The Experience Economy: A book review by Bob Morris

The Experience Economy: Work Is Theater & Every Business a Stage
B. Joseph Pine and James H. Gilmore
Harvard Business Review Press (1999)

Note: I read this book when it was first published and recently re-read it, curious to know how well its core concepts have held up since then. My conclusion is that they have held up very well, although a revised and updated edition will be published by Harvard Business Review Press later this year.

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Show Time!

First of all, I urge anyone thinking about buying this brilliant book also to consider (or to re-read) Bernd Schmitt?s Experiential Marketing and Michael J. Wolf?s The Entertainment Economy. Although the three books differ significantly in terms of thrust and content, together they help us to understand a New Economy that is perhaps best exemplified by Las Vegas. According to Pine & Gilmore, ?Virtually everything about Las Vegas is a designed experience, from the slot machines at the airport to the gambling casinos that line the Strip, from the themed hotels and restaurants to the singing, circus, and magic shows; and from the Forum Shops mall that recreates ancient Rome to the amusement parks, thrill rides, video arcades, and carnival-style games that attract the twentysomethings and give older parents a reason to bring their kids in tow.?

Pine & Gilmore explain ?The Experience Economy?; Wolf calls it ?The Entertainment Economy.? Schmitt suggests that ?Experiential Marketing? creates or sustains demand for this New Economy, however it is named. For all of these authors, ?work? should be viewed as ?theatre? and every business should be viewed as a ?stage.? If they are correct (and I believe they are), the quality of sensory experience is critically important. That is to say, it is no longer sufficient to offer high-quality goods or services for sale at competitive prices. Most (if not all) goods and services have become commodities. Competing on price alone seldom succeeds?especially against those which have superior purchasing power. Competing on quality alone succeeds only for those who offer what no one else has. The challenge is to achieve differentiation. According to Pine & Gilmore, this challenge is best met by understanding what the Experience Economy is (and isn?t) as well as how it works; only then, thus informed, can an organization (almost literally) function as a theatre company: formulating a script which has both an exciting story line and interesting characters; assigning roles to those who have the appropriate talents; and then conducting rigorous rehearsals. Finally, it?s ?show time?!

Pine & Gilmore observe, ?Since all commerce is moral choice, every business is a stage for glorifying something. Who or what does your business glorify? Your answer may not help you accept what is next, but it will certainly help guide what you do today.? At its best, live theatre can delight, amuse, excite, inform and even inspire those who experience it. Why cannot it also be true of business relationships? Of course it can. It is certainly true of those organizations that prosper. Southwest Airlines is but one example. Its CEO once observed:

?I keep telling [those interested in Southwest Airlines] that the intangibles are far more important than the tangibles in the competitive world because, obviously, you can replicate the tangibles. You can get the same airplanes. You can get the same ticket counters. You can get the same computers. But the hardest thing for a competitor to match is your culture and the spirit of your people and their focus on customer service because that isn?t something you can do overnight and it isn?t something you can do without a great deal of attention every day in a thousand different ways. That is why I say that our employees are our competitive protection.?

Herb Kelleher?s comments are relevant to virtually all organizations that now struggle to succeed in the New Economy (however it is named). To understand this economy, to understand what it requires of your own organization, I urge you to read The Experience Economy?as well as The Entertainment Economy and Experiential Marketing.

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