Customer Reviews

The Experience Economy: Work is Theater & Every Business a Stage

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The book takes a very logical, reasoned approach towards the theoretical next steps of economic expansion. It reasons that margins drive profits and that by constantly searching for higher margin offerings, a company will naturally improve and increase its profitability.

The logic is understandable... Commodity goods have small margins, as they are undifferentiated from each other and relativly easy to reproduce. Manufactured goods take things one step further, providing higher margins due to some level of product differentiation and brand specificity. Above that are Services, where the products don't last long enough to be copied and are customized enough to prevent easy manipulation. The higher margins should lead to higher profitability and better staying power. Fair enough.

Where the book's logic becomes strained, however, is where it strethes out towards the next generation of higher margin offerings, "Experiences." While it is true that experience companies my be able to provide higher margins than can older economy companies, experience companies tend to suffer from a fatal flaw that has infected many of the companies praised in the book. That flaw is the utter lack of repeat business generated by most experience economy companies.

Take two of the companies mentioned in the book as companies to emulate -- Planet Hollywood, the restaurant chain, and Peapod, the online grocery store. Planet Hollywood is under bankruptcy protection, because people are simply unwilling to pay through the nose repeatedly for the same experience over and over again. Peapod ran out of cash and is limping along only after being bought out by a Dutch firm. Hardly two stellar companies to emulate when searching for ever expanding profits.

Throughout the book, by expounding the virtues of ever expanding margins, rather than focusing on goods, services, and 'experiences' that people would be willing to repeatedly pay to have, the authors make the mistake of ignoring the overall forest for the sake of a single tree.

In the real world, experience companies know their limitations and create their pricing scheme to represent that fact. Amusement parks sell season passes for less than the cost of two visits -- acknowledging the fact that people may pay more for experiences, but only once, and repeat business depends heavily on making the repeat worth the cost.

Had the book focused more on successful ways for experience economy companies to thrive, rather than spending its time drolling on about the virtues of failing companies with the right plan, it would have been far more believable and enjoyable.

First of all, I urge anyone thinking about buying this brilliant book also to consider (or to re-read) Schmitt's Experiential Marketing and Wolf's The Entertainment Economy. Although the three books differ significantly in terms of thrust and content, together they help us to understand a New Economy which is perhaps best exemplified by Las Vegas. According to Pine & Gilmore, "Virtually everything [italics] about Las Vegas is a designed experience, from the slot machines at the airport to the gambling casinos that line the Strip, from the themed hotels and restaurants to the singing, circus, and magic shows; and from the Forum Shops mall that recreates ancient Rome to the amusement parks, thrill rides, video arcades, and carnival-style games that attract the twentysomethings and give older parents a reason to bring their kids in tow."

Pine & Gilmore explain The Experience Economy; Wolf calls it The Entertainment Economy. Schmitt suggests that Experiential Marketing creates or sustains demand for this New Economy, however it is named. For all of these authors, "work" should be viewed as "theatre" and every business should be viewed as a "stage." If they are correct (and I believe they are), the quality of sensory experience is critically important. That is to say, it is no longer sufficient to offer high-quality goods or services for sale at competitive prices. Most (if not all) goods and services have become commodities. Competing on price alone seldom succeeds...especially against those which have superior purchasing power. Competing on quality alone succeeds only for those who offer what no one else has. The challenge is to achieve differentiation. According to Pine & Gilmore, this challenge is best met by understanding what the Experience Economy is (and isn't) as well as how it works; only then, thus informed, can an organization (almost literally) function as a theatre company: formulating a script which has both an exciting story line and interesting characters; assigning roles to those who have the appropriate talents; and then conducting rigorous rehearsals. Finally, it's "show time"!

Pine & Gilmore observe, "Since all commerce is moral choice, every business is a stage for glorifying something. Who or what does your business glorify? Your answer may not help you accept what is next, but it will certainly help guide what you do today." At its best, live theatre can delight, amuse, excite, inform and even inspire those who experience it. Why cannot it also be true of business relationships? Of course it can. It is certainly true of those organizations which prosper. Southwest Airlines is but one example. Its CEO once observed:

"I keep telling [those interested in Southwest Airlines] that the intangibles are far more important than the tangibles in the competitive world because, obviously, you can replicate the tangibles. You can get the same airplanes. You can get the same ticket counters. You can get the same computers. But the hardest thing for a competitor to match is your culture and the spirit of your people and their focus on customer service because that isn't something you can do overnight and it isn't something you can do without a great deal of attention every day in a thousand different ways. That is why I say that our employees are our competitive protection."

Kelleher's comments are relevant to virtually all organizations which now struggle to succeed in the New Economy (however it is named). To understand this economy, to understand what it requires of your own organization, I urge you to read The Experience Economy...as well as The Entertainment Economy and Experiential Marketing.

It was painful getting through this book. Partly because of the content, but mainly because of the writing style of the authors. That aside, let's talk about why I didn't like the book. First, the economic arguments for the 'Experience Economy' were flimsy at best. It seemed to me they were overly selective in choosing their supporting arguments, mainly because they needed to make their work seem larger and more broadly applicable than it really is. Second, much of their 'new economy' is really just an as-yet-little-discussed market segment. And many of their groundbreaking ideas traditional (and fundamental) marketing. Third, I found the religious (sorry, world-view) over- and under-tones of the last two chapters almost insufferable. Quite frankly, for two authors who talk about the importance of customization and segmenting according to world-view, they should have known better than to discuss religion in the manner they chose. Don't get me wrong, the book did have some very interesting points. I found the 'work as stage'concept and the review of 'experience development' concepts fascinating and applicable. I cannot, however, recommend this book to you. If you want the critical insights, borrow it from someone who did buy it, and read Chapters 2,3,6, and 7. Oh, and mind the typos, a few of them happen at the WORST possible places (like the misdrawn table 5.2).

As co-author of the cluetrain manifesto .......... I'm often asked by companies how they can implement the ideas we talk about. This book is a great place to start. Unfortunately, the listing here leaves out the subtitle: "Work Is Theatre & Every Business a Stage." That's what got to me. Acknowledging the role of serious play in serious commerce is long overdue, but The Experience Economy makes up for lost time. While most business books are little more than literary Sominex, this one will stretch your head in new dimensions. Even if you disagree with bits, it'll wake you, shake you, make you think.

At first, I was put off by the notion of the Internet as "the greatest force for commoditization known to man." This is only true when the net is seen as an extension of the broadcast model: think TV. But that's the wrong approach, as the authors later make clear: "Cyberspace is a great place for such experiences, but many businesses still don't get it. They're heading into the commoditization trap, trying to figure out how to better sell their company's goods and services over the World Wide Web, when in fact most individuals surf the Net for the experience itself."

E-commerce as performance art, I love it! So step right up, boys and girls, and get your ticket to the Pine & Gilmore Masque. The show's just about to begin!

The Pine and Gilmore book about work and theater is a different, but not unique, way of looking at business. By concentrating on employees' ROLES instead of jobs and functions, this book encapsulates new thinking about:

-how a company presents itself to the customer -internal customer service

-the need for aggressive change management

-differentiation of products

-dynamic strategic planning [no more five year plans] -where actual economic value is found

A very quick and dirty overview of their concepts can be accomplished by looking at their definitions:

[cast=employees]must take on [roles = responsibilities] by each making choices to develop compelling [characterizations=representations] that form(s) a cohesive [ensemble = organization] to engage [guests = customers] in memorable ways

workplace = theater drama = strategy

script = processes

producer = shareholders, investors director = leader

Perhaps the most memorable section in the book that resonated with me was the statement that for every piece of work, one must describe his [or her] intention using the phrase "in order to"

what a powerful way to keep the focus! It brought to mind the story about the cathedral builders that I have seen in so many places....

And I was left with a solid suggestion on how to recognize the role of support departments -- those people who get left out when the sales incentives and bonuses are given out but without whom the entire organization will falter -- see the chapter on movie and stage credits!

As I write this review on July 29, 2003, I see 'The Experience Economy' is ranked at #624 in amazon.com's constantly updated sales rankings. Pretty heady for a fairly esoteric business book published in April 1999.

The reason has to do with the latest (August 2003) edition of 'Fast Company' magazine. The editors asked a series of business leaders to pick one "book that matters," noting that "one book can change the direction of a company -- or a career." Bob Nardelli, ex-of GE and now CEO of the Home Depot, chose 'The Experience Economy.'

That's a great thing, because this excellent piece of work really got the short shrift - with its April 1999 publication date, its message of capturing the full potential of face-to-face retail got buried in the tsunami of e-commerce hysteria.

Now that we all recognize the Internet as just another viable sales channel, this fine effort by Pine and Gilmore has a second life. The fact that Nardelli picked it as his one book that matters tells you all you need to know about his vision for the future of Home Depot.

The Experience Economy is truly a work of art. It is one of those rare books that provide insight, perspective, illumination, and rich content together in a unified framework. The book thoroughly explains the nature of an experience offering, clearly differentiating it from a service. Understanding your business as an experience provider can radically shift your thinking about the value of your economic offering... and your understanding of what your customers value.

Work is theatre. Every time an employee is in front of a customer they are acting...whether they know it or not.

As the higher value economic offerings of experiences and transformations come to dominate the economy, the understanding of experiential and transformational offerings becomes more critical. As individual buyer's needs are targeted by company offerings, the notion of a market of fictional average people gets replaced by individual buyers. The elimination of customer sacrifice requires the customizing of each offering to a specific customer's needs. Customizing goods turns goods into services, customizing services turns them into experiences, and customizing experiences turns them into transformations.

Though the book focuses on "experiences" as a distinctive economic offering, it also provides a comprehensive framework for understanding all economic offerings. The insights from the progression of economic value and the characteristics of each offering provide a frame of reference for assessing your current business and stimulating strategic discussion of what it might be.

Pine and Gilmore take great care in defining the five economic offerings -

* Commodities
* Goods
* Services
* Experiences
* Transformations

Each level is of greater value than the prior level. Tailoring offerings to reduce customer sacrifice adds value and moves the offering up the progression of value. At the same time, offerings are continually commoditized to bring greater value going the other direction.

The distinguishing factors of each offering are explicitly defined and reinforced throughout the text. These offerings are a progression. They build upon one another. For example, at the transformation level where the customer is the offering, guiding transformations can be explained in three basic steps:

1. diagnosing aspirations, with characteristics of a service,
2. staging experiences, to bring about the transformation, and
3. follow-through, to sustain the transformation.

Towards the end a terrific thought provoker -- "Who or what does your business glorify?" What a thought provoker!

In my view this book explains on how quality experiences finishes the job where personalization leaves off. The Experience Economy is a exciting read and recommend you read slowly. In addition if you read Pine's previous book (Mass Customization) and blend the concepts.....wow.

We all pay admissions to get into Disneyland, museums, country parks and even universities. What if I tell you that, in the future, you will be charged a fee for setting foot in a Nike shop or Starbucks? You must find this notion repulsive. But why is it that you feel obliged to pay the former group but offended to pay the latter? Is it just because of the very nature of the places (we should pay an admission fee to theme parks but not shopping malls)? Of course not, for we will be more than happy to pay to enter a Nike shop if it will add a Roller Coaster, plant some trees, showcase some wild animals and yes, bring us a world of fantasy. In the end, what separates companies which can charge an admission fee from those which cannot (without infuriating customers) depends on their ability to stage memorable and worthwhile experience. In The Experience Economy, the authors believe that the traditional way of dividing sectors of economy into agriculture/ extraction of raw materials, industry and service is obsolete. A nascent sector, which is very often overlooked or mistakenly fused with service, emerged in the latter half of 20th century and is called "the experience sector".

Review the first group of places again and see if you can identify a common trait. In fact, they all primarily sell experiences. Although goods and services are also involved in the process, they are a means but not an end. The authors argue that people scrimp on goods and services to pay for what they find more valuable: experiences. Experiences are valuable because they are relevant to the customers and engage them in a personal way. Recall the last time you visited a haunted attraction (e.g. Ocean Park Halloween Bash in Hong Kong) when you literally paid to be scared. You lavished hundreds of dollors for nothing tangible, nothing akin to a service - but congratulations, you got an unique experience which made headline in your exchanges with family and friends while it lingered on your mind for months, if not years.

Companies in the experience sector charge more, reap repeated patronage and enjoy higher customer loyalty than those considered to be purely service providers (Starbucks charges 5 times more for a cup of coffee than your neighbouring coffee shop when the production costs vary only slightly). If they dare push it to the extreme, they could even consider charging admission fees. The prerequisite? Coordinate every details of your business as if you are putting up a show in a theatre, treat customers as your guests, indulge them in memorable experiences which make them feel embarrassed not to pay for.

Many have noticed that America is importing more and more goods from places where it is more economical to manufacture them than here in the U.S., .Mexico and China come immediately to mind.and have commented that America's economy has turned into a service-based economy. Yet, even our services are now being sent to foreign countries so that corporations can save money; think "technical support" for computer applications, for example. In their book, The Experience Economy: Work is Theatre & Every Business a Stage, Joseph Pine and Jim Gilmore (1999) introduce their readers to a new era of consumer-focused marketing.an era that goes beyond the delivery of goods and services, and into delivering consumer experiences. The authors present clear evidence and case studies that business owners who compete on the basis of price are commoditizing their value offerings; and that those who deliver compelling, memorable, and transformational experiences to their customers are pioneering and leading this economy revolution known as The Experience Economy. The Experience Economy provides insights into how successful businesses have moved into the new age of experience marketing, and Pine and Gilmore present a logical blueprint for marketers to follow. True experiences, say Gilmore and Pine, provide a value that "lingers in the memory of any individual who was engaged by the event" (1999). In order to create those memories, an experience must deliver on guest participation and connection and even transformation.
The Experience Economy has become more than a best-selling book since its publication ten years ago; it has transformed the way not only Americans, but also people the world over, are conducting business. In this book, it is almost as though Pine and Gilmore have discovered the secret recipe, not for Coca Cola or Kentucky Fried Chicken, but for Disney World. They have captured the essence and substance of what creates success for companies marketing directly to consumers, and have spelled it out in a language that is understandable to anyone. In reading the book, the reader finds him or herself constantly nodding his or her head, agreeing with the examples provided and finally "getting it" .how they work they way they do or why they fail to work the way they were originally intended. The book provides insights not only into pop culture, but business on a much higher level.and how success will be measured, not only in the past decade but in future decades to come, by how well the business experience has integrated itself into pop culture of today. Pine and Gilmore take the current success stories: Disney, The Geek Squad, Rainforest Café, Starbucks, Cabella's, and the like, and teach their readers how to create tomorrow's experience culture. Applicable to both historians and marketers alike, it is not so much a book on the history of pop culture, as it is a visionary book on the future of marketing.