B. Joseph Pine II is an internationally acclaimed author, speaker, and management advisor to Fortune 500 companies and entrepreneurial start-ups alike. His 2 latest books are Infinite Possibility and The Experience Economy, Updated Edition. The Experience Economy identifies a shift in the business world and many of the items discussed are just being realized today. In fact, the idea of staging experiences to leave a memorable and lasting impression is now more relevant than ever. In Infinite Possibility, Pine and Korn provide a new tool The Multiverse™ that helps your organization to search the infinite possibility of value creation that lies on the digital frontier.
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Related Podcast: The Experience Economy Author, Joe Pine discusses Customer Value on the Digital Frontier
Transcription of the Podcast
Joe Dager: This is Joe Dager, the host of Business 901 Podcast. With me today is Joe Pine, co-founder of Strategic Horizons, an Aurora, Ohio-based thinking studio dedicated to helping enterprises conceive and design innovative ways of adding value to their economic offerings. Joe is the author of many of my favorite books that include “The Experience Economy,” “Authenticity,” and now, most recently, “The Infinite Possibility.” Joe, I’d like to welcome you. And from all indications, you’ve been a busy man, globetrotting around. What is generating all the interest?
Joe Pine: Well, it is, in fact, the fact that I’ve got two new books out this summer, both an updated edition to “The Experience Economy” that originally came out in 1999 ?? so, with my partner, Jim Gilmore, we updated that with fresh new ideas, some new frameworks, and many, many new exemplars ?? and then, also, as you mentioned, “Infinite Possibility.” I wrote that with a colleague, Kim Korn. It came out in August and has generated a lot of interest, as people are increasingly trying to figure out how they can use digital technology to fuse the real and the virtual. And that’s what that book is all about.
Joe Dager: Well, “The Experience Economy” was a landmark book, in my opinion, but I believe many of the concepts were not really fully realized till several years later, and maybe even later than that. Is that the reason you printed the second edition?
Joe Pine: Well, that’s one of them, yes. I mean, there were some things in there that were ahead of their time, most particularly, where we talked about how important charging admission was. In the experience economy, the currency really is time. And so, you need to align what you charge for it, and what your customers’ value, which is the time they spend with you. That means charging for time, which, admission fee, membership fee, you know, per play fee, some way of charging for time.
I remember that got a lot of notice when we came out, because we didn’t have very many examples outside of the ordinary experiences that have always been around, like concert, plays, sporting events, movies and so forth. You expect to pay admission to those sorts of things, but not to retail stores, to restaurants, to business to business experiences and so forth.
Now, we’ve got a slew of examples across many different industries, including one of the big surprises, also, that was not in the original book is, how many manufacturing companies now have really gotten into the experience business? They’ve created these marketing experiences, experiences that do the job of marketing. So much of that going on that we wanted to update with all that activity.
The other thing that was really ahead of its time and probably still is the last two chapters of the book talk about the economic offering after experiences. You know, the core framework in the book is our progression of economic value, about how things have moved from commodities, the basis of the agrarian economy, through goods, the basis of the industrial economy, through services, the basis of the service economy, of course, and now, in the 21st century, we are now in an experience economy.
Coming in the future is that fifth and final economic offering, where you use experiences to guide customers to change. We call that a transformation. Eventually, we will be in a transformation economy, where people are paying to be changed. They’re paying for the outcomes that they receive, rather than just the time of the experience.
Many, you know, again, we’ve got more and more examples of that, you see more and more of it happening, but for most industries, most people, and even, a lot of consumers, they find that a little scary. So, it is still a little bit ahead of its time.
Joe Dager: Do you think that is because the world has been, with products and services, has really become so commoditized and to seek demand, it really is based on experience, isn’t it?
Joe Pine: Well, that’s exactly right, is that goods and services are everywhere being commoditized, you know, where people don’t care about the brand, about the features are all pretty much the same anyway. They come to care about three things and three things only ?? price, price and price.
That’s when they’ve been commoditized, and that’s why companies are always have to seek out new sources of differentiation. Differentiation is how you can actually create economic value there, how you get out of the commodity trap. That means today staging experiences. Creating memorable events inside of each individual person, that’s what the experience is.
Joe Dager: I talked a lot about people need to be playing in the customers’ playground. They can’t sit there and just push information, features and benefits. If they’re going to err, they have to err, what I would call downstream in the customers’ playground. Is that what you mean, to create that experience in the marketing, to be there and be in the sandbox with them?
Joe Pine: Many different ways of doing it, but that certainly is a key thing that you are in the sandbox with them, you are there to help them in any way possible. There’s a class of experiences that I’ll call marketing experience, which is where you create an experience that does the job of marketing that generates demand.
You know, think about, well, it was two years after “The Experience Economy” first came out, that Apple announced it was going to create its own retail stores. I remember; they got lambasted in the press, because people said, “Hey, you’re a manufacturer, you’re a designer. What are you doing? You don’t know anything about retail. This is going to kill the company.”
Well, in fact, it catapulted the company. You know, over half their revenues now are in their own stores. They get over $4,000 per square foot across over 300 plus stores around the world, which is the number one retailer in the world. You know, from nowhere to the number one retailer in the world. The next closest is Tiffany’s at $2,700 per square foot, whereas the average retailer gets two or $300 per square foot, so the order of magnitude more.
They created this wonderful experience of going in the stores and interacting with all of their products that they have in there. You can apply that to B2B, as well.
Like the term, you mentioned the sandbox. My favorite example of a B2B marketing experience is actually Case Construction that created an actual sandbox, huge sandbox in Tomahawk, Wisconsin, for their Tomahawk Experience Center, where they bring customers up there to be able to literally play with the equipment. You know, use the front loaders, the bulldozers, the earth movers if they have those, and so forth.
They did a study and found that a customer goes up to one of their normal dealers, they have perhaps a 20 percent chance of getting a piece of business. But they bring them up to the Tomahawk Experience Center, and it goes up to 80 percent. Because the fundamental principle is that the experience is the marketing.
That’s one key way to do it. Another is with your service and support, the fact that when people call you, and they need your help, you turn that into an experience. My favorite example there, of course, is the one of our Experience Stage of the Year Award winners is the Geek Squad. You know, start off with a small company helping people install and repair computers, founded by Robert Stevens.
He said, “Well, who better to do that than geeks?” He costumed them as geeks with a white shirt, the thin black ties that are clip on; you know, just in case there’s an altercation. They have the black pants, the white socks that make the black uniform pop, shoes with the Geek Squad logo on the heel in reverse, in case they walk across anything where it will imprint.
They create this wonderful, engaging experience based off the theater that they provide. And you know, they, as I’m sure you know, they were bought by Best Buy in 2002, they went from something like 20 special agents in the Minnesota area too, now, over 20,000 agents around the world. Getting in that sandbox, as you say, with them.
There are other companies that can actually make experience their actually offering that this is the key thing that we are doing. You think about Disney. Disney’s offering is experiences. They still sell tons of goods, Mickey Mouse hats, Mickey Mouse watches, and so forth. They still sell a lot of services, food services, parking services, photographic services. But why people pay that admission fee, a very high admission fee to go there is for the wonderfully staged experience that Disney provides them.
Joe Dager: Well, your books really stretch the way you not only think about marketing, but the way you think about business. Your new book, “Infinite Possibilities” is about the Multiverse,” is a real stretch for most of us. Can you possibly simplify this message for the listeners that are hearing about it for the first time?
Joe Pine: I’m not sure I can, frankly.
Joe Pine: But we’ll try, and we’ll see what happens. I freely admit that the core framework in “Infinite Possibility” is the most complex thing I’ve ever brought together. But I think it does, in fact, provide a sense-making tool, a map, if you will, help people figure out what is going on with all this explosion of digital technology.
While it may be difficult to understand and to internalize it, I think it will reward those who do, and use it as their map to figure out where they can find new opportunities to create economic value on the digital frontier. That’s what it’s about. It’s about how do you use digital technology, again, to fuse the real and the virtual?
At its core, one of the reasons it’s complex is that, well, you know, I often say, it’s actually a very humble framework, because it merely attempts to redefine the known universe, which physicists tell us is made up of three fundamental dimensions ?? time, space, and matter. That’s what the universe is.
We’ve always viewed those as constraints that we’re limited by time; we’ve got only so much space, we’ve got to move matter around and it costs us whenever we expand resources on the matter. But, in fact, they are resources that we can use, particularly when you see what is possible with digital technology.
What brought it forward to me was that I was reading Stan Davis’ book “Future Perfect.” I’m here today because of that book. He coined the term “mass customization.” I read that as a strategic planner at IBM. My first full book was on that topic. I was rereading it once, and Stan also had another term in that book he called “no?matter.” No?matter, which is recognizing that, increasingly, the value in companies will come from immaterial things, in other words, from bits as opposed to atoms.
I got to think about the three fundamental dimensions in the universe again, time, space, and matter. I realized no?matter is the opposite of matter. Matter is about atoms, again. No?matter is about bits. Matter is about the material substances that we can touch and feel and use to create physical offerings whereas no?matter is about the digital substances that we can’t touch and feel. They are immaterial. They reside inside of a computer somewhere. But we can use them to create digital offerings.
Once it struck me that you take the three dimensions and the X?Y?Z axis and you move matter backwards into no?matter then you can do the same with the others. If there’s no?matter, there must be no?space. Space is about the real places that we inhabit in which we have experiences. No?space is about virtual places. Places that do not exist in reality that, actually, only exist in our minds and reactions to what we see, generally, on the screen.
Then, if there’s matter/no?matter and space/no?space there must be time and no?time. Time is about the actual events that are unspooling before us, moment by moment. Whereas no?time is about autonomous events, anyway that you get outside of actual time, whether to put people into the past, make them envision the future, get them in the flow where a sense of time falls away.
Hyperlink it like you can on the web, where you’re on Facebook or LinkedIn where you post something at one time, and somebody comes back with an asynchronous time. Later, you respond to that, and it’s like you have this conversation, but it’s all done at different times. So that’s autonomous events, anyway that you play with time.
What this then yields is, in fact, a complex, yes, two by two by two where you’ve got eight realms of experience, depending on which choices you make between the time and no?time, matter and no?matter, space and no?space.
Are you with me so far, Joe?
Joe Dager: Yes. I think it’s a lot. People are going to back up a little bit, and re-listen to that part though.
Joe Pine: Well, they ought to because, basically, it says that these are the variables. These are the variables that we can now use as resources to create economic value in our offerings. If you look at each of the combinations of those…you’ve got two anchors.
One is reality ?? time, space, and matter, the normal experiences that we have like going into an Apple store. The other anchor is virtuality ?? no?time, no?space, no?matter. That means that you’ve got autonomous events in a virtual place using digital substances. That’s like Facebook or LinkedIn where you are on there, creating this wall if you will, that is virtual, not real; that can be accessed in the hyperlinked manner of no?time, that is created via digital technology. So that is virtuality.
Those are two anchors of the multiverse. Those are two of the eight realms. In?between them are all of these, what I call third spaces. All of these types of experiences that fuse the real and the virtual and that have aspects of reality and aspects of virtuality because of the different choices you make on which of those variables you choose to play.
Joe Dager: Look at a real basic concept of it. It’s really about influencers and how people are influenced today. Is that fair to say?
Joe Pine: Well, yes, in terms of what you are doing for those influencers that get them interested in your offerings. But it’s not just about marketing. None of my books and ideas are just about marketing. I actually always hate when they show up on a marketing shelf. They’re about economic offerings. They’re about economic value that you create. They’re about the overall business that you do. What is your business? What are your offerings? How do you create value for your customers? Marketing is one aspect of that, but it’s not the only one.
Joe Dager: Well, you really do make all the possibilities seem endless. It’s difficult to put yourself around it a little bit. How do we get it out of the classroom and onto the street? Is there a way to do that easily? That may be too big of a question at this point, but…
Joe Pine: You can simply think about those realms of experiences and how you can use them in your business. I’ll give you, at least, a couple.
One is augmented reality. Most people have heard of augmented reality, today. It’s like when you take a smartphone, and you look at a scene through the camera and you have different information that pops up. Layer, out of the Netherlands, for example, is a platform for augmented reality that provides all of these different layers. 3M just came out with PopNotes where you can place a virtual Post?it notes out in the real world somewhere. When you encounter that location again, it pops up and provides you the note on your smartphone. Or, Word Lens where they allow you to take a look through the camera again at the sign, for example, and translate it, in real time, into your language in the same font and color as the original sign. It works like magic.
All of those are examples of augmented reality. The simplest definition of which, or example of which, is a GPS machine, a navigator on your dashboard providing you with digital information that enhances that real world scene coming out your windshield. Augmented reality is, basically, when you take a reality based experience of time, space, and matter, and you switch from matter to no?matter. You now use digital technology to enhance that reality experience that you have. That definition is what augmented reality is.
The multiverse allows you to see that and see that connection to reality that the primary experience is out there in reality, and we’re now augmenting it with digital technology. We are enhancing it, amending it in some way.
So it’s one of the realms of the multiverse, and now you can understand it, and you can say, “Well, how else might I be able to do that?” Such as moving beyond visual and auditory, moving through other types of senses which, increasingly, is being done, such as digital prosthetics that augment the reality in a kinesthetic way.
Joe Dager: You touched upon this a little bit earlier. You talked about time and convenience. And really, they’ve become, what I would say, the new cost elements in the decision-making process. Are we complicating things, looking at it this way, or are we assisting them?
Joe Pine: I’m not sure what you mean.
Joe Dager: I think time and convenience are really cost elements to the customer. It’s in their decision-making process. By looking at it from a multiverse standpoint, are we really assisting those elements or are we complicating them?
Joe Pine: Well, actually, what you’re doing is that you’re shifting from thinking them, again, as constraints to thinking them as resources. When you say that time is an element that costs our customers that’re a constrained view, instead of recognizing that customers have time that they want to spend inside of experiences.
How do we give them that value that they spent that time well spent, as my friend Dave Norton puts it? How do you give them time well spent and then it becomes a resource that you can use?
When somebody goes into an Apple store, they don’t think of it as an inconvenience, that they have to spend time playing around with this stuff. They’re having fun. They’re learning, as a result. Somebody goes into a Lego store or an American Girl Place, one of my favorite experiences, or even when they have the Geek Squad over, they love the interaction so much; they don’t mind the time that it’s taking. It becomes a resource rather than just a constraint.
That is, fundamentally, what I think experience thinking should be about. It’s about the time that your customers spend with you.
Joe Dager: So really, when I drive past this local Starbucks, and there are always five cars in line, that’s time well spent for them.
Joe Pine: Exactly. Exactly. In fact, I’ve often thought that if you go through the drive?through you don’t get the same level of experience of as you walk into the place. Starbucks either ought to one, redesign the drive?through experience so, in fact, it is a true experience or two, they ought to give you a discount when you go through drive?through to say, “Hey, we know you’re not getting the full experience, the full value, out of this cup of coffee. So here’s a discount by going through drive?through.”
Joe Dager: I don’t know. There are five cars in line down the street every time I go by.
Joe Pine: They don’t have to because, in fact, people gladly pay the full price. But I think it would send a signal that says, “Hey, our experience, in?store, is worth having.” That’s the key.
Joe Dager: If I want to stage a multiverse experience, is there an outline? Is there an outline, in the book or anything, for me to follow?
Joe Pine: Yes. Actually, there’s two different ways that we look at it to let you apply it to your business. One we call “reaching through the realms” which is, basically, to go methodically realm by realm by realm looking at each one and figuring out what could this mean for our business.
You can look at the examples that we provide and say, “Is there an analogy to what they’re doing there to what we could do?” Then we provide a set of principles for all of the realms where you can methodically go and figure out what you can do here and here and here, and apply all those principles. So that’s number one.
And two, we also have another way of looking at, where we recognize that even labeling all the stuff by realms, you know. So, we talked about reality and virtuality, we’ve got augmented reality. There’s also augmented virtuality, you know, which is like a Wii, where you have material substances that modify your virtual experience.
There’s alternate reality, work reality, mirrored virtuality, physical virtuality. We don’t have time to go through all of those. But each and every one provides a different way of combining these elements and a way of creating value for your customers. Again, with tons of examples with lots of principles.
But they also limit us. You know, this two by two by two equals a big cube, you know, with eight different octants inside of it, eight different realms. And each of those realms can limit our thinking. When we think of augmented reality, it’s sort of says, well, it means, like, the smartphone. That’s a key way of thinking about it.
But, in fact, there are many different ways to be able to use digital technology to augment reality experiences. And some of the best, some of the most robust experiences are those that actually transverse through here, that go from the realm to realm to realm, that maybe provide such a great experience, you can’t even figure out what realm it’s in.
The second one we provide, we call varying the variables, which is, don’t be limited by the realms. Let’s forget all about the realms. Let’s just work on these six variables. Again, time, no?time. Space, no?space. Matter, no?matter. Let’s work on these six variables, and provide an experience design canvas that my co-author, Kim Korn, came up with. Where you can then, just sort of, map out, in a sort of a spider diagram, what your experience is and how you can boost it, how you can amp it. So that you are, in fact, using all six variables at once.
We think of augmented reality as time, space, no?matter, again. But you can have no?matter and matter at the same time. You can be, have time and no?time in the same place. You can have space and no?space within the same experience so that you can have a very robust experience that again, transverses the whole thing. It isn’t limited by the individual realms.
Now, it’s harder to think that way, so you want to sort of progress your way through. You know, figure out the realms, internalize those and then begin to think about this. And it will open up entirely new avenues for creating economic value.
Joe Dager: Well, it sounds really kind of like a three-dimensional SWOT analysis.
Joe Pine: Right, yes, yes, very much would. You could, in fact, actually use it just that way. You know, looking, well, where’s your competition? How can we beat them? You know, how can we boost beyond what they’re doing, eliminating sacrifices that people incur when they buy their products
Looking at the technology as well, what are new technologies that are out there? When are they going to get to the point where they become ready for prime time? And how might we incorporate them? And so forth. So, rather than view them as threats, we can view them as opportunities.
Joe Dager: Do I need to be an early adapter to use something like this? Can I be selling, like, mousetraps or something?
Joe Pine: Digital mousetraps. Well, yes. The obvious thing with the digital mousetrap is simply one that sends a signal when it’s tripped. So, why do I want to encounter a dead mouse under my basement that’s been decomposing for seven days? Instead, get an immediate signal when it’s tripped, is a way of being able to use digital technology in a mousetrap.
I fully believe that every company could take advantage of this model. Every company could figure out how to use each of these six variables in their business. That does not mean that every company should, or every company will be able to make money at it. There is a way in virtually every company.
Joe Dager: Is the customer the starting point? Or do I need to work internally before starting to work with this?
Joe Pine: I think the customer is generally the best starting point. All of my career, what I’ve been trying to do is to move companies to focus on the customer, rather than internally, on their own processes, on their efficiencies. It’s, rather than pushing stuff out, they should have customers be pulling it through. That’s what mass customization is about; that’s what the experience economy is about, you know, because experiences happen inside of each individual person.
That’s what “Authenticity” book obviously was about, as it’s the perception that individuals have of the authenticity of your offerings in your company that matter. It’s the same thing with “Infinite Possibility,” it’s about creating value for your customers.
There are some internal things we can do. We can use this technology to enhance our operations. You know, for example, augmented reality can be used on assembly lines, where it can actually have a screen that highlights what exactly you want to do, make it easier to figure out, particularly in a mass customization situation where you’re not doing the same thing all the time, it depends on what the customers order. Augmented reality can be a benefit to that.
Or in maintenance situations, highlighting, this is the thing you need to take off, and this is how to do it and that, and having the computer direct all of that. You can use all of the stuff internally. You can also all of it for marketing. But the greatest value’s going to be thinking about your individual customers and what they see, what’s the ideal offerings that you can provide to them, given the technology that’s available to us today?
Joe Dager: I found it real interesting that it’s taking customer experience to come to the forefront and be an everyday term. We talk about it, and if you ask companies, are you customer?centric? Well, they all are? But designing that customer experience is different for most. And now, many are saying we’re moving into the user experience economy. When do you think we’ll be in the multiverse economy?
Joe Pine: Well, the multiverse is a way of staging experiences. So, it’s part of the experience economy. It also can yield goods and services, you know, doesn’t have to, not everything has to rise to the level of experiences. You know, if you’re a TomTom and you provide a GPS navigator, you’re actually selling a good, but even Apple is selling goods. But what people value out of each of those goods is the experience. It’s the deriving, the purchasing of all that.
No matter what business you’re in, you need to think about, as you said, the using of the good, the using of the experience, and then, often, the experience itself. How are you going to create value in an experiential manner? The multiverse is part of that, and that’s something distinct.
It just recognizes, as we did, barely at all in the original “Experience Economy,” the updated edition that came out this summer has much more on Internet?based examples, web-based experiences and so forth. There’s even a good chapter, the marketing chapter in “Authenticity” talked a lot about virtual marketing experiences you could create.
It’s in there; it all can be used across the corporation, but again, the primary focus is on value for customers.
Joe Dager: Is there something you would like to add that, maybe to sum up on the multiverse, that you could give the listeners?
Joe Pine: Well, I guess the one thing I would add is, you know, the title of the book is “Infinite Possibility.” And that is because there is infinite possibility that what we know about what’s going on, what we know about the possibilities of using digital technology is just a small fraction of what is possible. There are many more areas to explore there are many more technologies to discover, and there are many more ways of creating customer value.
The two by two by two framework has arrows at the ends because they do extend on forever. Because we can now, thanks to the technology, thanks to the mindset this view, thanks to the shift into the experience economy, we can now create new experiences that have never before been envisioned, engendered or encountered. That’s because today, thanks to viewing this stuff as resources, not constraints, we are now limited only by human imagination. And of that, there is no end.
Joe Dager: How could someone contact you?
Joe Pine: There are a number of ways. You can follow me on Twitter at @joepine. My co-author of “Infinite Possibility,” Kim Korn, is @kimkorn. We like to keep it simple. My corporate website is StrategicHorizons.com; that’s the partnerships I have with Jim Gilmore, as well as Doug Parker and Scott Lash.
There’s also a book site, Infinite?Possibility.com that you can take a look at. You can even download, there, the first, an introduction, the first chapter of the book, which gives you the full framework, so you can understand what it is that I’m talking about. There’s even an interactive multiverse that our publisher, Berrett?Koehler, designed that you can just sort of play around with this and see all the realms, get a little bit of information on each one.
So, it’ll be a great way, as the next step to internalize what you’ve heard about today, or even to begin to understand it, because again, hard to do in a radio sort of talk with no visuals to be able to see what I’m talking about. But I think those will provide a great start for anyone.
Joe Dager: I’ve been on your website, and I think it’s a great tool for people to take a look at and see just what can be done. So, I wanted to compliment you on that. I enjoyed it, and then combed all the buttons?
Joe Pine: Well, Scott Lash designed that for it. It’s a very unique design. I don’t want to give it away, but it’s a very unique design and I think people will get a kick out of it.
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