You can’t create experience, you must undergo it

The complete narrative of economic development can be summarized in the four-stage progression of the basic birthday cake. As a mark of the rural economy, women made birthday cakes from scratch, mixing farm supplies  flour, sugar, butter, and eggs  which, when blended, cost a pittance.  As the products-based manufacturing economy moved forward, women parted with their pesos to pay Sylvia Gala-Reynoso or Maya’s Kitchen for premixed ingredients. Later, when the service economy took hold, busy parents ordered cakes from pastry shops or grocery stores, which cost about 10 times as much as the packaged items. In recent times, parents neither bake the birthday cake nor even get too occupied with party preparation. Instead, they  “outsource” the entire affair to an event organizer or some other businesses that stage superb happenings for kids, which often includes the cost of the cake as part of the package.

The basic premise of the book The Experience Economy: Work Is Theater and Every Business a Stage (updated version) by B. Joseph Pine and James H. Gilmore is that society has gone through a new period where experiences are the economic offerings that are in peak demand, and thus generate the highest value returns. Pine and Gilmore wrote that the progression of economic value has gone through four stages: The “commodity economy,” which was concerned with the extraction of various substances from the world around us; the “manufacturing economy,” where the primary economic offering was the making of products; the “service economy,” where the delivery of intangible services was uppermost; and the “experience economy,” where experiences serve as the major push.

An experience takes place when a company purposely uses services as the stage, and goods as props, to engage individual customers in a way that creates a memorable event. In the experience economy, economists have characteristically grouped together experiences with services, but in truth, experiences are dissimilar from services, as services are from products. The difference between services and experiences can be better appreciated using an episode in the old television show Taxi, in which Iggy, a more often than not awful but playful cab driver, decides to turn himself into the best taxi driver in the world. Aside from the expected deliverable of a cab ride, he serves sandwiches and sodas, conducts city tours, and even belts out Frank Sinatra tunes. He engages his passengers in a big way and turns an ordinary taxi trip into an unforgettable event. Iggy fashions an entirely new cab-riding experience that becomes a distinctive economic proposition. The experience becomes more precious to his customers than the service of getting transported from point A to point B. In the TV show, Iggy’s patrons contentedly react by giving bigger tips.

Take the case of Cherry Alejandrino, a simple, hardworking elevator operator who turned a rather lackluster elevator ride in an Olongapo City mall into a totally new experience. Her cheerful personality and dedicated enthusiasm to help shoppers provided customers with an inspiring feel of the place. She became an instant celebrity when a number of video clips showing her joyful deportment made the rounds online. She was also a guest on popular TV shows, sharing her positive outlook. Shoppers found Cherry’s sunny disposition infectious, and without a doubt the happy impressions created a halo effect on the mall itself.

• Innovative companies will discover that the next competitive battlefield largely rests in staging experiences. Thus, businesses must deliberately design engaging experiences that command a fee. Unless companies want to be in a commoditized business, however, they will be compelled to upgrade their offerings to the next stage of economic value. The question, then, isn’t whether, but when — and how — to enter the emerging experience economy. An early look at the characteristics of experiences and the design principles of pioneering experience stagers suggests how companies can begin to answer this question.

• Experiences have always been at the center of the entertainment business. This is a fact that Walt Disney and the company he put up have creatively exploited. “But today the concept of selling an entertainment experience is taking root in businesses far removed from theaters and amusement parks,” the authors declare. “New technologies, in particular, encourage whole new genres of experience, such as interactive games, Internet chat rooms and multi-player games, motion-based simulators, and virtual reality.” At theme restaurants such as the Hard Rock Cafe, Planet Hollywood, or the House of Blues, the food is just a prop for what’s known as “eater-tainment.” Apple stores and Niketown draw consumers in by offering fun activities, fascinating displays, and promotional events, sometimes labeled “shopper-tainment.”

Jollibee and McDonald’s offer more than just meals. They can host birthday parties for kids, complete with candlelit cakes, games and personal appearances of their mascots. Herb Kelleher of Southwest Airlines proclaimed, “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.”

On the other hand, Sir Colin Marshall, former British Airways chairman, stated: “What British Airways does is to go beyond the function and compete on the basis of providing an experience.” The aircraft and the flight is the stage, the setting, for a distinctive en-route experience.

The experience economy is likewise best exemplified by Las Vegas. As Pine and Gilmore explained, “Virtually everything about 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.”

• Other industries have adopted the workings of the experience economy. There is no question that the entertainment industry has obtained the skills and talents for engaging people, but now other businesses have grasped that many such aspects can convert a “me too” service into an impressive event that the customer will want to go through again, and will want to report to all their families and friends. Andersen Consulting’s Smart Store in Windsor UK, for example, can interact with advanced technology — all within the setting of a home, supermarket, or distribution center. The company used film set designers to produce visually striking sets that immersed the executive and in some cases transported them to another world. Kevin Duffill, operations director, revealed that many executives came away shell-shocked by the experience. Smart Store is particularly aimed at the retail and financial services sectors.

• Many goods encompass more than one experiential aspect, opening up areas for differentiation. The authors elucidate the concept of manufacturers “experientializing” their goods, saying, “Apparel manufacturers, for instance, could focus on the wearing experience, the cleaning experience, and perhaps even the ‘hanging’ or ‘drawering’ experience. Other industries might create the ‘briefcasing, wastebasketing or the mask-taping’ experience.” Business enterprises, fully embracing this concept of the experience economy, have taken to providing themed experiences for their customers.” The authors presented five principles that in their view are critical to the staging of a successful themed experience for a customer, developing a captivating theme, creating cues around that theme that will leave the customer with a memorable impression, and integrating diverse sensory stimuli. The authors showed that even the most mundane product or service can be enhanced: “Smart shoeshine operators augment the smell of polish with crisp snaps of the cloth, scents and sounds that don’t make the shoes any shinier but do make the experience more engaging.”

• The metaphor of the theater takes center stage in the experience economy. It gives a stimulating view on what it takes to earn the equivalent of a standing ovation from today’s complicated and discerning clients. Once a company appreciates that it is in the business of staging experiences, there are four forms of theater that it should consider using to do this. Pine and Gilmore have invented a portfolio approach to classifying these different forms of theater, according to two dimensions — whether the performance is stable or dynamic and whether the audience itself is stable or dynamic.  The four types of theater all have their place in the business world:  The “Platform Theater” is what most people think about as a staged performance, where the script doesn’t vary, and the performance is done in front of an audience. The “Street Theater” is traditionally the domain of jugglers, mimes, and clowns.  The script is stable but the audience is dynamic. The “Matching Theater” is exemplified by film and television, and requires the integration of work outcomes from one disconnected time frame to another. The “Improv Theater” is the process of “winging it,” which demands certain skills in terms of thinking on one’s feet, responding to new and changing demands from the “audience.”

In an experience economy concept, the bottom line is the entrance ticket. Pine and Gilmore remind us that once a company has staged an experience worth having, it is entitled to exact an admission fee, or dictate a price tag commensurate to the experience. Discerning consumers should heed Albert Camus, who quipped, “You can’t create experience, you must undergo it.”

* * *

E-mail bongosorio@yahoo.com or bong_osorio@abs-cbn.com for comments, questions or suggestions. Thank you for communicating.