My previous post was about the 2010 thinkAbout Cafe being a gathering of like-minded individuals who are committed to creating experiences in the workplace. Today let’s take one step backwards and examine what Pine & Gilmore were talking about in their book The Experience Economy. Specifically, I’ll examine the progression from commodities to goods to services to experiences.
About 150 or so years ago, the world was still primarily an agrarian economy. What that means is people spent the most of their time farming, hunting and living each day attempting to survive to the next day. That type of world existed with relatively little change for thousands of years. Of course towns and communities existed where some specialization had developed and trade amongst the people of the community leveraged each others’ talents – but only locally, never on a world-wide level. The majority of the world’s people lived as farmers and peasants.
But in the last century and a half, a remarkable and astronomical change has occurred in the way humans live. We first developed into a commodities economy, then a goods economy, next a service economy and finally an experience economy. Each successive step would not have been possible without the preceding step.
Here is a timeline and description of each of these 4 economies that have developed in about the last 150 years.
- Commodities. In the second half of the 18th century, the industrial age created the possibility of producing many things (ultimately called commodities) in significantly greater quantities then previously available. Minerals such as iron, coal, lead, & copper and food products like wheat, oats, sugar & livestock suddenly were available in larger and sufficient quantities. Transportation by rail made it possible to move these commodities across greater distances and provide manufacturing with a reliable supply.
- Goods. With commodities now reliably available, manufacturers could focus on producing goods in larger quantities and at affordable costs. The automobile, manufactured food products, clothing and other items were suddenly available for purchase. Things people previously had to make for themselves were now available for purchase at reasonable prices. People went to work in the factories, were paid a wage, and then purchased what previously was either done without or made in the home.
- Service. After WWII, goods were plentiful and affordable. A service sector (white collar jobs) started to expand exponentially. People started to demand quality. Just offering goods was no longer good enough; businesses had to improve their product?s performance. Consumers now accustomed to obtaining the goods they wanted demanded higher quality in those goods, more specifically tailored to their exact requirements. Service and customization developed to differentiate basic goods from the very best. Product performance replaced affordable as a determining factor in purchasing.
- Experience. So now, according to Pine and Gilmore, an experience economy has developed. People want authenticity in their daily lives and they want their purchases to conform to their own self-image – e.g. green, genuine, natural. Restaurants no longer simply serve food … they entertain their guests with singing waiters, video screens, and exotic decors. Automobiles are no longer sold by describing the tires and engine size, but rather the driving experience: surround sound; video screens; GPS; blue tooth enabled. Web development companies don’t simply build websites … they write copy, produce graphics, advise on social media interfaces. The act of purchasing isn’t simply about a good or service; it’s an experience that re-enforces the buyer’s self-image and appeals to the sense of being real, genuine and authentic.
An era driven by goods would not have been possible if commodities hadn’t become readily available. The need for service developed as goods became readily available, affordable, and accepted as a part of everyday life. Now that we have all the goods (i.e. food & stuff) that we need to live comfortably, and we’ve accustomed ourselves to expecting excellent service and product performance – we move towards experiences as a driving force in our economy.
Do you believe we?re moving into the Experience Economy? If yes, how could you make your business a better experience for your customers?
Next Blog Title: How to create Gump-like experiences for the people you meet!
Next Blog Date: October 11, 2010