The Experience Economy

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

by B. Joseph Pine II and James H. Gilmore

The Experience Economy is about the progression of economic value:

  • Commodities – coffee beans
  • Goods – ground coffee
  • Services – a cup of coffee at a diner
  • Experiences – cup of coffee at a fine restaurant or trendy café

“Commodities are fungible, goods are tangible, services intangible, and experiences memorable… The easiest way to turn a service into an experience is to provide poor service.”

A fifth category is introduced at the end of the book. Transformations are sustainable changes in which the customer is the product, such as a weight loss program. An impressive example is the job training programs for prison inmates by Corrections Corporation of America. “Transforming a hardened criminal… into someone who won’t return to prison truly is a different kind of economic offering.”

Pine and Gilmore suggest asking yourself, “What would you do differently if we charged admission? … Even if you reject for now the idea of charging admission out of fear, uncertainty, or doubt, it should still be your design criteria… Charging admission is the final step; first you must design an experience worth paying for.”

The authors recommend modular goods and services to enable mass customization. But be careful about overwhelming your customers with too many options: “Fundamentally, customers do not want choice; they just want exactly what they want… Variety is not the same as customization.”

Another noteworthy topic in the book is customer sacrifice. This is defined as the difference between what a customer wants exactly, and what he settles for.  “Designing for the average is the root cause of customer sacrifice.”

Some books are so well written that the words fly off the page. This isn’t one of them.  The authors have some interesting ideas, but this was slow reading for me. The three chapters belaboring the theater analogy (drama=strategy, script=process, theater=work, performance=offering) could be skipped for a less tedious reading experience.

Note: This is a review of the first edition. An updated edition was published in 2011.

Order from Amazon

Pine, B. Joseph, and James H. Gilmore. The Experience Economy Work Is Theatre & Every Business a Stage. Boston: Harvard Business School, 1999. Buy from Amazon.com

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