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 / Autumn 2010 / Issue 60(originally published by Booz & Company)


What Experience Would You Like with That?

How a new view of consumers changed the way we think about products, companies, and economies.

Greetings from Williamsburg, Va., an outpost on the new frontier called the experience economy. Well, maybe not so new. John D. Rockefeller Jr., the only son of Senior, who was, of course, the founder of Standard Oil and an iconic figure in the rise of the unfettered industrial economy, began buying up this sleepy Tidewater town in the 1920s. Junior’s vision: Create a living museum that would protect the heritage of the United States and transport everyone who paid the price of admission back to the revolutionary 1770s to experience colonial life, right down to the horse manure.

Colonial Williamsburg, the restored capital of England’s Virginia colony, has attracted tens of millions of visitors since then, including long-reigning Queen Elizabeth II, who visited her ancestral fiefdom first in 1957 and again, 50 years later, in 2007. It also spawned an entirely new local economy based on feeding, lodging, and entertaining all those visitors and providing housing and services for people who found jobs there, as well as for former tourists who decided, as I did, that it would be a nice place to live. The entire greater Williamsburg area is a testament to the transformative power of a compelling customer experience.

Experience Unbound

No one connected what was going on in Williamsburg to a new kind of economy until 1998, when an advance excerpt from a groundbreaking book by B. Joseph Pine II and James H. Gilmore, The Experience Economy: Work Is Theatre and Every Business a Stage, appeared in the Harvard Business Review. The authors called attention to the fact that certain highly successful businesses, such as the Walt Disney Company’s theme parks, REI’s outdoor stores, and Chuck E. Cheese’s pizza restaurants, were delivering something more than products and services. They were delivering engaging and memorable experiences, which attracted droves of customers.

Before Pine and Gilmore, and a few other experience pioneers whom we will soon discuss, the delivery of superlative experiences was mainly seen as something that a service company did, and it was usually called “service excellence” or “service quality” (think Nordstrom or Southwest Airlines). But Pine and Gilmore effectively decoupled the experience from the service, and thus illuminated the fact that the creation of customer experiences was not limited to service companies or the service function per se.

“Manufacturers must explicitly design their goods to enhance the user’s experience as well — essentially experientializing the goods,” they wrote. “Automakers do this when they focus on enhancing the driving experience. But what could a valve manufacturer do to improve the pumping experience, a furniture producer the sitting experience, a publisher the reading experience?... Any good can be inged.”

From there, the two authors, who cofounded the consulting firm Strategic Horizons LLP, took an even more ambitious leap and declared that experiences weren’t just a way to add value to customer offerings — they were the basis for an entirely new economic era. As the agrarian economy had given way to the industrial economy and the industrial economy to the service economy, now the service economy was morphing into the experience economy. The key question for companies seeking to successfully position themselves in such an economy: What would we do differently if we charged admission?

More than a decade after the book’s publication, Pine and Gilmore are more convinced than ever that customer experience is the basis of a new economy. At their annual “thinkAbout” conference in 2009, they issued a manifesto titled “Economic Sense” that touted customer experience as nothing less than the solution to the U.S. economy’s recessionary doldrums. In an era in which products and services are increasingly automated and jobs are disappearing or being offshored, they wrote, “experiences require increased human capital in their initial conception, comprehensive design, venue placement, and everyday staging.... A prosperous economic future requires the dawn of a new economic era based on experiences.”

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Customer Experience Resources
Works mentioned in this review.

  1. B. Joseph Pine II and James H. Gilmore, The Experience Economy: Work Is Theatre and Every Business a Stage (Harvard Business School Press, 1999)
  2. Bernd H. Schmitt, Experiential Marketing: How to Get Customers to Sense, Feel, Think, Act, and Relate to Your Company and Brands (Free Press, 1999)
  3. Lewis P. Carbone, Clued In: How to Keep Customers Coming Back Again and Again (FT Press, 2004)
  4. Leonard L. Berry and Kent D. Seltman, Management Lessons from Mayo Clinic: Inside One of the World’s Most Admired Service Organizations (McGraw-Hill, 2008)
  5. Lior Arussy, Customer Experience Strategy: The Complete Guide from Innovation to Execution (4i, 2010)
  6. Gosia Glinska, James H. Gilmore, and Marian Chapman Moore, “The Geek Squad Guide to World Domination: A Case for the Experience Economy,” (Darden Business Publishing, 2009), DVD
  7. Jeanne Bliss, Chief Customer Officer: Getting Past Lip Service to Passionate Action (Jossey-Bass, 2006)
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