The Experience Economy: Work Is Theater & Every Business a Stage [Hardcover]

B. Joseph Pine II (Author), James H. Gilmore (Author)

Book Description

Publication Date: April 1, 1999

Future economic growth lies in the value of experiences and transformations--good and services are no longer enough. We are on the threshold, say authors Pine and Gilmore, of the Experience Economy, a new economic era in which all businesses must orchestrate memorable events for their customers. The Experience Economy offers a creative, highly original, and yet eminently practical strategy for companies to script and stage the experiences that will transform the value of what they produce. From America Online to Walt Disney, the authors draw from a rich and varied mix of examples that showcase businesses in the midst of creating personal experiences for both consumers and businesses. The authors urge managers to look beyond traditional pricing factors like time and cost, and consider charging for the value of the transformation that an experience offers. Goods and services, say Pine and Gilmore, are no longer enough. Experiences and transformations are the basis for future economic growth, and The Experience Economy is the script from which managers can begin to direct their own transformations.

Editorial Reviews

Amazon.com Review

Sometime during the last 30 years, the service economy emerged as the dominant engine of economic activity. At first, critics who were uncomfortable with the intangible nature of services bemoaned the decline of the goods-based economy, which, thanks to many factors, had increasingly become commoditized. Successful companies, such as Nordstrom, Starbucks, Saturn, and IBM, discovered that the best way to differentiate one product from another--clothes, food, cars, computers--was to add service.

But, according to Joseph Pine and James Gilmore, the bar of economic offerings is being raised again. In The Experience Economy, the authors argue that the service economy is about to be superseded with something that critics will find even more ephemeral (and controversial) than services ever were: experiences. In part because of technology and the increasing expectations of consumers, services today are starting to look like commodities. The authors write that "Those businesses that relegate themselves to the diminishing world of goods and services will be rendered irrelevant. To avoid this fate, you must learn to stage a rich, compelling experience."

Many will find the idea of staging experiences as a requirement for business survival far-fetched. However, the authors make a compelling case, and consider successful companies that are already packaging their offerings as experiences, from Disney to AOL. Far-reaching and thought-provoking, The Experience Economy is for marketing professionals and anyone looking to gain a fresh perspective on what business landscape might look like in the years to come. Recommended. --Harry C. Edwards

Review

"A wise, deep, and enlightening book." -- Toronto Globe and Mail, May 5, 1999

"Pine and Gilmore do make an intriguing case. In particular, they implicitly challenge two ideas that have recently hardened into conventional wisdom: that giving away your product is the path to profit, and that casually clad tech-heads who inhale pizza and who write code until dawn represent the future of work." -- Fast Company, April 1999

"The Experience Economy, with its own well-developed theme and enriching examples, may transform more than a few managers." -- Technology Review, May-June 1999

"This is a good look at how every business is morphing into show business...just creating a product and waiting for the world to come to your door is not going to cut it." -- Jesse Berst, ZDNet (for Wired), July 1999

"This is a seminal work, a book that presents new ideas--and uses old ideas in new ways--to change the reader's perceptions and expectations." -- National Productivity Review, Winter 1999

This book scared the hell out me. The pitch is that consumers are increasing in complexity. They want everything from simple commodities to manufactured goods to what the authors call experiences – immersive, richly textured commercial events. And fast-paced business types better follow or they'll be left in the dust.

The patron saint here is Walt Disney: Coffee shops should focus on the coffee experience, the authors suggest, while restaurants need to realize that the music and the ambiance – eatertainment, as the authors label it – are as important as the food.

The book is well written and I liked its fanatical conviction. The authors cheerfully acknowledge that even the most sacred experiences can be turned into a fast buck for faster companies. (They point out that many Americans now seek advice not from their priests and religious leaders, but from paid "spiritual coaches.") I'd love to think this is an elaborate spoof on the absurdity of late-state capitalism, but I'm afraid Pine and Gilmore are absolutely serious when they conclude that "The Consumer Is the Product." God help us all.

– Michael Parsons -- From The Industry Standard

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Product Details

• Hardcover: 272 pages
• Publisher: Harvard Business School Press; 1st edition (April 1, 1999)
• Language: English
• ISBN-10: 0875848192
• ISBN-13: 978-0875848198
• Product Dimensions: 8.5 x 1 x 11 inches
• Shipping Weight: 1.3 pounds
• Average Customer Review: 4.3 out of 5 stars  See all reviews (54 customer reviews)
• Amazon Best Sellers Rank: #280,351 in Books (See Top 100 in Books)
  • #32 in Books > Business & Investing > Management & Leadership > Pricing
  • #68 in Books > Business & Investing > Marketing & Sales > Marketing > Product Management

Most Helpful Customer Reviews

109 of 115 people found the following review helpful

3.0 out of 5 stars The Divergence of Theory and Reality June 13, 2000

By "babyfrog"

Format:Hardcover

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.

139 of 149 people found the following review helpful

5.0 out of 5 stars Show Time! January 30, 2000

By Robert Morris HALL OF FAMETOP 100 REVIEWERVINE™ VOICE

Format:Hardcover

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.

36 of 40 people found the following review helpful

3.0 out of 5 stars The Most Disappointing HBS Book I've read in Years July 12, 1999

By A Customer

Format:Hardcover

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).