2 to 3 cents per cup. As a consumer product: 5 to 15 cents. As a purchased beverage: 50 cents to $1.50. As an experience: $2 to $5.
"That's four levels of value, depending on what industry they think they're in," Pine said at a London book-promotion talk last month. Starbucks turned coffee into an experience with, as Pine outlines later in The Experience Economy, a dramatic structure all its own.
Or take toilet paper. Every year at Christmas, Procter and Gamble mounts a restroom experience. There's a toilet paper menu, mascots sing and dance — oh, see for yourself on YouTube. Sales went up 15 percent the first year.
"If you can do it with toilet paper, you can do it with anything."
To me, as a consumer just trying to slide as fast as possible through the things I have no choice about, reinventing every transaction as an experience sounds perfectly ghastly — as if the entire world had been reinvented as scenes by Disney, the master inventor of this type of customer engagement. But for a business trying to make the case that you should buy their coffee, their toilet paper or their computer rather than some other company's indistinguishable coffee, toilet paper or computer, entertaining customers (while selling them things) helps bond them to you.
Make the experience sufficiently engrossing, and they'll even buy mementoes of it. (The curmudgeon in me says, "Great, more crap", but if I owned a business in this economy I'd likely run, not walk). Pine actually plays down the 'stuff' aspect: "We don't need more stuff," he said. "We truly value experiences."
The Experience Economy outlines and analyses how to turn products into experiences in a variety of sectors. Infinite Possibility moves on to add measurement. Pine starts with three positive vectors creating three-dimensional space: time, matter (material substances) and space (real places). Against these three, he's drawn three new ones, their negatives: no-time, no-matter and no-space.
No-matter is easy: that's bits instead of atoms, and goes all the way back to early-1990s Nicholas Negroponte. No-space also isn't a challenging concept: that's all those virtual spaces the internet creates. No-time is tricky, however: Pine defines it as "where the nature of experience is no longer tied to actual time". Well, plenty of art forms have played with time before now, but the difficulty with these eight "realms of experience", which Pine later expands into the "multiverse", is that the human at the centre of all these experiences is still bound by time — whatever illusion you manage to create using Pine's guides.
Interesting concepts for developing new business models, for sure (hint to the copyright industries: read these books and learn how to compete with free!), but in the end, even Pine admits "Reality is still the richest of experiences".
Infinite Possibility: Creating Customer Value on the Digital Frontier By B. Joseph Pine and Kim C. Korn Berrett Koehler 270pp ISBN: 978-1-60509-563-9 $26.95
The Experience Economy By B. Joseph Pine II and James H. Gilmore Harvard Business Review Books 360pp ISBN: 978-1-4221-6197-5 $24.95 (paperback)