I think it was Joseph Pine, who said that if we customize an experience (an economic logic that seems to be dominant today) we end up in a transformation economy. The transformation economy brings forth a product or service that is so individualistic that it will actually transform a customer, because it reaches deep inside that person. Examples of that kind of industry that you can see today are health care and education. When you enter the hospital you are sick, you then get a service that is customized to your specific situation and as a result you get transformed to a healthy person again. It is that transformation that you’re actually paying for. Something similar could apply to any industry.
But interestingly that would mean, it is in the best interest of the company to get a customer transformed as effectively as possible (speed might be one of the factors in that). Now, whereas in the traditional economic and business sense we try to ‘create’ loyal customers that keep coming back to your brand over and over again and extend their relationship for prolonged time spans, in the transformation economy it will not be about such loyalty anymore.
I would even take it one step further: in the transformation economy we’ll try to get people out of the relationship with the brand as fast as possible. Because if you do, you’ve truly transformed them, which, in an era where time seems to be the only scarcity left, is much more valuable then anything else. So, stop focussing on how to get people in. Focus on how you’ll get them out. The answer to that lies in the following question: how will I transform my customers?
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Just wondering… Isn’t it more useful to look at the needed services/transormations healthcare (and education) can’t (yet) provide and why that is? For me it’s about ‘needed’ transformations… This seems again just about definitions, but unfortunately not ALL definitions… Were it that simple
I think that only if customers are totally transformed or dissatisfied they won’t come back… The first is (hopefully) impossible and the latter something not to wish for…
However good the hospital and school are in transforming you, you keep coming back because the world around you is changing, in turn demanding new transformations from you to stay healthy and well educated.
But are transformations not an aspect with wider applicability than just health and schools, like: any concumer product and service?
Isn’t for example Heineken aiming at transforming you (a bit) every time you buy/use the product? And will it not only have you coming back for more if it succeeds in succesful transformation, at least temporarily? And offering a better transformation than Grolsch or any other brand will give?
So again on definition, when to speak of transformation?
All good and relevant questions. Thanx
@ Björn: yes, it should be about needed transformations. What transformations are you thinking of? As capitalism has become very good in fabricating needs that we don’t really want a development to a transformation economy might even solve that schizophrenia a bit as transformation really touches an individual inside in his true needs. That might get capitalism back to its original goal: providing goods and services for real needs, instead of creating needs for crap we don’t want (freely quoted from Barber)
I’m not too sure if it is impossible to totally transform a customer. Again, the hospital example might be an easy one here, but if the hospital is authentic, then you would expect a full transformation of the unhealthy individual to a healthy one. At least for now, a hospital doesn’t strive to keep you just a little bit sick to make you come back. And I agree with Rens here, that changes in the situation of the individuals makes him come back again (if another ailment occurs).
Note: it still is about complete transformations here. There’s not something deviced that makes you want to get more, because the experience has been unsatisfactory. It is the satisfaction that makes you come back and want more.
@Rens: from what to what is Heineken transforming me? And yes, that is about definition, so I’ll give it a try. With transformation as a new dominant economic principle I mean: the transformation of an individual that is so profound that it actually changes the person inside. It should move beyond the level of a mere experience that you’ll forget as soon as you’ve left the bar. It should be something that stays with you or makes you an other person entirely. So this plays much more on the levels of ‘meaning’ or ‘insight’….life changing stuff. (Check the Experience-economy blog for some interesting writings on this)
So, I don’t see the drinking of a Heineken as a transformation of me individually (although I have to admit that the hangover the next day might proof to be a life changing event
) However, maybe Heineken is not about producing beer at all. To take another beer brand that is part of the Heineken family: Amstel. Amstel is about friendship, making friends, having friends, whatever. Now if Amstel would succeed in getting me new friends, then that experience might profoundly change who I am…
In any case, yes: transformation should be possible for any product or service. But thinking of your product as a product for transformation requires you to dive deep and look for the source of meaning of your brand to your customer. And then come up with strategies to create that transformation. It is my belief that if a brand is able to help me go through a transformation (or help me get through the transformation of society), then such a brand become very valuable. Not only to the individual at hand, but to the market as a whole…
@Jorgen,
that hangover, that’s what worries me when I think of the experience economy and the fabrication of transformations. First of all I do think that beer is all about transformation, that would explain the gap between cost price and market price, helping the transformation is what justifies the huge advertising budget of beer companies.
The fact that you would not easily think of beer in terms of transformation is that the concept is often described only in its most profound (meaningful)appearance, like in health care or in the examples quoted in the article you linked to.
However, from an economic point of view these meaningful experiences (often rare events, like you stated) are just as interesting as less meaningful experiences that you can sell (for a lower price) much more often. Like a beer!
You should have a look at the book Imagineering by Nijs and Peeters where they (p140) show figures in which they place different brands of beer. If you’re an individual you drink Grolsch, if you’re depending more on others judgement it will be Heineken, and so on (a family man drinks Bavaria).
Consciously or not, we choose our beer based on the person we think we are and/or wanna be. So it either confirms what we are or it even transforms us into what we wanna be.
This way of positioning brands is huge, but I think will be ever bigger. At least much more money goe into making old products look like transformators than goes into developing the kind of meaningful experiences the article is about.
Now my big question is: what is meaningful? is this extra payment for an image OK, our own choice? or will there be a hang over one time, if we find the beer doesn’t deliver on its promise, that there is a paradox in showing your individuality in buying a mass marketed beer?
Branding, can’t live without it, but can we live with it? Or: is there a place for branding in (a meaningful) experience economy?
First of: I don’t think the experience economy is fabricating transformations. It’s fabricating experiences. The gap between the market price and the cost price is created by such experiences. But they still operate on the level of the masses in my opinion. There’s not a lot of personalization in play I think.
Like Albert noted below: it takes two to tango. And a transformation will only occur when a dance is being performed. I don’t agree with Ablert that a hospital is merely offering a service. Sure, very often we feel we don’t receive the personal attention we should get, but in its core reason for being, hospitals have tremendous opportunities to deliver on the transformation. Maybe the first examples of it are the places where you can go to transform you appearance.
So, to come back to your argument: I think what you’re describing above is a description of experiences. I believe we will evolve to a more personal approach, simply because we as consumers will demand it. Therefor, companies have opportunities especially in the arena of transformations.
On your last questions: what is meaningful? In my opinion meaningful should mean that it serves a purpose. It should make you a different person, it should alter you. So: after drinking a beer, I feel nice for a while, but that feeling passes. I would argue that is not a meaningful experience that will last for a lifetime (or at least the beer is not responsible for that). What is it with Heineken that I would rather switch to drinking a coke or a wine, or drive an additional 10 minutes to get a Heineken, instead of drinking a Grolsch? What does it do for me individually?
Lets keep our feet on the ground. Most examples above are products and services. A hospital does not offer a transformation, it delivers a service.
It is the personal decision of a person t o start a relationship from which he expects meaningful value. When you go into pyschotherapy you have to do the hard work of confronting your thoughts , beliefs and feelings. Your intention is to change, the psychotherapist helps you in different ways. It takes two to tango. Business do not offer transformations.I have answered some questions on meaningful experiences on www.experience-economy.com.
Provoking thought Albert. Does that mean that you don’t believe we will progress to another kind of economy after the experience economy? Or do you think that there will be a new economic offering after the experience economy, but that that offering will primarily be useful for organizations outside the business spectrum?
Do people’s ‘real’ needs ever really change over time?
Bjorn, a book that Albert also refers to in his very interesting post is of the Leiden professor ter Borg, it is on the Sensemaking Economy. In it he describes the need for transcendency (next to a more trustwothy one for what Giddens labeled ontological security).
Now this one, never changing, need for transcendency will mean in practice that we are always looking for (small) transformations, reaching beyond what we have experienced so far.
Would you consider this to be a change of needs? It does seem to be a changer of the way we can fulfill the need, and thereby a driving force for change in the economy.
People’s basic needs never change. We’re in the top of Maslow’s pyramid (or in the Penthouse as Susanne Piët says). That doesn’t mean the needs on the lower levels are not present any more. On the contrary, we might see a return to the importance of those needs.
So, no I don’t think those needs change. However, we are lead to believe by the capitalist system that we there are still other needs that we need to fulfill. Those needs are not true needs. We don’t need bottled water in a special bottle and pay huge amounts of money for it. But the capitalist system has become very clever in manufacturing those needs, leading us to ever more consumption. It has lead to an unsustainable future, we all know that.
I do think we will see a transformation in our attitudes towards our current mode of operation. Those brands or organizations that are able to help consumers in that transformation to a more meaningful level of living, will be the winners of the coming age.
In that sense every company can play a role in transformations, make money off it and create products and services for our real needs…