Experience Platforms: Staging Experiences through an Ecosystem — with B. Joseph Pine II



Experience Platforms: Staging Experiences through an Ecosystem — with B. Joseph Pine II

B. Joseph Pine II talks about the new discoveries that he and his co-author James H. Gilmore share in the new version of their book The Experience Economy, and how experience platforms are moving to the next level of staging experiences through their ecosystems. We also talk about how these dynamics impact the organizational shape of experience platforms, towards matching modularity between the experience staged, and the organization behind it.

Podcast Notes

In this episode we have the pleasure of speaking to Joe Pine, an internationally acclaimed author, speaker, and management advisor.

Joe has addressed the World Economic Forum in Davos, the original TED conference in California, and the Consumer Electronics Show in Las Vegas. He’s a Lecturer in Columbia University’s Technology Management Program, and has co-founded Strategic Horizons LLP to help businesses conceive and design new ways of adding value to their economic offerings.

As a prolific writer, Joe is most famous for his 1999 book The Experience Economy, which was updated in 2011 and re-released in hardcover in 2020 with new ideas on Competing for Customer Time, Attention, and Money.

Joe’s work on the experience economy has been central to our work on platform design and thinking, and so we wanted to explore with him what has changed — or not changed — in the original ideas of the book. We talk about how experiences cannot be “delivered” but staged, and how it’s important to also consider the experiences of the employees contributing to the development of the organization, and of the providers who participate in co-creating the platform, so that they can stage the best experiences.

The experience economy is not a fad, but a profound transformation of our economies. That’s why, like Joe points out, there is no “recovery” of the economy, without the recovery of experiences that people value. Peeking into the future, we see patterns of continued modularity of experiences, whether physical goods or activities that make up a final experience.

Once businesses recognize that they are staging experiences, not delivering services, they can gain much more economic value by leveraging on the time and attention of their guests.

To find out more about Joe’s work:

Other references and mentions:

Find out more about the show and the research at Boundaryless at https://boundaryless.io/resources/podcast/

Thanks for the ad-hoc music to Liosound / Walter Mobilio. Find his portfolio here: www.platformdesigntoolkit.com/music

Recorded on 29 September 2020.

Key Insights

1. The monetary value of time is a new measure introduced in the update of the book The Experience Economy. Now, every company competes against the world for the time, attention, and money of individual customers. In this context, experiences are “time well spent”, whereas services are “time well saved”. The money value of time well spent is the expenditure per minute that customers are paying , which can be compared across industries, across geographic areas, and across companies to understand how engaging an experience is.

2. Experience platforms are staging experiences through their ecosystems. The economic function is one of designing and staging the elements that come together to create experiences, which requires whole ecosystem mobilization. It is a matter of understanding that our customers are “guests” enjoying experiences. This calls for a “guest-centric” learning relationship around each individual guest, and platforms need to get to that level of doing that.

3. Modularity is the most important factor of mass customization and as this pattern continues to play out in the experience economy, we start to see organizations become more modular to match the modularity of what they can do, rebundling around experiences.

4. When it comes to transformational experiences (health, fitness, etc…), what transformation platforms need to charge for is the demonstrated outcome that customers achieve. The platform is enabling them to change, to achieve their aspirations and this will be a growing platform value proposition according to Joe.

Boundaryless Conversations Podcast is about exploring the future of large scale organizing by leveraging on technology, network effects and shaping narratives. We explore how platforms can help us play with a world in turmoil, change, and transformation: a world that is at the same time more interconnected and interdependent than ever but also more conflictual and rivalrous.

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This episode is hosted by Boundaryless Conversation Podcast host Simone Cicero with co-host Stina Heikkila.

The following is a semi-automatically generated transcript that has not been thoroughly revised by the podcast host or by the guest. Please check with us before using any quotations from this transcript. Thank you.

Simone Cicero:
Hello, everyone. It’s Simone here for this new episode of the Boundaryless Conversations Podcast. And today I am with my usual co-host, Stina Heikkila.

Stina Heikkila:
Hello, everyone. Good to be here.

Simone Cicero:
And with us we have no less than a legend such as Joe Pine. Good evening, Joe. It’s afternoon on your side, I think.

Joe Pine:
It’s morning on my side, but it’s afternoon on yours. But it’s a pleasure to be with you, Simone and also Stina.

Simone Cicero:
You’re right. I think after a full day of workshops, sometimes we lose the time. So, thanks very much again, Joe. And it’s a pleasure and honor for us to have you here. So, first of all, I would like to ask you maybe a question that many have been asking you, I’m sure lately. That is, why after so many years you are re-editing the experience economy book. So, what has changed? What are the new key aspects that designers and managers and business people need to catch up with, after a while?

Joe Pine:
Well, what has not changed, Simone is the shift into the experience economy. James Gilmore and I didn’t identify a fad, but a fundamental change in the very fabric of the economy. And that has proven out over the last 20 plus years. And so we felt it important to be able to talk a little bit about what are the latest things we’ve discovered. We actually updated it in 2011, from the original book in 1999. But then in the nine years since then, the basic thing that we’ve seen is that companies now compete against the world. You don’t compete against your normal competitors in your industry, or in your geographic area. Every company basically competes against the world with every other company, for the time, attention, and money of individual customers. And so that’s why we subtitle the new release of the book as competing for customer time, attention, money, because time really is the currency of experiences. That’s something that we realized. We now talk about experiences as time well spent. Services are time well saved but experiences are time well spent, that people actually value the time that they spend with you. And what you’re really doing is that you are designing the time that they spend with you. That’s what experience design is all about as famed experience architect Jon Jerde once wrote.

And so it is about managing that time providing value of time, not just about the activities you perform with the service, or the things that you provide with a good, or even the natural stuff of commodities. So, one’s about time, and then secondly, attention, recognize that the greatest, the number one competitor for attention of any company in the world is the smartphone where companies can, people can instantly drop out of your experience and be doing something else with their phones. So, you’ve got to grab their attention, you’ve got to capture that attention, and get them to spend time with you. And we talk in there about five core elements of experiences that can be used to capture people’s attention. That is, you need experiences that are robust, cohesive, personal, dramatic, and even transformative. And the whole rest of the book really is the frameworks and the ideas and the principles that allow you to be able to capture people’s attention with, again, experiences that are robust, cohesive, personal, dramatic, and even transformative.

And then lastly, money. You know, no company should think of its purpose as making money. But money is the measure of how well you fulfill your purpose, including how well you provide that time well spent. And so one of the key things we talked about, from the very beginning, people laugh to this over 20 years ago, when we started talking about the importance of charging admission for the experience. And still many companies give away the experience in order to better sell what they have today. That’s what cafes like Starbucks do. They’re still charging for the coffee making service but they’re providing and offering a coffee drinking experience. But increasingly what you see is more and more companies across many industries are charging admission for the experience. Because fundamentally you are what you charge for. You know, if you charge for and differentiate stuff, you’re in the commodities business. If you charge for tangible things, you’re in the goods business, if you charge for the activities, you’re people performing in the services business.

But you’re in the experience business economically, if and only if you charge for the time your customer spends with you. Right? That’s that time well spent aspect. And so you need to go beyond the goods and services economically to charge for time through an admission fee, a membership fee, a per play fee or other ways of being able to do that. And we also introduced in the new book a new measure, which is the money value of time. Which is recognizing that — We all know about the time value of money. With the money value of time is the expenditure per minute that customers are paying you. And it’s a measure that you can then use to compare across industries, across geographic areas, across all companies to be able to understand how engaging the experience you’re really providing. How engaging your customers find your experience is based fundamentally on how much they’re willing to spend for the time that they’re with you.

Simone Cicero:
Right. That’s an interesting take and a really relevant update, I think, to the initial framing that was offering in the book. And my question here, Joe, is that since you lately also participated in the MIT platform summit, I know that you have been leading a panel if I’m not wrong. And you said also that platforms have always been, for example, trading commodities, also services, maybe we are pretty much used to this idea of platforms as marketplaces where producers and consumers meet each other and exchange services and products. Maybe we are less used still to an idea of fun and an experience platform. So, a platform where essentially people share experience between each other. So, I’m really curious of your insights on this transition from brands, customers relating on experience and more into this world of new brands that are more platforms that enable the sharing of an experience between peers. What are your insights on these transitions?

Joe Pine:
Yeah, Well it is interesting, though, that commodities have always been sold on platforms almost exclusively, unless there’s some long term contracts. Commodities are exclusively sold in platforms. Had the opportunity a couple years ago to go to the flower commodity show or place in the Netherlands and see how commodities are really traded with flowers. It’s just fascinating to see how that was going on. Goods are mostly exchanged on platforms. And here, you need to think about physical platforms, not just digital platforms, right. With the rise of digital technology we can amp platforms up just tremendously. But a retail store is a platform. Retail stores where distributors bring in goods from many different places to one single place. And then customers come from all different places to that one single place and then they exchange money for goods, right? That’s a physical platform, just like the original Agora in ancient Greek times. And services were however mostly done via point to point, right, that you use specifically went to a service and then bought that service, like having your hair cut or cleaning your clothes. And the same with experiences. You know, generally they were provided by experience providers and then there are various consumers that come and buy from them. That’s the way it’s always been.

But now with the rise of digital technology, with the capability to create these sorts of platforms, we have seen this shift, first in services, but now, especially and strongly in experiences of going from that point to point, a customer company model to a multi-user double-sided platform model. And probably where you first saw it is that there were, sort of in every country, there were local companies that recognize the value of experiences, and created ways to consolidate all the providers together so people could buy them particularly initially as gifts. Like birthday gifts or Christmas gifts, or things like that. But then also, they discovered that a lot of them are doing it for themselves or their family. And I’m thinking particularly of like Red Balloon in Australia, and my days in Germany, and others, like If Only in the US, which is a very high end one. But those sorts of platforms have been there for 10 or 15 years. And probably the one that really made a difference and showed the way though is Airbnb. You know, Airbnb, originally very much of a service platform in the sense of renting a spot on somebody’s couch. It was generally not that great of an experience, but it does provide the functionality that you need to be able to go to a city that you’re there for other reasons, not for the hospitality experience. But over time, it became much, much more of a hospitality experience.

In fact, they hired Chip Conley, a friend of mine who actually won our third ever Experience Stager of the Year Award back in 2000, I think it was or 2001, one of the two. And they hired him as Chief Hospitality Officer. He’s a wonderful hotelier, he created “Joie de Vivre Hospitality”, and hospitality is in his bones. And so he hired him to teach the one side of the platform, right, the providers to be able to be hospitable, right, for guests. And that’s one of the things where, you know, it’s an experience where you stop talking about users, particular customers, even clients, you start using the word guests. And one of the things about guest is guest always implies a host. In fact, they have the same root in, a Germanic root. They’re literally two sides of the same coin, or the same word that have been translated twice into English. One’s a host, and one’s a guest. And so you have to teach the host to be hospitable, and that’s when it started becoming more experiential than service oriented, that people weren’t looking just for a place to stay. And so they do all these other stuff and in a city, or a locale, but instead look for that hospitality experience to actually enjoy the time that they spend in the place.

Well, then, of course, they started adding the trip function, and now where you can rent not just the place to stay, but you can then now be able to access these various different experiences that are out there. So, begin to have an itinerary where Airbnb took more and more of the piece of the pie of that trip itinerary that you have, by connecting you in particular to local experiences, right, that was its forte. It’s easier to find the big things, all the big touristy things. But to be able to like go bar hopping with a local, right, you couldn’t do that normally. Where are you going to find that sort of person? It took an experience platform to be able to do that. And then of course, when COVID hit, they moved more towards online experiences and became an online experience platform, where people usually generally, individual people versus companies would offer themselves online to teach you how to juggle or to show you magic tricks or to take you on an experience through a city that you couldn’t visit yourself. But let’s do it with my smartphone, I’ll take you around, I’ll be your virtual tour guide. So, all of those really shifted towards providing almost a full function experience platform from its roots and as a basic service platform. And so we see, and particularly the fact that we all have been locked down and has seen the rise of many others that are able to do that, that show people how they can gain access to that, including Side Door and First Tube Media that were part of that MIT Platform Strategy Institute panel discussion we had on experience platforms back in July.

Simone Cicero:
It’s really interesting that you brought up this Airbnb example indeed. I recall once listening to somebody at Airbnb. I don’t recall if it was a Joe Gebbia or.. saying that essentially the organization really completely transformed itself in terms of culture, and maybe also practices, when they realized that they weren’t selling rooms, but they were selling experiences. One question that I have Joe, still with regards to this idea of platforms and experiences, you once said, or at least I’ve seen you being quoted so hopefully that’s true that: “staging these experiences is a fundamental dimension of how a company competes”. So, I can imagine that this also means that the organization needs to organize internally in terms of structure, for example, in a way that it’s able to stage such experiences and to create such experiences for their customers.

So, the question will be, what are the organizational artifacts and practices that you see emerging, to be able for an organization to really be able to stage these experiences? And maybe if you can double click on what does it mean for platforms that to some extent manifested themselves on the market, not through an employee or to a process that is entirely under control of the organization. But true, I would say providers or third parties that some extent embody their brand promise and brand experience without being part of the organization. So, how do you change an organization both from the point of view of culture, skills and structures to be able to do this, and to invent this, first of all?

Joe Pine:
Well, it’s a very good question. And there are a lot of things that are wrapped up in there. And one is, is you obviously have to, you have to turn from being product centric to customer centric, from focused on what you’re doing, to what your customers are experiencing. And again, with experiences, that really means guest-centric. And to change culture, one of the first things you got to start changing the vocabulary, right. And when we change vocabulary, then you can change behavior, and then you can change culture. And so it is a matter of understanding that our customers are guests that we are staging experiences, not just delivering services. And so I hate the term like delivering experiences. No, no deliver is a service word. Staging, if you want to use choreographing or orchestrating that’s okay as well. But the economic function that you’re doing, you need to understand is one of staging. It’s designing the elements that come together to create experiences. You have to understand that experiences happen inside of people; commodity is good, services exist outside of us. But experiences happen inside of us.

So, you need to reach inside of people and engage them in an inherently personal way to create that memory, which is the hallmark of the experience. Not all companies have to do this. But one great route to stage and experience is by customizing your goods and services. And mass customizing them allows you to do so efficiently because mass customizing a good automatically turns it into service. And mass customizing service turns it into an experience. So, developing those capabilities are important. And that’s of course, one of the things that as you think about shifting to platforms that you do is that platforms are inherently customized. You know that you have an individual customer coming to that platform with their individual needs picking out an individual experience that they want to have. And so you necessarily need to customize it for them.

And as I mentioned Airbnb being a great example, is with hiring Chip Conley as Chief Hospitality Officer, is that what all platforms will eventually find out is that you can’t just leave it up to the providers to the experience stagers that are on your platform to create a great experience. Eventually, you have to realize you have to help them out. You have to ensure that they take a great experience, or that they staged a great experience. And you have to train them and teach them how to do so. And one of the things that virtually no one does is I can give you an example of a company that has an experience platform that thus far is internal to itself. That shows you the way of how to do this. But no one has really created a platform where they understand their individual guests or individual customers so well, that they have a profile of them where they can fulfill their preferences across different providers on the provider side. In other words, that I have one shared view of who that end guest is. Most platforms today don’t share information about the guest, beyond their name and credit card numbers and that sort of thing, that everybody starts from a blank slate of not knowing who this person is.

And therefore, they can’t provide a very well customized experience. We need to be able to get to that point where we are in fact understanding that every guest has a profile, and we can share that profile and each then provider of each experience, individual experience teacher can learn about that guest and contribute to that profile. So, the next time we interact with them, we know even more about them. You know, that cultivates what Don Peppers, Martha Rogers and I originally called in the Harvard Business Review a learning relationship, a relationship that grows and deepens over time that enables you to realize that every interaction you have with the customer is an opportunity to learn from that customer. And the more you learn from that customer, the better you customize to them, the better you customize to them, then the more they’re going to benefit. And the more they benefit, the more they’re willing to interact with you, and every interaction is an opportunity to learn. Right? That’s how you form a very tight customer-centric, guest-centric learning relationship around each individual customers. And platforms need to get to that level of doing that.

Simone Cicero:
Joe, a little follow up question before leaving to Stina that I know has a question for you on the employees. It’s very interesting to see how you’re pointing to information asymmetries here. So, you’re pointing to, to say platforms and their providers, the platforms need to develop a different relationship with their providers in a way that the information is more transparent to some extent, the information, for example, about the other party involved. And so to some extent, you are hinting towards developing — the need to develop a different social compact, I’d say, between platform owners and platform providers, if we really want to be able to deliver that kind of deep personal and transformative experiences that you talk about. I know I said deliver, which is not the way you should refer to an experience, but I guess you understand what I mean. So, can you maybe just expand a little bit on what you feel like because this also resonates with the idea of organizational development in terms of a shared governance, a shared access to information? What do you feel like in terms of the direction these new kind of relationship between platforms and providers can bring these courts to really be able to stage these transformative experiences?

Joe Pine:
It’s interesting too, Simone that you use the word transparent in describing this. And another Harvard Business Review article that my partner, Jim Gilmore, and I wrote, we talked about four different types of customization, and one we named transparent. And that’s exactly the sort of thing that I’m talking about here. Transparent customization is where you don’t necessarily tell customers that you’re customizing for them and may look like it’s standard. But you see through that, that transparency there. You see through that to find the customized value. And when you have a profile of customers on a platform basis, and they share it, well, you haven’t interacted with them before. So, the way to do it is to transparently customize based on what they know about you, make further observations to contribute to that profile, and then send it back so that the overall platform becomes smarter at understanding individual customers. So, it is the right way to go. So, one way to recognize I think what you’re getting at is let me talk about the example that I alluded to of an individual company that’s doing this with an experience platform, and that is Carnival Corporation. And Carnival Corporation is a cruise company. They have I think nine different cruise company brands including the Princess Brand where they started this.

And obviously, right now during the midst of the corona crisis, there are a few cruises that have started up I’ve noticed. But basically, it’s an industry that’s almost dead in the water, if you pardon the phrase. But you know, it will come back and Carnival’s best position to exceed because most companies in the cruise industry compete and provide the next generation of the biggest ship. It’s the shift towards big, big, big and betting billions of dollars on every ship and so forth. And instead, what they wanted, they wanted to create an experience that was viable on any ship, even ships that are 40–50 years old, and much smaller than what used to. And to do that it’s about understanding the individual guest. So, they created an IoT device called the Ocean Medallion. And the Ocean Medallion is something that every guest can carry with them to identify who they are. They have sensors throughout the ship that can track every medallion, therefore, know who customers are. And of course then they keep a profile of that individual customer. It starts before they even get on the cruise ship where they booked their cruise and then Carnival asked them to upload an image of their passport so they know that they’re ocean-ready, they call it so that they have a valid passport six months after the date of the cruise. And then they ask them for preferences about what they’d like to do on their cruise.

And so they begin creating a customized itinerary for each person they can show on the ocean compass app that they have. And as they work to get on the cruise, one of the worst parts of getting on a cruise is always getting on the cruise where you go in these dirty dusty, dingy buildings that are like you know very hot and that until you worked very slowly showing your passport multiple times. And they completely redesigned that entry and experience to be in light airy, cool buildings that are themed properly for the ocean medallion. You never have to show your passport when you get up and walk in a normal place up to the plank onto the ship, every Carnival Cruise member has a tablet. And when your medallion gets within range of that tablet, it pops up an image of you, right, your picture from your passport, as well as your name so that they can welcome you by name on board. As you walk down the ship, it’s again tracking the medallion, so when you get to your room, it knows that it’s you, when you touch the door, you close the electric circuit, and it unlocks for you and greets you by name digitally there in the room. You can pay for everything with that, you don’t have to carry around keys or wallets or coins or anything. And then with that personal experience itinerary, they begin to observe what it is that you do.

And if you, for example, tend to spend more time in a particular experience than average, they think that well, that probably means it’s time well spent for you and you value that more. If you spend less time than average, then you probably didn’t enjoy that much. So, they make personal experience invitations to tailor your experience during that cruise which then gets smarter the next cruise, and the next cruise after that as they go through that learning relationship. They can even remember things like when you’re on the pool deck with your kids, your favorite drink is an iced tea with no lemon. But we’re in the bar with your buddies, it’s a mojito. And when you’re in the restaurant with your spouse, it’s a glass of Shiraz. Right? Not just the same kind of customer, but the context of that customer, the market within that customer. And so that is just a tremendous way of creating competitive advantage, all based off of what we learn about this individual customer. And you can imagine them expanding that beyond the ship to shore excursions to begin to get other companies involved to then create it as a platform to others and that’s certainly what many experience platforms should be doing. It’s exactly what I’m talking about where we can learn from every customer and customize to that customer.

Stina Heikkila:
I think that this links very much to the question that Simone hinted that I had. Because I read recently that you’ve wrote something about the employee experience. So, it would be interesting to hear what, because it seems that there’s a lot of learning going on here, obviously held by technology. But of course, the people who are staging the experience, they would need to master a new set of skills it sounds like to me. And what would motivate them to be these kind of geniuses that will stage these experiences from your point of view?

Joe Pine:
Well, it’s interesting a subject you might want to get into is what I call Genius Platforms, which is what Carnival exemplifies. But yes, it’s crucial to give your employees the wherewithal to create a great experience. And if you don’t do that with an engaging employee experience, then you’re not going to be able to create as great an experience for your guests as you want. So, all the ideas, all the principles, all the frameworks we talked about in the experience economy do in fact, apply to employees. Which is what I wrote about in that recent article, the point of view paper from Rightpoint on the employee experience. So, I talked earlier about making experiences that are robust, cohesive, personal, dramatic, and even transformative and all that applies to employees. Let me focus on one of those, I think is a good learning point as well, and also opens up a lot more opportunity for companies in the platform business to think about what business they’re really in, and that is the transformative part.

The transformative part, which we’ve always talked about from the beginning of the experience economy is to recognize that experiences can be commoditized, as well just like goods and services. And so you will need to go beyond experiences, you will need to differentiate yourself when they do, if you think of theme restaurant is really the first commoditized experience industry. And then using that same heuristic where customization is the antidote to commoditization, when you customize an experience, when you design an experience, it’s so appropriate for this particular person, exactly the experience that they need at this moment in time, then you can’t help but turn to what we often called a life transforming experience, an experience that changes us in some way, right, that is transformative. And that leads to a fifth and final economic offering in this progression of economic value that we call transformation. Right? Transformation is where using experiences, a set of experiences, to guide people to change in some way, in particular, to achieve their aspirations. Right? Healthcare is about transformation. Fitness center is about transformation, management consulting is B2B transformation, coaches of all stripes are about transformation. We see tons of transformation industries.

And so in terms of the employee experience, so that’s a core thing, that you need to provide them with those experiences that transform them into not just better employees but to better people, to better skills, to have better capabilities. Even if they leave and go someplace else, that’s part of the bargain that you have with them that you work for us, then we’re not just going to live there and suck all your skills and your brains out of you. We’re going to help invest in you as an employee and give you the wherewithal it takes to do this. And that goes to another aspect I talked about. Services is time well-saved, experiences is time well spent. Well, transformations are time well invested, that people actually investing their time beyond the ephemeral experience, the memory that that’s created, they’re investing their time in a way that pays compound interest, so that they get dividends now and into the future. And that’s true for employees, that can be true for customers as well. And there’s a whole big opportunity out there for experience platforms to recognize, well, if I create the right set of experiences, if I stringing them together in the right way, if I understand what my customer, in fact, aspires to become, then I can go beyond the experience business to start creating a transformation platform.

I’ll give you one example that is related directly to the employee experience. And that’s a company out of the Oakland, California area called BetterUp. And BetterUp is a coaching platform. They work with companies, particularly when they’re undergoing some sort of transformation, to be able to provide coaching to their executives and their managers. And they do it with an app that allows people to go in and look, to talk about what their aspirations are, talk about what they’re trying to do coaching. Maybe their management gives them things that they’re looking for them to change. And then they recommend, here’s a set of coaches that meet your needs. But then there may be particular reasons why you prefer one coach over another. And so you select among those and select those coach and then it connects the coach with the aspirants, right, with the person who wants to transform. And then they go through the set of coaching that’s guided by BetterUp’s agreements with the company. So, that in fact is, I mean, obviously, you have a coaching experience every time you interact with them. But it is a transformation platform, not just an experience platform.

Stina Heikkila:
Yeah. Joe, and just a small clarifying question. So, obviously, this, you’re talking about employees. But if you think about a platform, you could also think in terms of you obviously need to pay attention to the suppliers on your platform, then they would also need to be equipped to provide the best experience.

Joe Pine:
Yes, exactly. Exactly. You know, my colleague, Kim Korn, who I’m working with on ideas that he’s developed, around how companies can thrive forever, and not fall into mediocrity eventually fail, he calls it regenerative managing. And it’s a great, great set of ideas. And one of the things that, one of the words he gave me that’s now part of my vocabulary is to think not just about employees, or even what you might call stakeholders in that, but think about contributors. It’s who are the contributors to your offering. And obviously, on a platform, all the set of people that provide the offerings for the end customers are contributors. And you’re absolutely right, you need to invest in them. And again, I’ll go back to Chief Hospitality Officer, Chip Conley at Airbnb. They invested in their experience stagers on that side of the platform to make them more hospitable to provide a better experience and give them the wherewithal to be able to do that. And so you’re exactly right, Stina is that you need to invest, not just in your employees, but in all contributors to the enterprise, including your suppliers, and including the platform providers. Or the offering providers on your platform.

Simone Cicero:
Thank you, Joe. That’s very, I think, very interesting from the perspective of one platform designer. It’s this idea of recasting, I would say the experience economy into the multi-sided structure of platform businesses. So, one further question that I think, came to my mind when we were speaking about this idea of transformative experiences and this idea that people are always seeking for this personal fulfillment. So, we know that there is this relationship between what we desire and what we create from a technological standpoint. So, we know that from Marshall McLuhan, but even before, we design our tools and our tools shape us. So, my question for you will be if you have spent some time thinking about and trying to ponder this kind of inflection point that we seem to be leaving now. Because, for example, the pandemic, surely is a brutal interruption of our customs, I would say, our way to do things — usual way to do things. But I think most of all, it’s kind of harbinger of the times to come, between climate change, and social disruptions. We kind of feel like that the world we are going to live in the next decade is going to kind of a bumpy road.

So, the question is, how do we, and if it’s possible, if it’s feasible or useful, in your point of view: how do we kind of interrupt these separation from the experience as what we consume, or what we live through, and all the rest that makes these experiences possible in terms of impacts on environment, the workers, especially if we speak about platform? So, maybe we have these brand experiences that are cutting edge and are very much fulfilling, but they come at the expense of a lot of stuff that gets eaten in the background. For example, with the debate on the gig economy workouts, and so on. So, what are your thoughts in terms of — Are we living through this inflection point? Are things changing? Can things change from this perspective?

Joe Pine:
Well, there’s certainly something going on, if it’s not an inflection point. And I am a big believer that the pandemic, first of all, is not the end of the experience economy, there’s been a few articles on that. First of all, the experiences are so much a part of the economy that without the recovery of experiences, there can be no recovery of the economy. The economy will never go back to, as it was before, without the experiences that people value without them coming back. Certainly, many businesses will not make it through the pandemic, others will continue to grow. Right now, of course, it’s the digital experiences and digital platforms that are growing over the physical. But experiences will come back. And in fact, one of the things that pandemic is doing, and this could be part of that inflection point, is that people recognize that at least in the first world, we don’t need more stuff, we sort of got enough stuff. And it’s not stuff that makes us happy. It’s not stuff that gives our lives meaning. It’s the experiences that we have, that make us happy, as research shows. It’s the experiences that we have with our loved ones, with our friends, even with our colleagues that gives life meaning. And therefore, we understand that more and it cause, I think once, as it becomes opportune, once we get a vaccine, we get close to herd immunity that we will continue this shift from goods and services into experiences because of that fact that people recognize it gives life meaning.

Then there’s also the fact of okay, what is the effect of what we do as consumers on the world, which I think you’re getting that as well, and issues of sustainability in that. And another word that Kim Korn came up with in looking at regenerative managing is in addition to contributor is beneficiary, and recognize that often for an offering, there’s a beneficiary who’s not the actual customer, right? I mean, the customer is very simple. The dictionary definition of customer is the one who pays you money. And often people pay you money, but it’s actually to benefit somebody else, whether it’s parents to pay for kids schooling or health care or coaching or whatever, whether it’s insurance companies that are paying for health care or fixing a car, whatever. The beneficiary is not the same as the customer. And so we can think about also then beneficiaries in terms of citizens of our state, in terms of the environment in our place, in terms of the greater good of people out there that we can affect as well.

You know, so for example, there’s another experience platform out there or actually, transformation platform is the Transformational Travel Council that is putting together and bringing together sets of businesses that are all about transforming. Whether it’s transforming yourself because when we travel is when we get out of our normal daily routines is when we are most open to change, but also to transform the world around us as a beneficiary of what we’re doing in that travel. Both of those things are possible there because they are, it can be the beneficiaries of what we’re doing. So, I think that there’s just so much going on that that very much could be a shift again, and where that inflection point is that really makes a difference between the old goods and services and new experiences and transformations.

As individuals, we only ever change through the experiences that we have. As the saying goes, we’re all the product of our experiences. That’s only how we ever change is through experiences. So, you need to design — If you want to create some level of systemic change, whether that’s inside of a company or among customers or among the greater world, then you’ve got to create the set of experiences that change people to effect the change that you want to have happen.

Stina Heikkila:
I like this turn of thinking that things can actually change through experiences. And of course, now that we have been pushed so much to our homes and to our virtual environment; how do you see that frontier of virtual reality and immersive experiences online in this whole coming or economy continuing to live its life in this world of the pandemic?

Joe Pine:
Well, I wrote a book about this too, called Infinite Possibility: Creating Customer Value on the Digital Frontier. And in it is, the core is a model that talks about how you can fuse the real and the virtual. But I make clear that reality will now and forevermore provide the richest of experiences, right, reality comes automatically in 3D engaging all five senses without having to add any technology to it. But what virtuality does is it enables experiences that are simply impossible in reality. And that’s true, whether I’m sitting at a desk or on the couch with my tablet, but the experience I’m having is being mediated by a screen in some way. So, yeah, I think that you’ll have a lot of innovation in that. I mean, and I think that, of course, the leaders in any sort of home-based experiences, video games, and then all the players that are out there to enhance your experience of the video games, including that you have exactly the right chair that allows you to move in 360 degrees and tilt back, and where you get the haptics almost of the feeling of what’s going on, as well as the multiple screens that you have, the audio, and so forth. And, of course, the headsets and that.

But also you see innovations, and which and I would call this another experience platform is Twitch where who would have guessed 20 years ago that people would love to sit around and watch people play video games. But in fact, it’s a very engaging experience. But one of the things that makes it most engaging is it isn’t just watching, it isn’t just a passive experience. In fact, it’s a very active experience because of your socializing with other people, commenting on what’s going on. Even making contributions to what the video game players are doing and so forth, and spurring them on. And it’s that whole social media aspect amplified on top of the core virtual experience of the video game that makes it so engaging. So, I think that there are things that we can learn from that and how we design experiences that we do deliver to people in their homes during this pandemic. Even something as simple as a jewel, or ideal, excuse me, a jewelry store in China. When the pandemic first hit there in January and they started to go into lockdown, they took their retail store sales associate and they put them on WeChat. They started using it as a broadcast channel to people who had bought from an ideal before. And then basically their retail store turned into a virtual showroom, broadcast out into the homes of all these clients. And then when somebody wanted to be able to actually buy a piece or talk more, to learn about it, to buy it, then they would drop down into that individual chat, and be able to talk to them. Right. Those are the sort of innovations that we see going on.

I do believe that in the long term and as always, that a big part of the future anyway. Again, reality always provide the best experiences of things you can do. But there’s a huge opportunity in fusing the real and the virtual and creating purpose-built places for virtuality, for virtual reality. You know, like the Void does, where they create a place where the physical things that you have in the place match exactly what you’re experiencing through your goggles. You can’t see the physical environment because they’ve taken over your entire senses with the virtual reality. But when you see walls, there’s a wall you can touch. When you go upstairs, there’s a stairs you touch. When you reach for a door, there’s a door that you turn and open. And when you open it, you feel the cold of the outside, for example, come in. When there’s a torch that you can pick up in the game, there’s an actual torch, you pick up with heating elements at the end of it that tell you that, hey, this thing is hot. And I think that those sorts of experiences are sort of going to be the frontier of where we’re heading to, for those who desire that virtual reality experience. Because the home is not a great place for virtual reality, because you tend to fall over the furniture and put your foot through the TVs and things like that. It’s better to have an outside environment.

Simone Cicero:
Joe, as a closing question, I would like to ask you to project ourselves into the future a little bit, if possible, and trying to give us your most important ideas about how these massively important trends that you have been spotting regularly in the last one or two decades; the topic of experiences, the topic of mass customization. How are these things going to impact the very shape of the organization? Because we are really interested in, also in exploring how our organizational models will adapt today to the future, especially when we talk about scalable organizations. So, I would say incumbents or ecosystems and platforms. What do you see in terms of massive innovations in how we organize around modular infrastructures and the experience economy?

Joe Pine:
Yes, Simone, that’s the exact word I was going to use is modular, right. That’s where we’re headed. Modularity is the key principle of mass customization. Modularity is what enables you to efficiently serve customers uniquely, do you have every customer exactly what they want. But do it with high volumes, with low costs, with efficient operations that you modularize either physical components to create a physical good, you modularize activities to create an intangible service, or you modularize the events to create a memorable experience. And one of the things in my original book on mass customization, which going way back came out in 1993. And I had a chart in there that most of it, not original to me, but on six different types of modularity, of which the most robust in there is what’s called sectional modularity, which is like Lego building bricks. So, I’ve, for decades, I’ve asked what can you build with Lego building bricks? And everybody goes, ‘anything’. Right. Anything you want because there are a large number of modules of different sizes, different shapes, and different colors. And again, so that module, that brick can be a physical component, it can be a human activity or a computer activity. It can be a physical experience, or a virtual experience. It can be an experience that humans deliver as well, as part of that. They can all be part of those Lego building bricks. But one of the things I’ve only realized in the last couple of years that there’s an even more powerful form of modularity, and that’s digital modularity.

The zeros and ones are digital modules, the bits and bytes are modules that you can bring together to create again, as my — as that last book talked about, Infinite Possibility, that you can do anything that you want with digital technology. And that’s what enables us to connect all these things together to create these wonderful platforms, that will make a huge, huge difference going forward. And it does point to how the organization is performing. Like I mentioned Carnival, its platform, Ocean Medallion is inside of the company. Now you can see how they could take it out if they chose to. But it’s inside of the company, but it sort of recognizes all the modules that people do. And so you’ll start to see organizations that are more modular to match the modularity of what they can do. It’s one of the things we need to study. And you mentioned earlier, the talk I gave, or the panel discussion at the MIT Platform Strategy Institute. And I’m working with them now to create a multi-client study on experience platforms, which will include, of course, that core concept of customization. And one of the things we need to look at is what does it mean for organizations as you’re describing? What does that digital modularity mean for how we create experience platforms that deliver the value that customers are looking for today?

Simone Cicero:
Right. So, I feel like we’re talking about abandoning our organizations and let them rebound all around experiences. You know, last week, we had a chat with Sangeet Choudary. And he was talking about this idea of the economy as a process now of rebounding around the jobs to be done, around the conversation that I’m having with you. I kind of take this idea of rebounding around experiences, which is even more powerful to think about instead of jobs to be done. So, really, thank you, Joe for these reflections. Anything else that you want to add before we close our conversation, Joe, maybe something that is really important that our listeners need to think about in terms of the impact of their professions, or the companies or organizations?

Joe Pine:
Well, it’s sort of a summary of what we talked about. But what I would encourage you to think about is what business are you really in and recognize the opportunities that comes from recognizing that you’re in — If you’re in the experience and transformation business versus merely the service business, you have different requirements, you have different organization, you will do things differently as a result, than if you think of yourself as a service business. And therefore, you’ll be able to gain much more economic value. And one of the key aspects of that then is recognizing you are what you charge for, as I talked about earlier. And so if you’re in the experience business, you need to charge for the time your customer spends with you. And not just in the individual platform modules, but think about membership offerings, where they’re a member of the platform, and that enables them to have access to greater and greater levels of experience.

And then when it comes to transformations, what need to charge for is the demonstrated outcome, that your customer achieves, that with transformations, the customer is the product, that’s what you’re tapping is you’re changing the customer or actually, you’re enabling them to change themselves is what’s really happening. And so the customer is the product, and therefore, inputs don’t matter. Right? What you do, the activities that you do, the experiences that they have don’t matter. It’s only whether they achieve their aspiration or not, or to what level they achieve their aspiration. And so that is charging for the demonstrated outcomes. And we see that happening more and more. And that will become more popular as people recognize transformations for the distinct economic offering that they are.

Simone Cicero:
And that would be surely a very selective impact on businesses not because those that we’ll be able to demonstrate the impact will succeed, the other most likely will disappear. Joe, that was a super insightful conversation. I must say that you were really ahead of time across your whole career. And since you’re talking about modularity so many years, and now we’re all talking about unbundling and then you were talking about experiences where we are still stuck into this idea of jobs to be done. So, really thank you for pushing us to think, to think forward, I would say. So, again, thank you very much, Joe for the time you spent with us.

Joe Pine:
Thank you, Simone and Stina. It was an absolute pleasure.

Simone Cicero:
And thank you Stina for the follow-up questions.

Stina Heikkila:
Thank you.

Simone Cicero:
And to our listeners, catch up soon. Okay. So, I’m stopping the recording.