New Value Creation is required for the Experience Economy
Learning from the international thought leader, author, and advisor Joe Pine.
The construct of business models and offerings are changing fast, based on new digital developments, increased competition and changing customer desires and access.
Customer experiences need to feel valuable and create a memorable experience to create value for the customer, and by that be value creating also for the serving companies.
We are fortunate to learn from the very experienced executive, thought leader, author, and advisor B. Joseph Pine II. Joe advises companies and leaders all over the world. He is co-founder of the research, advisory and teaching firm Strategic Horizons. In addition, Joe has been a Visiting Scholar at Universities like MIT, University of Amsterdam, Penn State and Columbia University. Joe is the co-pioneer of concepts like Mass Customization and the Experience Economy, and the co-author of books with those titles, and titles like Authenticity & Infinite Possibility.
Joe is passionate about helping companies and leaders understand the new constructs and will help companies increase their value creation.
The episode is recorded as both an Audio and Video Podcast, and it focuses on Joe’s journey and approaches that he finds effective for top companies and top leaders.
Welcome to listen and learn about
- Writing books
- From Experience to Transformation
- Learning through travel
- Changing Customer Insights and Economies
- New Opportunities
- Mass Customization for Sustainability
- Staging Experiences
- Hints and Tips
- Books to learn from
New Value Creation is required for the Experience Economy – with International Thought Leader Joe Pine by Exploring Leaders by Digoshen
This is “Exploring Leaders” episode 23, with thoughtleader, author and advisor Joe Pine. Joe will share his story on how leaders can better serve customers in the experinece economy, inspiring you to take responsible leadership in the digital age.
The experience economy has been described by Joe Pine and research colleagues as the next wave, building on the product wave and the services wave, as a dominant way that customers experience value.
Many innovation methods were developed to better explore the experience economy, including ethnography, design thinking, customer journey, empathy maps, improvisation, and experimentation.
This also represents the fundamental shift in the very fabric of the global economy, where different parts of the experience are produced and weaved together across the globe.
Weaving this together, with the increased focus on sustainability, this trend will be even further heightened, as the wish to access and experience will gradually overtake the wish to own goods.
The next wave shared by Joe and his research colleagues is Transformation. It means enabling the transformation that customers ultimately seek through their experiences.
This table by Pine and his partner James H. Gilmore summarizes and clarifies how the progression of economic value has shifted over time:
There are five related value-creating opportunities following from this progression:
- Concerning Goods. More goods will become mass customized; for this, more innovation is needed in producing these goods. Moving from supply chains to demand chains.
- Concerning Services. More companies should direct their employees to act. Embracing the employees’ focus on staging the experience for the customer, and making it more engaging. Removing miserable encounters or disjoint experiences.
- Concerning Experiences. As time is the primary currency of experience, offerings should explore ways to charge for time, as time to access, availability time or length of access.
- Concerning Transformation. Whatever the output genre, offerings need to wisely blend the physical and digital world into different virtually blended offerings for better transformation achievements. A transformation can also provide the benefit of only being charged as transformation has occurred.
A key differentiator for all above is to explore mass customization, a customized experience is more easily turned into a transformational experience. By staging such experiences, the opportunity to ensure a more lasting effect is increased.
Additional insight on how to understand and match the customer needs comes from more profound insight into the customer’s desires, both expressed and researched, and is partly based on the increased value that adds to customers’ experience and, therefore, raises their expectations. All these extraordinary experiences drive to build brand attachment and customer loyalty.
Expressed insights. One of the most common mistakes most offering teams make is to use themselves as judges or apply biases to the insights from customers, making assumptions about behaviors or sentiments, including the benefit of products or new features. Ensuring fast, correct, and representative feedback from prospective customers is crucial and improving increasingly. The marketplace of finding the best answers is quickly changing, and platforms can now more accurately and faster provide knowledgeable answers on their needs and wants.
One such platform is Cint, where Digoshen Founder recently joined the board. Cint hosts the world’s largest consumer network for digital survey-based research. In a recent research, Cint did on exploring how enjoyable and convenient virtual experiences were and which are causing online fatigue, a major difference was found both across geographies and across generations. The research pointed to the importance of a more targeted and nimble customer research is critical in the fast-changing digitally blended world.
Researched insights build on the increasing insight into Neuroscience. When neurological insights inform design thinking, companies can innovate with greater precision. Recent research by Claremont University, has identified a set of brain signals that make experiences feel valuable and emotionally charged, making them more memorable.
Powerful emotional responses supercharge memories of experiences, however, they are mostly unconscious emotional responses. Research has shown a neurological state named immersion. The two components of immersion make the brain pay attention and trigger emotional resonance. The emotional resonance is crucial as that is when the brain values what is happening. And neuroscience helps close the gap between what customers say and do.
Integrating neuroscience into the Design Thinking Process would mean for the steps.
- Empathize – taking steps for participants to feel psychologically safe and relaxed before being observed.
- Define – when identifying the sources of frustration, using virtual reality and mockups, but also designing for the anticipation of the experience.
- Prototype and test – ensure to include alternatives for comparison and gauging the purchase experience as we as the usage experience. Additional, Superfans build up a high level of neurological tension during immersion, which can be released by having them share their expertise in social media.
There are emerging ideas finding structures on how to stage the customer journey. Recent research has pointed to the different archetypes of customer journeys and classified them towards the predictability and effort levels needed. The customer journeys are identified as routine, joyride, trek or odyssey and need different types of decisions and streamlining.
As companies engage with customers across a growing landscape of websites, blogs, apps, social platforms, third-party sites etc, understanding and handling the customer journey becomes increasingly complex. Adding to that challenge comes different and changing privacy rules that need to be respected. Using technology to combine insights is an additional approach to learning more about and better-serving customers. One such insight is adding geographically related information.
Creating New Business Value
”The end goal of people who go to fitness centers isn’t access to the equipment or trainers; it is to get in shape.” – Joe Pine
Many businesses still try to differentiate themselves based on what they sell, still, the critical value comes from the end result of the transformation.
Enterprises must increasingly recognize the economic opportunity offered by the transformation of businesses, where they partner with them to achieve a “new you”, a transformed business or transformed consumer.
Joe Pine and colleagues have created a three-step process to ensure the new type of value creation.
- Ascertain the jobs to be done. A holistic understanding of what customers want to achieve satisfies the four dimensions Functional, Emotional, Social and Aspirational. As described above, businesses can use several methods to understand the customer’s needs, including for example, interviews, surveys, observations and neuroscience.
- Define success along the way. Spend time and understand what success looks like at every transformation point. What new understanding and decisions are needed to prepare, progress, and sustain results?
- Identify the barriers. Understand what the barriers are and how they can be overcome. Barriers are typically within resources (availability, time, budget), customer readiness (skill, motivation, clarity) and context (when and where things are done)
Relevant for all company stakeholders
Companies need to better understand the customer value they are creating, the need to focus on other company stakeholders has also risen sharply over the last years. The fight for talent has increased the need to focus on employees. The sustainability challenges have increased the need to focus on investors, regulators, society and the environment, and the changing ecosystems has increased the need to focus on partners and suppliers. As sustainability is increasingly regulated, many companies need to ensure the stakeholder process and document it and share it with their investors.
For all of these, stakeholders the same approach as for the customer group can be considered to improve the value creation for the broader stakeholder groups.
Joe Pine has written a clarifying paper on Embracing the Employee Experience finding that the experience and transformation as the base is as relevant for the employee journey. Using the same principles guides companies to design the time employees better spend with customers and for their own development.
Furthermore, for leaders and boards, the need for a holistic perspective and arbitration between different stakeholder needs has increased. The experience economy can also provide a structure for considering transformed value for various stakeholders and how they are interdependent and impact each other.
If you have the ambition to succeed in the new digital and more sustainable world, ensure you understand the structure of how and where new value creation is happening, as in experience and transformation. And also, ensure you get an appropriate insight into the customers wants and needs and how you need to reconfigure your business to enable your customer’s transformation and success.
About Joe Pine
Follow Joe Pine on Linkedin and reach out if you are looking to improve your value creation success.
Checkout Joe Pine’s co-authored Books
Read Joe’s recent HBR article The new You business
And an article by Joe Pine written for Rightpoint on how to align Employees for the Experience Economy: Embracing the Employee Experience
See the HBR video about The new experience economy
On Customer Insights
Expressed customer insights
Researched Customer Insights
Other customer insights
Broader Stakeholder Insights
Understanding more about the future
Learn from Institute for the Future, IFTF and their Re-working the future – Strategies to building enterprises int the 21st Century, as well as their research map report on Re-Working the Future
At Digoshen, we work hard to increase #futureinsights and help remove #digitalblindspots and #sustainabilityblindspots. We believe that Companies, Boards, and Business Leadership Teams need to understand more about the future and the digital & sustainable world to fully leverage the potential when bringing their business into the digital & more sustainable age. If you are a board member, consider joining our international board network and master programs.
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