Lux & Tech

2020, are we still in the experience economy? With Joseph Pine

June 08, 2020 Carlo Pignataro Season 1 Episode 3
Lux & Tech
2020, are we still in the experience economy? With Joseph Pine
Chapters
Lux & Tech
2020, are we still in the experience economy? With Joseph Pine
Jun 08, 2020 Season 1 Episode 3
Carlo Pignataro

It was 1999 when a book titled “The experience economy” made its appearance in the bookstores around the world.
Many listeners will surely remember how companies, back then, were still busy producing goods and delivering services at full speed and very few of them, with the exception of some in the entertainment and hospitality industry, would ever think of their interactions with their clients as EXPERIENCES.

Yet, experiences they were, for experience is an inevitable dimension of human life.

When asked if they were trying to predict the future, authors Pine and Gilmour always answered that they were anything but futurists and that their work was grounded in history and in the present.

Fast forward two decades, CUSTOMER EXPERIENCE has become not just a common language, but a concept that pretty much every company in every industry says they are fully committed to.

However, the reason many companies do not succeed, despite their effort, in staging memorable and transformative experiences for their customers is because they fail to use the framework explained in the book The Experience Economy, which, by the way,  was re-issued in 2019 with many updates, and which is based on universal principles that make it as current and as effective today as it’s ever been.

In my conversation with Co-author B. Joseph Pine II,I've learned:

  • Experiences are NOT just nice and easy service
  • Experiences are time well spent
  • Experiences must be designed and staged
  • Experience must leave positive clues
  • Difference between Experiential Marketing and Marketing Experiences
  • Experiences are at the highest level of the economic progression
  • A theme helps create a memorable experience
  • Experience designers should take inspiration from theatre




Show Notes Transcript

It was 1999 when a book titled “The experience economy” made its appearance in the bookstores around the world.
Many listeners will surely remember how companies, back then, were still busy producing goods and delivering services at full speed and very few of them, with the exception of some in the entertainment and hospitality industry, would ever think of their interactions with their clients as EXPERIENCES.

Yet, experiences they were, for experience is an inevitable dimension of human life.

When asked if they were trying to predict the future, authors Pine and Gilmour always answered that they were anything but futurists and that their work was grounded in history and in the present.

Fast forward two decades, CUSTOMER EXPERIENCE has become not just a common language, but a concept that pretty much every company in every industry says they are fully committed to.

However, the reason many companies do not succeed, despite their effort, in staging memorable and transformative experiences for their customers is because they fail to use the framework explained in the book The Experience Economy, which, by the way,  was re-issued in 2019 with many updates, and which is based on universal principles that make it as current and as effective today as it’s ever been.

In my conversation with Co-author B. Joseph Pine II,I've learned:

  • Experiences are NOT just nice and easy service
  • Experiences are time well spent
  • Experiences must be designed and staged
  • Experience must leave positive clues
  • Difference between Experiential Marketing and Marketing Experiences
  • Experiences are at the highest level of the economic progression
  • A theme helps create a memorable experience
  • Experience designers should take inspiration from theatre




INTRO: It was 1999 when a book titled “The experience economy” made its appearance in the bookstores around the world.

Many listeners will surely remember how companies back then were still busy producing goods and delivering services at full speed and very few of them, with the exception of some in the entertainment and hospitality industry, would ever think of their interactions with their clients as EXPERIENCES.

 

Yet, experiences they were, for experience is an inevitable dimension of human life.

 

When asked if they were trying to predict the future, authors Pine and Gilmour always answered that they were anything but futurists and that their work was grounded in history and in the present.

 

Fast forward two decades, CUSTOMER EXPERIENCE has become not just a common language, but a concept that pretty much every company in every industry says they are fully committed to.

 

However, the reason many companies do not succeed, despite their effort, in staging memorable and transformative experiences for their customers is because they fail to use the framework explained in the book The Experience Economy, which by the way,  was re-issued in 2019 with many updates, and which is based on universal principles that make it as current and as effective today as it’s ever been.

 

In my conversation with Co-author B. Joseph Pine II, who’s also the author of many other books such as Mass Customization, Do you want to keep your customers forever? Infinite possibilities and many more, we will learn today that experiences are and will be for the foreseeable future at the top of the economic value progression, the arena where every business competes for customers’ time, attention and money, and given how connected the world has become, we all compete with the best in the world.

 

I know Joseph is a great speaker and a generous man, and I am sure he will share with us today precious insights to help us strive in the strange times we’re living.

 

Carlo: Joe, thank you for being on LUX & TECH, I am delighted to talk to you again!

 

Joe Pine: Yes. It's a pleasure to see you again as well.

Carlo: It's the same here, Joe.  As I mentioned during my introduction, it seems that most companies focus, or say they are focusing, on their customer experience, but when you take a close look at the way they do business, you realise it’s still quite transactional. Why is that, in your experience? Do they still confuse services with experiences

Joe Pine:
Well, that's exactly what's going on, Carlo, the, the whole customer experience movement is really about creating better service, not creating a distinctive experience. If you think about it, when people talk about customer experience, they talk about, look, let's make, our transactions, right  and our interactions with customers nice and easy and convenient. And those were all well and good, but those are service characteristics, not experience characteristics, you know, nice is nice, but rarely does it rise to a level of memorability. And if you haven't created a memory in some way, because of the great engaging experience that they've encountered with you then it's not a true distinctive experience.

And, what would make things easy? What often means is we, as we routinize things, to make it easy for our employees to conduct those transactions and have those interactions, and, but rarely is it therefore personal, and experiences are about reaching inside of people, engaging them and creating that experience within them, which then creates the memory.

And then convenience is the antithesis of what Jim and I have been talking about for over 20 years. Convenience is about getting in and out as quickly as possible. and that's really just good service. Nice, easy convenient, good service but with experiences it's about the time that they actually spend with you, so it's not about shortening that time. It's about making that time, add a dramatic art to it that engages people in that inherently personal way, and then creates that memory.  And you can think of services are about time, well saved, right? Saving my time. Nice, easy, convenient save time.

Experiences are about time well spent, that people actually value the time that they spend with you. 

Carlo: So, experiences are time well spent and not just nice and easy services. For our listeners to understand why experiences are so relevant and important for their business, I d love if you could explain the progression of economic value

 

Joe Pine: so that, right. So that's the basic foundational framework in our book is the progression of economic value, which describes scribes, you know, all of economic history. We're in the beginning where commodities, the things you're growing, the ground, raising the ground for a lot of the ground, you know, animal, mineral, vegetable, and then you extract them out of the ground and sell them on the open marketplace.

And commodities were the base of the agrarian economy that lasted for millennia. Then thanks to the industrial revolution in particular, the development of the system of mass production over a hundred years ago now is we shifted into an industrial economy. And Academy where goods became the predominant economic offering, what people were looking for.

And then the last latter, half of the 20th century, we shifted into a service economy where consumers and business people were looking for services, the activities that companies do on behalf of the individual customer. And so that's when goods started to become commoditized. You know, they're treated like a commodity where people don't care about the brand and the features are all pretty much the same.

Anyway. They come to care about three things and three things only, and that's price, price, and price. And  the internet is in fact, the greatest force of commoditization ever invented because the frictionless marketplace means that customers can instantly compare prices from one vendor to another.

And it tends to shift them down to the lowest possible price. So, what we see increasingly though, is that services are commoditized as well. You know, telephone service today is bought and sold on price, price, price, fast food restaurants, with all their value pricing and the internet can even commoditize services, you know, in banking or in financial services.

What used to cost several hundred dollars to buy or sell a block of shares with a full service broker, can now cost as low as $3 with an internet based broker. And it's going to zero, right? If it isn't already at zero. So goods and services are no longer enough. Goods and services are everywhere becoming mere commodities.

So that means it's time to move to a new level of economic value. Do you go beyond the goods and services? The staging experiences for our customers. So experiences again are a distinct economic value. It's not services, plus it's not better services. It's not nice and easy and convenient services. There are distinct economic value.

Or we use goods as props and services as a stage to again engage each individual in an inherently personal way and thereby create, that memory, which is the hallmark of the experience. So we're now in an experience economy where experiences have become the predominant economic offering, where experiences are, are, what people want, where experiences are the source of, of job growth in GDP growth and economic prosperity now, and into the future 

Carlo: In the book, you mentioned an example that , as an Italian, caught my attention.

Joe Pine: Okay. 

Carlo: The coffee bean. 

Joe Pine: Yes. Yes. You can see that progression in any industry, but the one that works around the world, everybody around the world knows about coffee and coffee at its core of of course, coffee beans. These are the commodities that farmers grow out of the ground. And if you convert it from a per bushel to a per cup basis, you know how much coffee costs per cup, in beans is actually only two or three US cents.

Right. Two or three sets. That's what a cup of coffee is worth with bees. That's what farmers get. What if you take those beans, your grind and roast and package them,  you turn them, you put them on a grocery store shelf then you get five, 10, 15 cents for a cup of coffee. 

Then, then you take those coffee and you brew it. for our customer in a, in a vending machine, a kiosk, a corner diner or bodega somewhere and now you get 50 cents, a dollar, a dollar and a half per cup of coffee, but surround the bruin of the coffee with the ambiance and the theater of a Starbucks and now you're paying three, four or five US dollars for a cup of coffee was only two or 3 cents worth of beans in it.

And that's the progression of economic value. You get two orders of magnitude increase in economic value and going from commodities up to experiences.

Carlo:  So, experiences are a specific economic offering. You explained in the book that, to be successful, experiences have to be designed and delivered properly. And you suggest that we think of experiences across two dimensions, client participation and connection, or if you will absorption any immersion. Would you like to elaborate more on this?

Joe Pine:  Yeah, so that's, that's a core framework of the experience economy that talks about the four different realms of experience.

And it's the model that's garnered the most attention in academics. There, there are tons of papers that look at this model and various different circumstances and so forth, but it basically says that there are four rounds that, first of all, you have, passive absorption, which is what entertainment is about . Entertainment, when we watch TV or watch a video, we go to movies or concert or play. We are passively absorbing in the sights and sounds that are presented to us when we flip from passive to active. Well, that's when we can learn. Probably when we're actively engaged intellectually and emotionally with the contents in a way that we can learn from, from what we're absorbing it, then there's escapist experiences where you're actively immersed in a different virus.

So you go from absorption to emotion from the experience coming into you, to you going into the experience and that's escapist experiences. Yeah. And tourism is classically a escapist experience. It employs over 10% of the entire world's population. And, and so, cause you're going from one place to another actively immersed in that environment.

And then finally there are aesthetic experiences. Aesthetic are about passive immersion, about creating an environment where you just want to hang out and be and that of course is a cafe, you know, and then the, you know, traditional Italian cafe that inspired Howard Schultz to actually create what Starbucks is today. Or it could be a national park, you know, where you're in nature, it could be an art gallery or a museum or where you are immersed in the art and so forth. And what we found is that the best and most robust experiences are those that hit the sweet spot in the middle that have aspects of all four realms that are simultaneously entertaining and educational, escapist, and aesthetic.

Carlo: Joe, studying your book has really helped me realize that to create a memorable and meaningful experience, it’s very useful to conceive it starting from a theme. I'm thinking that while it's very easy to spot a theme in businesses like, I don't know a Disney Park or a Hard Rock Cafe,  many other businesses struggle to find a theme to focus on, while creating their experiences and  they may also confuse a theme with a motif. Can you suggest  a practical method for businesses to find their own theme? 

Joe Pine: Yeah. You know, cause the theme is the organizing principle for the experience. That's how you decide what's in the experience versus what's out of the experience. So it makes it a cohesive experience and the technique that I use with, companies to discover what a great theme should be  is to understand the impressions that the place gives or that you want to get. So there's a difference, if it's an existing experience that you want to now theme and make better, or, or if it's a new to a world experience, but in an existing one as I like to send the teams out to, to experience the place where I go all over the place and I'll, I'll set different places where I want them to go places within the place. And then, and then answer, we have this little technique we use to observe what exactly is going on. You observe the five senses.

What do you see? What do you hear? What do you smell? what, what do you feel and, and what do you taste? Or if there is anything actually to taste and what taste is evoked, and then also observing worker behavior. And then you start to develop impression. Let's write down the impressions that this place gives us.

And then, you know, just standard technique of a facilitation technique of write each impression on a post and I'll put them all up, start to sort them around until you group them together. And you figure out these are the, whether it's five or eight or 10 impressions that the place gives us. Now, some of those impressions are going to be very positive.

You say, Hey, this is great. I love this. This is what we want. And then others are going to be negative. Right? Cause you realize particularly if you observe closely what's going on, that there's a lot of things that aren't quite right. So what you want to do is you want to accentuate the positive and eliminate the negative.

So let's get rid of those negative ones and figure out what are the impressions now that we want to give. And once you have five, six, seven, you know, maybe as many as eight impressions of positive ones and you say, yeah, you can see how they all come together. Then it's like, what theme? Now? Subsumes all of these impressions and that's really an art form.

They're there. There's no, there's no one way to do it sometimes it's very difficult to come up with one. Sometimes it just pops right into your head and one of the techniques we use also then is to think about, pop culture. Yeah. Was there a movie that would serve as a theme? Is there a magazine? Is there a particular celebrity that would serve as a theme?

and then go on to, to various different techniques, to be able to think about it. We like three word themes, you know, very sort of very concise themes that encapsulate the experience that you want to impart to your, customers, 

Carlo: Joe, you know, I come from the luxury industry. And I've always wanted to ask you, is there a company, in your opinion, a luxury company, whatever luxury you can think of, automotive, hospitality, jewelry, watches, fashion, whatever you have in mind, do you see a company which has really nailed their own theme?

Joe Pine: Well, that's, that's a, that's a great question. you know, it's interesting that it was about, I think it was 2007, I could be wrong, I remember the economist had an article where they talked about how luxury spend had moved from primarily goods to primarily experiences and experiences that overtaken the goods and,  so it's very important now in luxury to really focus on experiences, why LVMH bought Belmont, for example, that, that has beautiful, wonderful experiential hotels and, experience trains and so forth.

Cause they' ve recognized s they need to get into that side of the business. The, the, in terms of the actual theme of a luxury place, the one, one hotel that comes to mind. well, I mean, you could look at Ritz Carlton, hotels. Now a bunch of hotels are coming to mind, but it looks like a Ritz Carlton, whose theme is really ladies and gentlemen, serving ladies and gentlemen.

No, it's a slogan that they've used a long time, but really it's become the theme or that even the meaningful purpose of the, of the thing. Cause it's in part what we do as workers, as well as who our customers really are. And I think it's a wonderful evocative theme in that way. At Kimpton hotels, they, every hotel has a story and the story of that hotel really becomes a theme for us that they're trying to impart, but I'll give you one of my favorite examples is actually a small boutique hotel in Manhattan called the library hotel. And the library hotel is just down the street from the most famous library branch in the U S on fifth Avenue there in Manhattan.

So that's, I think that's why they named it, the library hotel, but the theme is a little more subtle it's not like the hard rock cafes or the Disney theme parks that you mentioned. It's not in your face. It's a little more subtle, which is that it's Dewey decimal system. All right. In three words, Dewey decimal system, it's a classification system and the libraries.

So knowing that when you walk into the hotel, what are you going to do to empart Dewey decimal system? Well, first of all, you've got bookcases all over the place, filled with books, all different classifications with the Dewey decimal numbers on there, but then you go behind the, you go to the, registration and behind the, the registration is a card catalog.

Right, which is a perfect exemplification of Dewey decimal system.  They actually have little bookmarks right there that you could take and then when they give you a key packet, your key gets in. It's actually not a normal key keypad. It's a tiny little book with sayings about libraries and then in the boutique hotel, it has 10 floors and six rooms in every floor.

And every one is a different classification. The Dewey decimal system. No. So there's an art floor. There's a history floor. There's a math and science floor. There's a literature floor in technology and so forth. And then every room is a different sub classification. So when you go into your room, it's filled with books as well as art objects that are inspired by that particular classification.

And so it's a, it's a wondrous play, a few love books. Like I love books. And I see from behind you, Carlo books like I do, but it's, it's just a wonderful, amazing place to be. And there's many more things that we could talk about in regard to it. But if you ever get a chance to go to New York Carlo, I do highly recommend you go to the library hotel, and then, if you do get a chance to go to room three, zero, zero.zero zero three, you can reserve three zero, zero.zero three.

That's the economics room. And then there's one particular book that you're being able to get experience in there. 

Carlo: That's a great example, which also makes me think that if I understand you well, the ultimate experience is not just a memorable experience, but a transformative one. Isn't it?

Joe Pine: . Yeah. So, so, you know, ,  you mentioned early on, I appreciated that, that you said that you know that we're not futurists, right? We don't tell you what's going to happen. We tell you what is happening, but you don't yet see it. And as a result of that, though, we're always asking what's next and whenever we ask what's next to find an answer, then  we see it's already here, right.

Again, you know, this William Gibson family said the future is already here, it's just unevenly distributed. And so we asked what's after experiences. In particular, you know, what happens when you customize an experience? When you design an experience that is so appropriate for this particular person, exactly what they need at this moment in time.

Well, then you can't help, but turn into what we often call a life transforming experience. There was an experience that changes us in some way. And, and that is a transformation that is a fifth and final economic offering this progression of economic value. We're using experiences now as a raw material to guide people, to change, to help them achieve their aspirations and many businesses naturally in the transformation business, whether it's fitness centers, healthcare, management consulting as a B2B transformation.  higher education and coaching of all stripes, right? All of those are in transformation business that nobody hires them and unless, or they have an aspiration that they, that they want to achieve. 

Carlo: So, shall these businesses be paid for the transformation they encourage, rather than the services they render?

Joe Pine: Yeah, exactly. You know, so, so, backtrack a little bit too, to mention that basically in, across all the progressive economic value, no matter all of economic history, a basic thing to understand is you are what you charged for and you are what you charge for that, that if you charge for a differentiated 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 your people perform, you're in the services business, but you're in the experience business economically, a lot of companies give away the next level of value in order to better sell what they have today. So not everybody does this, but economically you're in the experience business.

If, and only if you charge for time, again, it comes back to time well spent that people value the time. So you charge for the time be it an admission fee or a membership fee of some sort. And that reminds me, I do have a great luxury example of that if you'd like to get into it after we finish this. But, then the, transformations, what do you charge for what you want to charge for is to demonstrate outcome that the customer achieves.  You helped them achieve their aspiration, you get paid based in that. So now you still may charge for goods, services and experiences as well you know, you don't have to just charge for one thing. But, but outcomes is all that matters, right? Inputs don't matter what the transformation only out. And so that's why you charge for the demonstrated outcomes that your customers achieve.

And, many, many companies are now doing that. And healthcare is moving to that direction. And by the way, I like to think about it. This is Benjamin Franklin, his famous phrase about being healthy, wealthy, and wise, that that any business is about helping customers, whether they're consumers or businesses.

To be healthy, wealthy or wise while they're in the transformation business and we'll move to outcomes based compensation at some point. 

Carlo: I remember Joe, when we shared the stage in Dublin in 2019. Do you remember? You said something that caught everyone's attention when you said experience is your best marketing.

Joe Pine: Yeah. And, and, and it's, you know, relates to you are, you know, you were the preeminent sales guru, you know, you really help, a company, strictly luxury companies, whith their sales  process and that.

And Peter Drucker famously said that the aim of marketing is to make sales superfluous. Right. In other words, if the product sells itself because of great market, now we all know that doesn't really happen very often, but yes. So the aim of experiences is to make marketing superfluous. Now, is it the best experience, the best way of generating demand, right?

That's what market are the best way of generating demand is with an experience so engaging that their customers can't help, but spend their time with you, give you their attention and then buy your product as a result. So the, that sense of the experience is the marketing and, you know, luxury end example, I'll give you, is, is a Land Rover Land Rover has for years done.

I think maybe almost 20 years done theLand Rover experience and they actually franchise this out to their franchisees where they bring, and I've done it once in the UK where they bring customers in. And, they take them and Land Rover and actually go off road, you know, cause 90% of the people that buy one never go off road and they show what the capabilities really are.

When I went through there, we went through a river that you, that you thought for sure that the car could not get across. We went up these Hills at such a steep angle. You thought you were going to flip over. We went over these logs that you thought you were just going to slip on, but no, it really shows its paces.

And, and it's a wonderful, wonderful experience. Now, the amazing thing is, is that it is such a great experience that they're able to charge admission, that they charge customers, . And of course it's the best sales vehicle that they have. That's why they're all over the world, but they actually, Land Rover the company makes a profit on these. Right. You think about it, they make a profit. So they've, they've turned marketing into an experience charge for it because they've made an experience worthy of an admission fee and then they actually make money. I mean, think of the ROI. Right? Normal ROI is what incremental revenue did we get divided by the cost of an advertising campaign or other marketing endeavor?

Well, here, the cost goes down to zero. Because it costs you nothing because your customers are paying for it. And actually it's even profitable. You think you have a negative in that way. So, so, so don't think that ROI, I think it was R O X, right? The return are unexperienced really is infinite. In other words, they get incremental revenue with zero cost.

That's what is possible with marketing experience. . 

Carlo: That's amazing. And I've always thought that the very idea of asking yourself, what would I do, where I to charge an admission fee, even if you don't ask for an admission fee is already a game changer. 

Joe Pine: Well, you know, that gets back to the luxury example. I wanted to mention to you that, it's a, it's a men's store, single location in San Francisco called Wingtip and that a cofounder of the place on me abroad. He's now a friend of mine. He, he had the small little store in a different location. I mean, one to redesign, create a great store.

The theme of the store is solutions for a modern gentleman. And so it's, it's, it's wonderful shirts and suits. They have a barbershop in there. They sell a fine liquor and wine and cigars. One of my favorites is a little in a vault. They have at the, in the bottom of the store, they have a cigar lounge and humidor really.

And then, he, he read our book where we come to that exact question, Carlo, that you just asked about, what would you do differently if you charged a mission and he sorta racked his brain? Well, how can I charge admission to a men's store? I mean, I got a great men's store, but you know, if I put a vicious fee out front people aren't going to want to come in and I won't sell clothes to them and so forth.

So he thought about it. He thought about it. He finally figured out the way to do it was to create a club. They had the Wingtip store and now he created the Wingtip club. So he rented out the bottom two floors and this old bank of Italy building where the basement is where this vault is. And then the top two floors of the wing tip club.

And there he has different emission fees, but, but the, the, the primary mission is actually a $3,000 initiation fee. And then a $200 per month, a membership fee. Right charging for the time that the people spend there and it's open to men and women. It's amazing place as wonderful bar, just amazing restaurant.

It's got a pool room, a cigar lounge. They have amazing events. I learned how to sabre a champagne bottle. with him there in, in Wingtip. and so now the store creates demand for the club and the club. Then we'll also get people to buy more from the store, and there's a wonderful synergy there.

And it all came from that question. What would you do differently if you charge a commission? So it's not necessarily for the entire place, it can be places within the place or events within the place that you do on a temporary basis, but do events that you charge for. 

 

 Carlo: I find these very interesting. And in the book, you differentiate between marketing experiences and experiential marketing. Let me, ask you a question. How do you see events done by luxury companies like the Rolex cup, or the Festival des metiers of Hermes which is a travelling exhibition where people can see Hermes artisans at work, printing those famous scarves or the Ferragamo museum where people can see the history of, of the brand.

Are those examples of experiential marketing or of marketing experiences? 

Joe Pine: I think of each of those as marketing experiences, right. Were experiences is the now, because there are places you can go to and, and experience with, with experiential marketing, as it's long been termed, it often means, well, let's, let's make our mailers more dimensional.

Let's evoke the senses and, and, and, and, and on our online stuff, you know, look, let's, let's make it look like an experience, but. Actual experiences often lacking. So it's, it's, it's experiential, but not a true distinctive experience. So when you create a place which could be virtual as well as physical, but when you create a place where people can come in and experience your products, experience your brands such as with a Ferragamo museum, then you have created a marketing experience and experience that will we'll do the job of marketing.

And I think the basic principle there is if you get potential customers to experience your product or your brand, before they buy it, then the chances they will buy it go up. 

Carlo: Another concept I love in the book and that I always used to create sales and customer service training programs for, for my corporate clients is the idea that work is theater. And I've also noticed that this is a concept difficult to digest for both top management and front liners because number one, they think theater is show business and not something serious enough to be called a business. And second, because they miss an understanding of how the theatre works. In the book you share four types of theater people should learn from, to create experiences. Shall we talk about them? 

Joe Pine: Yeah. Yeah. And then I think, I think you should talk about theater because you are a, again, a consummate salesman and no, no, nobody understands theater better than salesman unless maybe it's lawyers, or financial advisors, work is theater.

Right. Then whenever workers are in front of customers, they're on stage and need to act in a way that engages the audience. And we do talk about when I should mention too, that it's not about being fake or phony, that it's not about play acting. It's not about being theatrical. It's about understanding that your work is, is theater.

And, and which is a matter of making choices, choices about, about how you present yourself to the others that are in front of you. Right? That fundamentally is what is what theater abouts being in it's intentionally designing what you say, what you do. And most importantly, how you go about doing that.

So we do talk about four forms of theater, in, in the, in the book. And, and one is improv. And, improv is where you, you know, you make it up. As you go along, you go to a comedy club, you go to a, an improv place or you watch whose line is it any way? And other, such places on TV right there, they have various technique, but, but literally everything they do has never been done before.

Right. It is, it is created in the moment. Right. And that's improvisation. And we need an improvisation particular when we are inventing new things, why we're doing things that we haven't done before. We need to think about the techniques by which we, we want to do those. 

Carlo: Yeah. And I think that improvisation is important because we always need to add an element of a surprise in the experiences we provide our clients with.

Joe Pine: Yeah. Surprise is very important because surprise gets you out of the normal and a, and creates that wow experience inside of you. And then, and that's particularly important with improvisation. Now, the second form is, is what we call platform theater. And platform theater is like, you're on a stage. You think about the plays of William Shakespeare, right?

Is that you're on a stage. You're saying lines that have been around for 500 years almost, but, you are still imbuing them with intention about how you say them. You still create a great experience. Now, if everybody knows the story, there's not gonna be much surprise there, but when you have comedies in particular, you have a particular turn in the tragedy, then that's where surprise can come into play.

And platform theaters are particularly important in business when people are watching others work, but there's not a lot of interaction. Yeah. So like when you're straightening merchandise, you know, in a store, but not interacting with customers, that's platform theater, when a CEO is on a. Call, and, with analysts, you know, and, and are giving a speech, right?

He wants to say his lines. He doesn't want to start improvising because that's what he's going to get in trouble. He wants to say his lines, right? So when people are watching you work, is platform theater, and then there is a matching theater. Matching theater is the provenance of TV and film where you are.

You're thinking about TV and film. You have different scenes. And you film them at different times, and sometimes you got to come back and refill them, but then it's an editing where you get the great performance and putting it all together and it all has to match. It has to be cohesive. You have to make sure that things aren't at a place that we're in one place in one scene, and now they're in a different place and the next, and they don't fit.

Cause that takes you. It takes you out of the experience. So matching theater and business is important. We think about all the different touch points you have with customers and how they match. You know, that, if a person goes to our website and has an interaction there, well, when you go to the store, then the salespeople should know about that and be able to build on top of it instead of starting from scratch.

No email communications advertising. If you do that, the experiences that you have interactions in store or wherever, all of those have to match and come together into one cohesive experience. And then finally there's street theater street theater, where you have routines that you're, you know, you think about jugglers and, unicycle us and, and others that are, that are out there and, and, and on the street is it seems improvisational because every performance is different.

But in fact, what it is, it's his, it's just little routines, right? They do these little routines and they connect the routines together in whatever way they best thinks will engage this audience and get them to put money in the hat. And, and those routines are our bits. There are originally known as lot Italian word LAZZI , right from Commedia dell'arte long ago in Italy. So LAZZI is the original term for them. They're really modules that you bring together in different ways. They're like Lego building bricks. And that I think is particularly important in sales is in sales is where you have to respond to every objection that they may, and you can think of that as, as being heckled on the street, you know, somebody heckles you it's, ah, you're no good at that.

Well, you need a rejoinder to that that allows you to come back. And, and, and keep the audience in and you have all these all, you know, that you have the thousands of different things you could say, and you choose which one is the right one that gets the customer to understand the value that you're trying to give to them with whatever the, the offering is.

Carlo: I agree and i also think that many people underestimate the importance, of rehearsing the stage tricks it takes to create a memorable experience when we sell to or or or we serve our clients

Joe Pine: Yeah, that's exactly right.  rehearsal is so important. You can't just expect your workers to go out and perform in your business stage without giving them the wherewithal to do that.

And that includes the time to rehearse, to think about what they want and to, to rehearse together, not just a solo thing, but to rehearse together as an ensemble, really. and if you don't do that, then things aren't going to tend to work exactly right. 

Carlo: Alright, Joe, before we touch on COVID-19 and the economic consequences of the lockdown, there is one last concept. I find very powerful and worth talking about it. the client is the product

 

Joe Pine: okay. And that is a recognition that when your businesses, one of transformation. Yeah. But again, only outcomes matter, not inputs. And therefore the client is the product, right? The customer is the product that, that it's a change customer that you're after.

If, if I am hiring a fitness center to make me more fit, Whether I have a specific app aspiration about losing 20 pounds or getting washboard abs or having better definition. Not that that would be possible here, but whatever that might be a is that, is that that change client is what you want is, is, it is that outcome.

And so the customer is the product. The customer becomes someone who weighs less, who has more definition of feels better about themselves. There's often a lot of emotional things that are, that are wrapped up in there as well. So when you focus on transformation, so recognizing that whatever commodities are at the core, whatever goods you use, whatever activity services you perform, whatever experiences they have, don't matter.

It's only the change customer that matters. 

Carlo: Okay. So, as we speak today is June, 2020. The world has suffered and is still suffering a major pandemic called COVID-19 and most countries in the world are slowly getting out of an unprecedented lockdown.  Are we still in the experience economy, Joe? 

Joe Pine: Absolutely. So, so it's the experience sectors of the economy that in fact have been devastated by the lockdowns. Right. Th that, that, it's the movies and the retail, the restaurants, the bars, the concerts, the plays and, and sporting events. Right. They're all, they're all based have been basically gone. Now there's finally starting to open up, here in the U S and Italy ,I know, and it's actually been several stories in the paper this week on Italy bars, and you see a coffee bar and Milan opening up and so forth. And, and so it's starting to come back, but it's been devastated and there's even an article in the New York times a week and a half ago about, you know, is it the, is it the end of the experience economy because of the gathering start?

Right? Cause any place people want to gather is not a place people want to be right now with this virus as we've been very, very, very careful with it. but we still have our experiences. We did give up experience. We are social beings who, who crave being around other people, and we are experienced seekers.

We want to have experiences and, and, and goods and services, you know, again are no longer enough. We want to experiences. So what's happened during this Corona crisis, as I like to call it.Is that our experiences have moved from the public to the familial, right? With our family. They've moved from out there to in here, they've moved from physical to digital, right?

Music streaming is booming. Movie TV streaming is booming. Video sharing is, is booming. all of those things are booming right now because we still want our experiences. In fact, we may have more time to be able to do that right now, but as things open up, yes, people will still want those physical experience because we are social beings.

You know, the Disneyland Shanghai opened up, several theme parks in Europe opened up down 25 to 30% capacity, but guess what? They were totally filled to that capacity. Right. That's the capacity that they can make them safe and get up to 50% and so forth. Totally failed because people want those experiences.  They've been, they've been craving those. So, so I'm often asked, is it the end of the experience economy? And in fact it is absolutely not. It is, it is just a momentary setback and physical experiences versus versus digital. But the experience economy not only has to come back. All right. I mean, not only will come back, it has to come back. It must come back because as we've been saying again for over 20 years, goods and services are no longer enough to ensure economic prosperity. It is experiences that need to be there and we therefore need to redesign our experiences and innovate. In ways that will bring people back out, ensuring that they're safe, obviously.

So ensuring that they're safe and then bringing people back out because otherwise we're going to have massive unemployment and, and economic, this prosperity. 

Carlo: Yeah. And we may be at the beginning of a new experience economy enhanced, if you will, by technologies like VR and AR 

Joe Pine: yes. Yeah. And I, I talk about that in one of my books on infinite possibility, creating customer value in the digital frontier, that some of the most amazing experiences will be those that fuse the real and the virtual in some way.

And absolutely that is a part of, of what is going to happen. There may be an acceleration of that as we've been used to doing over the last few months, doing things more and more online, doing things more and more with, with digital experiences. 

Carlo: Many luxury companies have reacted to the pandemic helping society, especially at the beginning.I remember Giorgio Armani  was the first in Italy to convert all his production plants to manufacturing, medical overalls,  LVMH also responded very quickly producing sanitizers and masks and many other brands and companies followed.  In the paper you recently published you wrote  "be human". Is this what you mean? 

Joe Pine: That's exactly it. The, during this time, we're all in this together and not just locally, not just nationally, globally, we're all in this together. And I think that the core response, the initial response that people need companies need to make is to be human. That we are serving human beings. We needed to take care of our fellow human beings and therefore being human is the right thing to do. And that's doing whatever we can to help people be safe, to help them feel safe. to help them, to help ameliorate the effects of the economic lockdown that we have and then to, to open up again, 

Carlo: What else can a company, let’s say a retailer, do in this time to prepare for an economic recovery we all hope for?

Joe Pine: Well, I I'd say three things, right?

So number one is you should be refreshing your places. Right. So that you've got some time if you're shut down, if you have a star so let's, yeah. I mean, as simple as give it a new paint job, as simple as figuring out the right fixtures, get the lighting better, you know, whatever all those things might be.

But most importantly, do what I call safety, theater and safety theater's about figuring out first the processes and the places to ensure that people, may catch the virus but they’re not going to catch it from you, right. They're not going to go in you and not just ensuring that that's the case, but letting them see a demonstrated show to let them feel safe in your place. That's the theater aspect of it. Again, it's not being fake or phony. We don't wanna, we don't want to hide the fact that we're not saying no, we want to be safe and then show that we're safe, that safety theater. So one refresher places in that way to redesign your offerings. And this is a great opportunity to come up with new experiences, to go beyond just merchandising and retail stores, to really staging and engaging experiences, figure out what that is to create experiences that as we say, in the, in the new edition of the book that are robust, Cohesive personal dramatic and even transformative.

And then finally renew your capabilities. Take this time that has been given to us to be able to figure out what new capabilities you need to prosper in a post COVID world. and, and I think one of the key things here is the digital aspects that we talked about. His work on digitally. So many retailers to be specific to them again, as you asked so many retailers think that, okay, we've got this great store, we have wonderful interactions. Look at the beauty of it. And then they have website and  it's just product, product, product, product, product, product, product, right. It's just merchandising. And they don't take the time to  let their, store  their virtual stores be as engaging as their physical stores.

One of the things I've said to retailers for a long time  and now I think it's particularly appropriate is,  if it is worth it for you to have a live sales associate work one on one with a customer in a store,  guess what? It's worth it to you to have a live sales associate work one on one with a customer online.  Right. Do that. Don't think that all, we just, we just are going to have a low cost channel where we're gonna use chat bots and that sort of thing. No, but let your people open. So, you know, during this crisis, one jewelry store in China called Ideal. I thought they did a wonderful thing is that they, they, when the, when the lockdown came, nobody's coming to the stores anymore, what they did as the sales associates were still in the store, but they got ontoWechat and they started using their store as a showroom.

They started broadcasting the thousands, maybe tens of thousands of people. And then anytime somebody wanted to buy, they could get down to, okay, let's talk one on one, right online. What a better shopping experience than just throwing up all your merchandise on there, letting them, you know, their eyes glaze over it. They, as they look at it all, I know a company called LUX LUX specifically looking at luxury goods that wants to be a platform for crane, such digital showrooms for luxury companies, where they can have their own digital showrooms that they then can broadcast out and then work one on one with individuals to create a truly engaging experience online as there is physically 

Carlo: Joseph Pine, thank you very much for being on the show and for the memorable experience, 

Joe Pine: it's been my pleasure, Carlo always wonderful to be with you.