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

by B. Joseph Pine and James H. Gilmore

Review by Scott Eckart

What do Starbucks, Nordstrom, Google and Apple/MacIntosh all have in common? Each has the ability to create a memorable experience. Each company has taken something that could be considered a “commodity” and has elevated it to a “unique experience.” If you personally have purchased something from the companies above, it is not hard to recount why you chose them and why you would likely use them again. Why do some businesses have that kind of appeal while others don’t?

In their book, The Experience Economy, authors Pine and Gilmore describe the genius behind creating a unique experience for each customer or client as the reason for the appeal. The number one lesson for every entrepreneur is to avoid becoming commoditized at all costs!

“No company wants that word applied to its goods or services. Merely mentioning commoditization sends shivers down the spines of executives and entrepreneurs alike. Differentiation disappears, margins fall through the floor, and customers buy solely on the basis of price, price, price.”

We now live in an economy that is hyper-sensitive to price points, and consumers are willing to wait for just the right moment to make that purchase. If you are only competing on price, you are on very shaky ground and you may risk losing business. If you are depending on people to remain loyal to the brand for brand sake alone, you must give them another reason to try your brand and, better yet, return.

These authors challenge business owners to change even the mundane transactions into memorable experiences. The goal according to Pine and Gilmore is to move your product or service through the four stages of development. The book outlines a progression that moves from commodity, to a good, to service and finally to where customers look at your business as having created a unique and memorable experience.

This book uses the analogy of theater quite well—a great play or musical has had intense rehearsals and everyone knows their part. Sports teams don’t excel by accident, they practice and drill and prepare. Pine and Gilmore encourage entrepreneurs to see this new source of value.

“Experiences are a fourth economic offering, as distinct from services as services are from goods, but one that has until now gone largely unrecognized. Experiences have always been around, but consumers, businesses, and economists lumped them into the service sector along with such uneventful activities as dry cleaning, auto repair, wholesale distribution, and telephone access. When a person buys a service he purchases a set of intangible activities carried out on his behalf. But when he buys an experience, he pays to spend time enjoying a series of memorable events that a company stages—as in a theatrical play–to engage him in a personal way.”

As a business leader, owner or executive, if you are concerned about making it through this difficult economic time, this book is a must read. In this intense business environment, you have two choices: 1. you can compete; or 2. you can separate yourself by creating a unique experience that has no direct competition, and therefore you stand alone.

Scott Eckart is the Director of Financial Planning for Westpoint Financial Group.