the Experience Economy aesecosecooe weveeveccccee Work 1s Theatre CF Every Business a Stage B. JOSEPH PINE II JAMES H. GILMORE HARVARD BUSINESS SCHOOL PRESS BOSTON, MASSACHUSETTSThe Show Must Go On Fok WIS OLDER BROTHER NICKY’S BIRTHDAY, Conrad purchased a rather unusual gift, Feeling Nicky had become too stuffy and set in his executive ways, Conrad contracted with Consumer Recreation Services (CRS) to stage a rather elaborate experience. No present needed unwrapping as Conrad simply handed his brother a CRS-furnished card, inviting Nicholas Van Orton to participate in “The Game.” Once he accepted the offer, Nicky found himself involved in a world all its own, ‘with intriguing characters drawing him to seemingly life-threatening situa- tions, curiously assimilated into his day-to-day routines. Every time he thought he had it figured out, a new twist emerged until the events finally spiralled into a fast-paced climax. To pull off “The Game,” CRS had to put ‘on a well-orchestrated show. No company, not even Disney, has mastered ‘such intricate experience orchestration—staging rich, compelling, inte- ‘grated, engaging, and memorable events—as well as CRS, the fictional business depicted in the 1997 movie thriller The Game, starring Michael Douglas as Nicholas and Sean Penn as Conrad. But the day approaches When this type of staging will form the bulk of real commercial activity. Far-fetched? To quote a line from the Broadway musical Rent, “real life's getting more like fiction each day.” Look around. Court TV broad- ‘casts actual litigation cases as entertainment; in other courtroom produc tions, litigants opt for celebrity judges in lieu of goverment magistrates. ‘Watch an old reel of game highlights from the National Basketball Asso. “Siation and compare its matter-of-fact action to today's sport, with its46 + THE EXPERIENCE ECONOMY . and. posterb colorfully decorated floors, lavish pregame i shows and pea personalities, Taday’s NBA gives us Dennis Rod, sae om Vadeo feeds now make it possible (0 display cena hops to maternity wards—on the a fion will become as much a part of ro ea ia hey None he s e eloreake ago satin gm om show time! THEME THE EXPERIENCE rock Cafe, House of sue he name of ay he tanrant—Hard Rok Cat, Homo Sst ea the a ol Tes mane a and 8 KUN We to expect when you enter the place. The proprietors Se a atiel expect WEN Yo cg eaprience by envisioning a well-defined cri ep award SA one other an, gives stones theme! omy re egaize tir mesons, and he ex noting tg memory. nebeent here ne aor sno there ere ee id: Th i nl. Tey koe sowing exe _ ails fen feet en dare erchanding eS, er” bt al ea ie cxinee Home ppc ales : ‘example, show little thematic imagination. yet eae a om aa wall after wall of refrigerators merely hi a a washers and dryer and sees, Should’ er be someting antes of diferent co ssh ea tan etabishrent called Ci ier. stv sot am ones th expen OF SOD ie chain of book- Riggio. When the Bares & Noble CEO begin to expand the chain of rot hetres” Rigs aa hon the simple theme : stores into superstores, he fit ce fr the same reason they zo (0 the like Gertrude Stein's THE SHOW MUST GO ON + 47 theatre: for the social experience. So he changed everything about the stores to express this theme: the architecture, the way salespeople acted, the decor and furnishings. And of course he added cafes as an “intermission” from mingling, browsing, and buying. ‘Or consider the Forum Shops in Las Vegas, a mall conceived by devel- oper Sheldon Gordon (of Gordon Group Holdings) and developed along with Indianapolis-based real estate company Simon Property Group. It dis- plays its distinetive theme—an ancient Roman market- place—in every detail and fulfills this motif through a panoply of architectural effects. These include marble floors, stark white pillars, “outdoor” cafes, living trees, flowing fountains, and even a painted blue sky with ffuff white lds that degra smaed dem, com, «HEME plete with lightning and thunder. Every mall entrance and every storefront is an elaborate Roman re-creation. Every hour, inside the main entrance, statues of Caesar and other Roman luminaries come to life and speak. “Hail, Caesar!” is a frequent cry, and Roman centurions period- ically march on their way to Cacsat’s Palace casino. The Roman theme even extends into some of the shops. A jewelry store's interior, for instance, features scrolls, tablets, Roman numerals, and gold draperies. The theme implies opulence, and the mall's more than $1,000 per-square-foot sales in 1997 (versus less than $300 at a typical mall) suggests that the experience ‘works. ‘Walt Disney’s idea for Disneyland grew out of his dissatisfaction with amusement parks—un-themed collections of rides, games, and refresh- ments geared to the young. As he related to biographer Bob Thomas, “It all started when my daughters were very young, and I took them to amusement parks on Sunday. Isat on a bench eating peanuts and looking all around me. said to myself, dammit, why can't there be a better place to take your chil- ren, where you can have fun together?” And from these first thoughts Walt conceived the original idea of Disneyland—in Walt’s words, “a car- {oon that immerses the audience.” It developed into a cohesive orchestra- tion of theme rides—such as the King Arthur Carousel, Peter Pan’s Flight, and the Mark Twain paddle boat (each “like nothing you've ever seen in an amusement park before”) —within theme areas—such as Fantasyland and Frontierland—within the very first theme park anywhere in the world, what its first brochure called “a new experience in entertainment.” What was the ‘overarching theme of the Disneyland experience? Disney's 1953 proposal to potential financial backers begins with a very simple but engaging theme {nd then goes on to elaborate the meaning of this theme in very real, and 00m tealized, terms: The first step is envisioning a well-defined‘4g © THE EXPERIENCE ECONOMY ‘The ea of Disneyland is a simple one. It wil be alace {OF people to find happiness and knowledge. Pt be a place for peas and children to share pleast ines 0% antes company place for tacers and puis wo Cisover STO ways ar nerstanding and education, Here the older generation 0 recapture the sr atalga of days zoe by, andthe younger generation ean SY" the cha- renge of the future “A place for people to find happiness and knowledge” conjured up such “A Poder image that he quickly found financil ‘packers. In less than tuo years the themed park opened 0 far more vistors than anyone had imagined. seine pode, consider the oftused theme in novels and films: Crime dost pay. Taree simple words say ital. Or eosides 1 television tavern sea Etwere everybody knows your name.” Compavies SOE cexperi- tnnoss must seek equally crisp thematic constructions ‘Of course, businesses Jd demonstrations (armor making, glass blowing, bookbinding, ‘so forth) Ee ene ere ee en cules ae ae es bw cies wc cen ht al Sern ie ae a a at eva Ge ltl an ga ol, ania) ; «oe eles ne) sk ariel ee eel per tna eee aon es ties, parades and various and sundry revelry (magicians, "en te of wish urea aoa ec roche ‘igs GUE a Fa etki of aban i oe pa all selling hand-crafted goods appropriate to the ps ae ie aa tery, glass, candles, musical instruments, toys, sepa, plat Fl mgs a saps reich is ain ta . catures. With nearly every I see eon le bags of goodies, te Renastance Festival exer ane vy iphons off shopping dllars tha otherwise would be spent “mye cen opel te pont fh rl oo em rnd He Mint Resa Festival, for example, opens RS re la ta cel Re terol oe ephanies oom ms aaa et scple do nt repeat this Kind of experience often coe Ike staging tere) day worthy Hower, wih appropri) ma Preps note oa sane pe: Mi en tn ep Steines Rm os ll as im states, recently lallowecn- see cial eaters obs Je ve ea eft ws ne Mam a Doss we 3 Jocale, as well as a Christmas-theme gourmet cox 1 sa tio the Feaawieg Feast Shopping malls entering the Experi and THE SHOW MUST GO ON + 67 Economy must lear how to stage revolving productions, just as theatres 4d tong ago, that entice people to pay an admission fee again and again Do you think people would be erazy to pay forthe experience of shop Ping at their local mall? Imagine the reaction if, decades ago—just after ‘World War I let's say, when the American economy was booming, flish with returning Gls buying houses in the suburbs and filing their garages rth new cars and their kitchens withthe latest in household gadgets you had told people tha inthe near future the ‘ypical family would pay some. ‘one clse to change the oil in their car, make their kids’ birthday cakes, clean their shirts, mow thei lawn, or deliver a host of other now-commonplace services. No doubt they would have said you were insane! Or imagine going back hundreds of years and telling rural farmers that in the centuries hence the vast majority of people would no onger farm their own land, build their own houses, kill ani- mals for their own meals, chop theit own wood, or even ‘make their own clothes or furniture. Again, you would have been thought crazy. ‘The history of economic progress consists of charging a fee for what once was free. In the full-fledged! Experience Economy, instead of relying purely on our own wherewithal ‘© experience the new and wondrous—as has been done for {ages—we will increasingly pay companies to stage experiences for us, just a8 we now pay companies for services we once delivered ourselves, goods ‘we once made ourselves, and commodities we once extracted ourselves, Charging admission does not necessatly mean, however, that companies Stop selling their goods and services, (Although some will indeed give away theit lower-echelon offerings to better sell their high-margin experi. ences, just as telephone companies today give away cell phones to con. Sumers that sign up for their wireless service.) The Walt Disney Company derives an avvful lot of profit at its theme parks from parking, food, and ather services, as well as from all the goods it sells as memorabilia, But without the staged experiences (not just of the theme parks but ofthe com. any’s cartoons, movies, and TV shows) there would be nothing to remem. tes Disney would have no characters to exploit. While historically Disney Started with the experience and then added lower-echelon offerings, the Panciple holds for those starting with goods and services that shift up to ‘xperiences, Inthe Experience Economy, experiences drive the economy and therefore generate much of the base demand for goods and services. So Slore what experience you could stage that would be so engaging that Our current customers would actually pay admission to experience it, and then pay extra for your services while they are so engaged, ox pay more for The history of economic progress consists of charging a fee for what once was free(68 + THE EXPERIENCE ECONOMY your goods a memorabilia In doing 0, you would be following the Jed of Yor only Disney but the Minnesota Renaissance Festival, the American Wilderness Experience, Bamboola, and a host of other companies that have already entered the Experience Economy. ‘The same principle applies to business-to-business companies: staging experiences for their customers will drive demand for thet current goods sae services. The business equivalent of a shopping mal is, afterall, trade Showa place to find, learn about, and, if need is met, purchase offerings ‘Trade show operators already charge aimission (and could charge even shoe, it they staged better experiences); individual companies ean as wel Ifa company designs a worthwhile experience, customers will gladly pay the company to, essentially, sell to them. ‘na Dusiness-to-business seting, Diamond Technology Partners of Chicago accomplishes tis with an experience offering i calls the Diamond Exchange. This thrice yearly gathering of executives, “fellows” (top part aac well as outside authorities ranging from computer pioneer lan Kay to University of Chicago economics and psychology professor Marvin Zonis)," and Diamone's own “knowledge leaders” explores “the digital fucure” to help determine its impact on guest companies. Diamond Exchange director Chunka Mui In business-to- business escribes it as “a long-term conversation between top exect- situations, stage tives and some of the world’s leading experts in strategy, fexperiences _tecinology, operations, and learning ts point of departs Where customers how our members can compete in a work! thas inves pay you to sell to them insights, revealing self-discovery, and engaging intractions—is worth wand because it demonstrates its capabilities in a nonsales mosphere (the Company stectly forbids any soficitation of potential consulting eneage- ments at the events) Diamond greatly increases its chances of gaining sig ifieant consulting work to help members further explore what they lea ‘Will every company be able to charge admission? No, only those tha hike Diamond or Club Disney, properly set the slage by designing rich Unperiences that ross into all four realms he entertaining, the edveaional, eee cgeapist, and the esthetic. And only those that use the principles Iecg above to efeate engaging, memorable encounters. Charging adm aires the final step ist you must design an experience worth paying fo ingly wansformed by technology.” Current and potential Cents gladly pay tens of thousands of dollars a year to fttend the Diamond Exchange for the simple reason that vvhat they gain from the explicitly staged events —the fresh Get Your Act Together Rewemnen THE Last ti LAST TIME you re __ ice, ata restaurant automotive shop, oratline ome» such ordeals create our most lasting re s ary poor se : morale cas Formas a -collections company n * cocktai-hour sores. We forget conten dotenbie ean oervce she eenbe le remembering the occasional service front discover the ha tia oa ae font soe te hat wy Me ens yt see Brovide poor service, this creting a menoatle ‘The surest way to provide poor servic Minn ey Ce at ea Su teatment over since service providers embraced the same pnp: roduction that manufacturers ust ee to walk every client through emmoditzati Bon se ease hit manufacturing now attack services Ho suns fice cae Sees their call centers to service into an whsize ie Saf o save on ted cos and oretend The too eens provide pos The end result? provide poor Their employ _ {utit employees spend less time with clients, and the time service