My first introduction to Joe Pine ( B. Joseph Pine II ) was during my study years when I read The Experience Economy: Work Is theatre & Every Business a Stage. Essentially about the superseding of the service economy by the experience economy, how organisations can add or create new economic value for their propositions. Mr. Pine is known by his work at IBM, MIT and other books like Authenticity: What Consumers Really Want and Mass customisation: The New Frontier in Business Competition and his latest one Infinite Possibilities.
In an era where customer-centricity is on top mind, executed via co-creation strategies and so forth, Pine’s Customer Sacrifice is a concept to take into account.
Customer sacrifice is the gap between what a user settles for and what she really wants. On the other hand, the more know customer satisfaction is a measure of how products and services supplied by a company meet or surpass customer expectation.
Every time a provider of a good or service interacts with a customer, both parties have an opportunity to learn. Eventually, one party changes his behaviour as a result of that learning. Unfortunately, all too often that’s the customer. He starts asking for something other than what he really wants – or perhaps he simply goes away.
This is where the digital world is both cause and effect. The increasingly demanding customer doesn’t want to settle, he knows there are many possibilities and social media is intensifying the challenge because of its transparency and dynamics.
This is also where the digital world offers the cost-effective means to strive for a low customer sacrifice as possible. This can be enriched by involving external stakeholders directly and indirectly in the organisation’s processes.
Passively by listening what external stakeholders are saying about the brand, its proposition, market and competitors. By understanding where the gaps are, the organisation can alter its processes and value proposition.
Directly by co-designing and co-creating with external stakeholders business output. This achieves engagement because people care about what they are involved wit hand more efficient business due to shorter and effective cycles.
Pine said that people want to be involved and just being a part of something is part of human nature. Providing a platform for people to belong is what social media is very good at it. He sees a shift in less stageing towards setting the stage to create ones own experience, ones own value.
An Open Business creates the stage or platform through social technologies to enable this.
Challenge of customer sacrifice
Mr. Pine elaborated that the “points of learning” are the challenge of customer sacrifice. Understanding where people are sacrificing and how to measure that.
The second part in this challenge is the organisation’s adaptiveness and ability to respond to sacrifice. Can and how is the organisation changing its operations and processes in order to do so?
This is where business agility and continual innovation are required, continual streams of information to minimize the sacrifice and the agility to respond accordingly.
The experience economy and the current global economic situation
Mr. Pine explained that the economic situation is accelerating the shift towards the experience economy. People question what they really value and they don’t value stuff and they do not need more things. What people are looking for are experiences, with loved ones, friends, colleagues.
On the supply side he explained that there will be more demand for experiences, making use of the opportunities experiences offers, create new jobs. Moreover because commoditized services are being outsourced and offshored.
Innovating new experiences, engaging customers and employing workers, those are in short the benefits for organisations.
How to innovate the experiences
This is where the Multiverse comes in play. (have a look here for the video for an explanation of the eight worlds)
Mr. Pine explained that there are effectively infinite possibilities in physical and digital opportunities. The key is how to discover the right opportunity for the organisation, create value for its customers amidst the infinite possibilities. The Multiverse is a sensemaking tool that allows to figure out and categorize the opportunities and to use it to generate ideas.
An organisation can use it to map existing experiences within the eight worlds, understanding where gaps are and adding new ones or start from scratch and taking a customer-centric approach.
Future economic value creation
The ultimate value creation is a customised experience: the transformation. According to mr. Pine, this is the fifth (raw materials, goods, services, experiences) and ultimate value creation. He gave examples such as fitness centres for a healthy life and management consultancies in the B2B sector that take their clients on a transformation journey. The organisation that helps its clients to achieve their ambitions are the ones who will thrive.
Social media are effective means that create and/or enrich the experience of a brand. There are plenty of examples, such as Heineken and their crowdsourcing activity on Facebook (involve and belong). Think of BMW that creates an experience by letting people design their own BMW via a Facebook application. The end result was four hours of brand engagement, marketers nirvana!
Both sell commoditized goods, the experience is the differentiator and social media are the efficient and effective means to achieved it and the open business is the enabling platform.
Take a look at the website Infinite Possibility for more information about the book, the Multiverse and the various social media.
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