The Experience Strategy Podcast: Experience Pioneers

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In this episode, Aransas and Dave are joined by the experience strategy pioneers Lou Carbone, Joe Pine, and Bernd Schmitt to take us back to the birth of Experience Strategy, Design, and Marketing. In this episode, we dig into the cultural and business forces that drove the experience revolution, explore how experience strategy has transformed business development, product design, and marketing, and discover what these pioneers predict is on the horizon.

[00:00:00] Aransas: [00:00:00] We are so excited to welcome you to our experience strategy pioneers episode. In this episode, we are joined by three of the leading thinkers in this space, the pioneers who didn't just pave the road but dug out the dirt for the rest of us who came after. We'll be joined by Joe Pine an internationally acclaimed author, speaker, and mentor management advisor to fortune 500 companies and entrepreneurial startups alike.

He is the co-founder of Strategic Horizons, LLP, dedicated to helping businesses conceive and design new ways of adding value to their economic offerings. In 2020 Mr. Pine and his partner, James Gilmore re-released in hardcover they're incredible book, The Experience Economy, Competing for Customer Time, Attention and Money.

They've added lots of new ideas, frameworks, and exemplars [00:01:00] to this book that has influenced so many of us for so long. Their book demonstrates how goods and services just aren't enough and what companies have to do today for experiences. We're going to get all into that. But first I want to introduce you to Bernd Schmitt.

He is A Robert D Calkins Professor of International Business and faculty director of the Center of Global Brand Leadership at Columbia Business School here in New York. He is widely recognized for his major contributions to branding, marketing, and new tech through his unique focus on customer experience and innovation.

Bernd has published in major marketing journals. He's written nine books, which have been translated into 25 languages. Some of his top titles include Experiential Marketing, Customer Experience Management, Big Think Strategy, and one of my favorites Happy Customers Everywhere. Finally, we have Lou Carbone [00:02:00] joining us.

He is the founder and CEO of experience engineering ever since the 1980s, Carbone has been continuously at the forefront of studying, exploring, and developing value creation through experience management. He's often referred to as the godfather of experience management and recognized as a thought leader in the field, as well as an experience management futurist.

He is an innovative hands-on academic practitioner and wrote the book “Clued In: How to Keep Customers Coming Back Again.” And again, we are so fortunate to have these gentlemen in conversation today and are so excited to learn alongside them. Thank you for being here. So gentlemen, let's get back to the 90’s.

I'm thinking back to the wacky hairstyles of that time, but what were you seeing that made you realize it was time for a change? What big, [00:03:00] hairy problems were going on in the world that helped you realize that experience mattered and was worth exploring as a proper business plan? Lou, let's start with you.

Lou: [00:03:12] What was so fascinating to me was, that I had started my career in journalism and then into advertising and I was just amazed at the painstaking positioning to go through advertising and promoting what would be an experience that comes with a product or service, which had been pointed out long before, that people buy products and services for the experiences that they come with.

That was actually Morris, Brandon. I'm going to need help on this it's Morris from Columbia Morris. Holbrook, thank you. I was fascinated by some of the reading and got involved in advertising with a restaurant chain that went out of business and Disney had left advertising and began to work at National car rental and in the client business. I was just amazed that as we got consumer insight everyone would be sitting in a room and around a board table, and all of the leadership and everyone would walk out of the room, operations, et cetera, and going well, that's really great information marketing, that's yours. You'd think, well, wait a minute, operations and other people in the call center would all be, oh, that's nice to know. It's a tracking study and I began to watch Disney. That was a much simpler organization in terms of the way that they created value [00:05:00] and I was fascinated by Disney as a cartoonist and his use of signals and clues to create an experience and a feeling. That was the impetus for really understanding an experiential value proposition and how do you go about it. Literally designing it and then Bernd, your work brought a great deal of influence into my thinking around experiential notions. It actually was one of the things that we did at National car was renting classic cars that were owned by movie stars and, Bernd you were the inspiration for thinking about creating an experience in that regard. It changed my life forever in terms of how I saw the world, just very, very [00:06:00] different.

You know, I still think that there are a lot of CX practitioners that may not see the vision that Bernd and myself saw. Then I don't think it's even fulfilled today that literally a lot of what we started. Thinking back then is still very new to thinking today.

Aransas: [00:06:27] Yeah. Let's get into that over the course of this episode, to see what those of us who came further down the road might not be seeing from that initial vision.

I want to get, really quickly before we hear from Bernd and Joe, about their experience with this, what do you mean when you say Disney was looking at signals and clues?

Lou: [00:06:48] Yes. The whole idea of Walt Disney was a cartoonist so in four frames, you had to make a point and an emotional connection where a light [00:07:00] bulb goes off and you've made that person engaged in the thought that you had, and in four frames, you have to embed these clues.

Disney took that to everything that he did all the way from movies to literally Disney Disneyland and then Disney World. I learned there was an expression that was used at Disney when we actually did the California classic cars, which was when you've got something that no one else has you can demand arrogance and pricing. And then at National, we figured out the actual cost of the cars and left out the experiential notion, and folks at Disney had reminded us at that time, friends that I had said, no, no, no, you need to actually charge a premium. And it's like, oh wow. Cars came back in [00:08:00] in better condition than we rented them, and people would Polish them for proms and everything else, they became part of life experience for folks rather than just a rental.

Aransas: [00:08:10] Was that idea of adding value through higher pricing, a new concept though.

Lou: [00:08:16] It was, I think that traditionally in the industrial age, everyone was really occupied by quote positioning and not so concerned whether they lived up to it. Then the other thing that happened in those legacy systems that still exist today is rooted in the age of the industrial age and caught up in industrial age thinking, which is fixing broken things rather than the experiential world that we live in today and what Joe and Jim point out as driving the economy.

Aransas: [00:08:55] I think there's a huge area of conversation for us to [00:09:00] unpack next around the idea of fixing something that's broken versus creating an experience and adding value within categories. Let's shoot back to the nineties now with Bernd and get a sense of what you were seeing before we go into that other territory.

Bernd: [00:09:17] Well, Aransas I'm sort of the academic in this round. I'm a professor at Columbia business school and you just heard Lou mention Morris Holbrook, who was a colleague of mine at the time. Morris had indeed written an article for academics 10 years earlier in the 1980s, as a matter of fact, or had been doing work on what he called the experiential aspects of consumption by which he meant actually that a lot of marketers in academia had neglected certain things like fun and entertainment.

And emotions, all of them. And that's how [00:10:00] Morris actually looked at experience. He looked at it as well. We need it to take a look at jazz. We need to take a look at the movies. And these were also the examples that he always gave in his research and that he studied in this research. Now I felt that this was actually a little bit limiting.

There are movies and there are films, and there's music but the concept, the idea of experience is actually much, much broader. I felt that the notion of experience really gets at the heart of marketing. I came as a marketing professor and when I taught courses or when my colleagues taught courses, we always talked about sort of functional features and benefits, you know, the product and its quality and the various features that toothpaste has. It cleans your teeth and stuff like that.

I always felt that there was something missing there, whether it's in toothpaste or whether it's in real estate, you know, real estate was all about the location and the size of the apartments and that's what you're selling. [00:11:00] I felt what marketers also need to sell is really the experience.

How people with any product, not just with movies and with music, but with any kind of offer that they are putting in front of customers and to consider how people feel, how they get sort of sensory information. How the thing in creative ways about products, what they can do with them and how they are also sort of living lifestyle, how they're acting and behave.

When they are interacting with products. That sort of got me into this notion of experiential marketing and indeed in that book. I talked about concerts that I call the sense, feel, think, act relate, which really I think provided a much more comprehensive view of the customer, not just as a rational analytical being that makes these rational decisions about product features and about quality but it's also more impulse-driven that is more emotionally driven and so on. So I [00:12:00] got into experience because I felt a major lack and gap in academic marketing in terms of just being very, very rational and analytical, and these models that we had, they came from economics, not behavioral economics, but more which we have nowadays, but more these sorts of rational models of how people should choose and I rebelled against this and that's resulted ultimately in this trade, a book called Experiential Marketing at the end of the 1990s in 1999, it was published.

Dave: [00:12:36] This is Dave. There was a lot going on in the nineties. It was a really interesting time and there was a lot of forecasting of what the next century was going to be about. I just have to ask you, why did you put the road warrior outfit, the pitcher in your book, experiential marketing, where you, [00:13:00] and I'll let you describe what you were doing or I can describe for it because it's so quintessentially nineties. And so what were you thinking when you put that picture in?

Bernd: [00:13:16] Well, I guess we have to describe it for people. It's a black and white photo, right? Of myself, in the road warrior yard for the road warrior outfit, basically it was an outfit that everybody has nowadays. It was a mobile phone and the notion being always being in touch, always interacting with people.

And the phone that actually is being used as a very, very bulky, big phone, nothing compared to the modern smartphones, we have much, much more limited in terms of its capabilities. I think it was Iridium. I don't know if any of the listeners even remember it, it was called Iridium communication, a satellite communication company because it [00:14:00] could make a phone call anywhere on earth with a satellite phone, but it was ridiculously bulky.

Bernd: [00:14:21] It was interesting that I put technology in there because I think technology has been a lot of experience marketing afterward and continues to drive it and I guess we'll also talk about the future. I think technology and understanding technology is absolutely critical for creating the right experience nowadays in the future and in a way that picture of the road warrior already sort of pointed to the importance of technology in experience careers,

Dave: You really tapped into that with that pitcher. I remember seeing it and saying, wow, he's really cool.

Aransas: [00:15:17] A futurist in the making. I am so struck too, by how much of what you're both saying. I think I take for granted as someone who came into this field in the two thousands, and I have grown up in a world now where there is an appreciation, at least to some degree that the felt experience is as valuable, as important and as influential as that logical experience with a brand or with a product.

It's really striking to me to think back to this moment where that was [00:16:00] radical rebellious to use your word Bernd, rebellious thinking. What was the response from your peers to upending this idea of logical choice and economic models?

Bernd: [00:16:14] I mean, it was rebellious. It was, I think my next book Customer Experience Management has had as a subtitle, a revolutionary approach, you know, It was in a way, I mean, everybody talks about experience, about product experience, about online experience, about story experience, educational experience. Name it, it's used for any kind of domain, it's used for any kind of interactivity that you have with customers and that sort of thing. But at the time it was a totally new concept and Lou and Joe also have made major contributions to this idea of experience and also sort of capturing the breadth of experience, not just looking at it, as I said, it's [00:17:00] more, as homework had done as something very, more specifically related to fun and entertainment and these sorts of things, but broadening the ideas of saying experiences matter. They matter everywhere and they are as important as understanding the more logical, rational side of consumers.

Aransas: [00:17:19] That's great. So exciting, Joe, let's pass it over to you. What were you thinking back in the nineties?

Joe: [00:17:27] Today is a single word commoditization that you could see that goods and services that manufacturers and service providers were increasingly being commoditized, which basically means treated like a commodity where price becomes the differential, right?

There is no real differentiation. People just don't care about the differences. When that happens is when [00:18:00] companies always seek out new forms of differentiation. So in terms of the experience economy, you could see going on both supply and demand, right? The supply side was that search for differentiation that led manufacturers and service providers as Lou and Bernd are talking about to become more and more experiential to recognize that they are selling, people are buying them for the experiences they enable.

So how can we help enable better experiences and eventually actually recognize that, Hey, we can actually be in the experience business? Right? The key thing with the experience economy is that it identifies experiences as a distinct economic. I mean, yes, they're built on top of goods and services, but they are distinct.

As Bernd mentioned, you go to a jazz music concert. That's an experience. You go to a movie, that's an experience. Lou talked about Disney theme parks. That's an experience. Sporting events, plays, you know, on and on and on the list could [00:19:00] go. But every company could begin to take on those elements and get into experiences themselves.

We've particularly seen where just hundreds and hundreds of manufacturers that are now in the experience economy are in staging experiences probably led by LEGO, but many others on the demand side, you could see that people wanted more and more experiences. So they valued them more highly that and in fact, people wanted goods and services to be commoditized.

Why? So they could buy them at the least possible. So they can spend their hard-earned money on experiences. They could get them at the greatest possible convenience. Yes. And that's why, you think about Amazon coming along in 1994 and all the rest of being able to buy things on the internet, which we saw explode through the COVID pandemic over the last 15 months.

People could get things much more conveniently, and guess what? Freed up their hard-earned [00:20:00] time. So they could spend that on experiences that they valued. So both supply and demand, you could see that there was this shift to experiences, right? It's not like it came out of nowhere, right?

Theme parks have been around since 1957, sports events, concerts, movies, and plays. They've been around for a hundred years. In some cases, thousands of years experiences have always been around, but they're becoming a more and more a greater part of the account. So you could see where in fact you could go beyond.

The agrarian economy is based off commodities, the industrial economy is based off goods, and the service economy, to where we could foresee that you would have an experience economy where experiences were the predominant economic offering. And I think that's where we are today.

Dave: [00:20:46] You know, Joe, one of the things that you said early on was about the things that are happening in Las Vegas.

So think about what was going on [00:21:00] in Las Vegas, in the nineties, that what would be happening in Las Vegas would be happening everywhere. Can you talk a little bit about that or what were you seeing in Las Vegas, in the restaurant industry, and in other categories happening in the nineties, that was really changing things?

Joe: [00:21:22] Well, yeah, the way I always phrase it was that everything that happened in Las Vegas has come to your town. And so what that means that you in the nineties was when Las Vegas really went towards the theme casinos and you could see that coming out in theory, restaurants, and other themed events.

I always hesitate to say that ou have to have a theme of an experience, but it doesn't have to be. In your theme park or theme restaurant or Las Vegas. But it's simply the organizing principle of experience. And they started theming entire [00:22:00] casinos.

After this, Steve Winn was the first to do it. Then you could also see that they would put Dean McConnell and the tourist called markers. For the experience outside of the experience that became experiences themselves. Right? What do I mean by that? Well, you know, the marker is simply a sign that says, Hey, there's an experience here, right?

Like you go along the highway and it says, Vista view, that's a marker. Well, you think about the Las Vegas, welcome to Las Vegas sign. That is an experience unto itself that people to stop along the highway coming into the south side of Vegas and have their picture taken right there with the neon lights going around in circles and so forth.

And then the first one being the volcano outside the Mirage casino, the fountains outside of Bellagio, the siren show outside of treasure island, and so on and so forth where all of these markers for the experience became experiences unto themselves. And now you see that all over the place. One of my favorite examples of Las Vegas [00:23:00] coming to your town is actually you think about slot machines, is the gum-ball machines are now slot machines where you put in your quarter and you don't just get the gum-ball. You get this experience that happens around you like the gum-ball wizard. The first big one was where the gum ball will go spiraling down clickety-clack, as it goes. Literally, you could see kids go up to their parents, ask them for a quarter excitedly, put the quarter in the gum-ball wizard, turn that crank and the gum-ball spiraling experience, pick up the gum-ball, throw it away and go ask their parents for another quarter. It was a slot machine.

Dave: [00:23:38] I got introduced to all things experience back in 1989, when your article came out in the Harvard business review, you and Jim.

Joe: [00:23:50] It was 98, but yes, it was, the book came out then.

Dave: [00:23:52] I probably saw it in 99 is when I saw it. At the time I was [00:24:00] working for a wonderful company called Yamamoto Moss and we were working with Royal Caribbean. I think about the cruise industry and how the cruise industry changed in the nineties. You know, at the beginning of the nineties, it was the love boat. That's the kind of experience by the end of the nineties, the industry had completely changed and there were all kinds of new experiences that were going on.

I personally was kind of interested in the impact of context on decision-making. So I've always had kind of this thing for how do consumers make decisions and what's the impact of context. And when I started reading all of your thinking, I was first introduced to Joe's work, then Bernd's work and then Lou's work.

I [00:25:00] just loved this idea that the environment that you find yourself in has such an influence on the way that you act, behave, think and so forth. So let's go to the next question. We'd like to ask you each, looking back on the frameworks that you developed and the ideas that you pioneered, what are you most proud of?

Maybe Lou, let's start with you. What are you most proud of from the framework that you developed in your framework you've used it now for well, tell us a little bit.

Lou: [00:25:42] a little over three decades. That's what Joe was pointing out that and actually, I guess it was before that because I was doing it before we wrote about it for a number of years. What was interesting to me was, as Joe talks about [00:26:00] the construct of flow that when you're at Disney and gaming brought this out in particular, you're literally blocking out other things you become so engaged. I became fascinated by the neuroscience and psychology of flow and did work with Jerry Waldman up at the Harvard business school, where we did pet scans of people buying automobiles.

And from that the whole idea of unconscious thought and its influence on decision-making was fascinating. The way that it began to look at experience was that life is full of experiences. Experiences of the molecular structure of life, whether it's a relationship with a partner, with our children, what we're processing unconsciously are clues, and those [00:27:00] clues lead to emotions and my fascination with that and then how do we begin to understand unconscious thought, which is the root of emotion, really became critical in terms of clues and signals. Clues ultimately affect our emotions and those clues we pick up and perceive in humanity things that humans emit and experience, the functionality, and the atmospherics or the mechanics of the experience. We process these clues and signals, and it leaves us with a feeling, not just a feeling about the particular individual or company or whatever it might be, but how we feel about ourselves in the experience itself. I think that so often the industrial age is built around efficiency and fixing broken processes and [00:28:00] unfortunately I think a lot of journey mapping and things like that get caught up and fixing broken things rather than looking at how we create distinctive value. One of the things I'm very proud of is if you take progressive auto insurance as an example, and progressive sold only high-end what is called high-risk insurance. That I guess I qualified at one time for where no one else would insure you in my teen years and they charged you a premium for that. Progressive at that time sold only through agents and they decided that they wanted to sell directly to the consumer.

So the initial problem, and this is where I know everyone is thinking about how does experience solve a problem? We have to look beyond the problem. The thing that they were [00:29:00] worried about was literally losing agents as they went direct to the consumer. So in going direct to the consumer, the gentlemen, Bob McMillan, who was the president of Progressive in Florida, where we did these tests on Progressive which was basically proving ground for new ideas and new concepts to go to market. And what the realization was is if we create an extraordinary experience, we won't have to worry about losing agents. So they were the first we brought them. I remember using modems where it was trying to make them the very first insurance company to sell online. We looked at the experience from an emotional unconscious perspective and [00:30:00] realized that the moment of impact was probably the highest point of vulnerability that someone would feel and created the instant response vehicles that showed up at the scene of the accident. Bob McMillan was amazing in terms of, we need to do these things. These are really critical. If you had done traditional journey mapping in the industrial age, it would have been, that the claim starts with the phone call, probably not even to the agent, but the phone call to their call center, but to understand that there was a moment and these instant response vehicles, the drivers were trained in grief counseling because it was a feeling of loss.

They had water, and bottled water was just coming on the scene. They had a cell phone because not everyone had a cell phone, they would take you back home or arrange for transportation. So it [00:31:00] was understanding that there was an experience. It was outside the realm of what people ordinarily understood as the functional aspect of insurance versus the emotional and unconscious needs that someone has.

Later the insurance industry led to accident forgiveness, which is emotional reciprocity, but it's dealing with all of these unconscious elements that drive the emotions that literally ultimately ended up driving behavior. And there were two parts to that outcome. One is how you feel about yourself and how you then feel about the company. And there was a direct relationship to that. I think that often as marketers or as CX people, will we become so concerned about how our constituents feel about the organization we lose sight of how the organization causes them to feel about themselves.

Joe: [00:31:54] Let me add there that Lou's work with Progressive was absolutely fantastic and it's long been one of [00:32:00] my favorite examples of how you take a plain old vanilla service and customize it and turn it into just a remarkable.

Lou: [00:32:10] It's so neat because you know, people will always ask about financial performance and they became the fastest growing most profitable insurance company in the world. And they actually gained agents rather than lost agents. And that was something that was really exciting.

Dave: [00:32:33] Joe, what framework are you most proud of?

Joe: [00:32:39] It's the core framework, the progression of economic value. It's world-famous. It's a framework I'm most proud of, the comment I'm most proud of. I saw it, I heard it a lot at the beginning, not so [00:33:00] much in the middle years and now more and more. I hear it again. I'm amazed that people would say, thank you for giving me a vocabulary to describe what it is I already do. People talk about it, I can now explain it to my mother. She knows what I do for a living because you've given us this framework to think about and because I always say none of us invented this stuff.

We discovered what companies were doing and then put frameworks, put ideas on it, and showed what's going on so that other people could come, behind and do it themselves. But the progression of economic value does delineate the five distinct economic offerings that exist out there and shows how companies can get into those businesses. Again, each one is built on top.

Dave: [00:33:54] I think at the time it was predictive, but now it's very descriptive. [00:34:00]In that we're actually living in exactly what you were predicting. Bernd, what are you most proud of the framework?

Bernd: [00:34:10] Yeah, it's really sort of a project management framework. I mean, we heard from Lou that it's his idea. It's very much about designing the experience. And we also heard from Joe that he looks at the progression of economic value that sort of culminates in experiential value. And what I've created, in this book, Customer Experience Management is sort of a project management framework that any company can really use to manage an experience.

What that means is let's say you have not really focused on experience management yet. So how can you do it? Or you want to reposition your brand in a more experiential way, or you want to launch a new product in an experiential way. So for all these sorts of situations and many more. This customer experience [00:35:00] management framework has five simple steps, it starts out with understanding what I call the experiential world of the customer. It's not just the functionality that the customer has with the product, but it's under immersing yourself sort of in the world of the customer and how customers see things rationally, and emotionally, experientially. And then the second step is what I called creating the experiential platform.

It's sort of a positioning platform, but in an experiential way, while you explain to the customer what value you're creating experientially, and then there are three implementation steps. One is in the brand. One is in the customer interface, and one is through what I called a sort of continuous innovation in an experiential way.

It's a simple five-step framework that I've used afterward with all sorts of companies. I've done these half-a-year, year projects where we sort of did customer experience management for them. The clients in the Pharma [00:36:00] industry, in cars, in the tech industry, mobile phones, for example, you know, all sorts of credit cards, all sorts of industries we're interested in, how can I make the business and the products and the communications more experiential.

And we really use this framework in getting that done. So I'm proud of creating this framework, customer experience management.

Aransas: [00:36:27] So cool to hear how all of this has seeped into our collective conscious within this industry and how those of us who came after this work has absorbed this. I hear Lou loud and clear there, there are missing links from the original vision. So I want to get into that for a second. What did you mean when you say maybe there were some misunderstandings and some gaps in the current understanding of experience.

[00:37:00] Lou: [00:37:01] I think that what is amazing about Joe, Bernd, and folks at the beginning of this were truly visionaries that Joe burning your geniuses because geniuses see things that other people see, but see it differently than the way other people see it.

And unfortunately, I would say that the large percentage, I hate to say this of work that's going on in the world of experience management in the world of experience, value creation. It's still very much anchored in basically wallowing in the mire of the industrial age and times have changed.

My original coauthor, who Joe knows when we all met at the [00:38:00] IBM advanced business Institute at Palisades when I first met Joe and Steven Hackel, Stephen talked about the world changing and moving from make and sell to sense and respond. the distinction there was that in the world of make and sell it's about bus drivers, its processes, it's becoming more efficient.

In fact, there was a story you have a schedule, you have a route and you follow that and in fact, there was a story to be more efficient. One bus driver who was measured on keeping on schedule actually cut out stops to stay on schedule so the customer was not focal. He wasn't driven by the customer.

He was driven by the organization and the organizational structure in the world that we live in today. Steve's idea of the world of sensing and responding is very much [00:39:00] like being an Uber driver or a taxi driver in the old days. Now with technological assistance, the Uber driver doesn't even know where you're wanting to go as a customer.

You set the standards and they take you where you want to go. And I think that many organizations are still in the world of looking at it as process improvement, fixing things that are broken. And I'm somewhat frustrated. I don't know, Joe, Bern, that our vision from three decades ago or thereabouts is not really fully fulfilled that there are a lot of discussions, but not a lot of knowledge and not a lot of exploration. And that what has happened is a lot of this vision has been shoehorned into legacy systems and organizations.

Bernd: [00:39:58] I'm all with you. Lou, [00:40:00] and I'm a marketing professor. I take an advertising campaign. Many companies believe that they run some more just to be called emotional advertising. Nowadays you could call it experiential advertising and of course, it might not be done anymore via TV. It might be done through other media but that alone is not fixing up the experience. sAme people may say, okay, let's create a flagship store. Let's have a store in a major city like New York City and so on. Well, that does not necessarily make the service better. And the other elements of the experience or take even product design to have a really cool product, sure, that's nice. It's a nice product design experience, so to speak, but it doesn't make an overall, holistic experience.

What I feel is really missing these companies that in a holistic [00:41:00] way at least experience, there are some great examples. Of course, you know, Apple, obviously everybody talks about Apple. I mean, when you go to the store when you look at the product when you look at the communications, everything's beautifully integrated. It creates a unique experience, memorable experience.

Sure. It's still the exception. So I feel that experience is still managed in a sort of isolated way. And there is a lot of integration.

Joe: [00:41:25] I'll add one. It is even sometimes when it is managed, it's managed wrongly. What gets me is the whole CX movement that people talk about CX.

They were doing CX and think they're actually doing experiences when they're not because all CX will get you is great service. It's about being frictionless. It's about being nice and easy and convenient, but that never rises to the level of memorability, which really creates it, takes to create a truly distinctive [00:42:00] And so a lot of people, you know, say they read our, our book and then, and then miss the basic thesis that the experience is not just, I mean, yes, there's benefits wrapping your goods and services in some experiential stuff and be nice and easy convenient though.

It doesn't even get there, but experiences are in fact, a distinct economic offering. And that's what so many people miss.

Aransas: [00:42:25] and they are not a flagship store marketing campaign alone.

Lou: [00:42:31] Yeah. Right, right. No, absolutely. It's quite frustrating. And yet encouraging, I hope that we all get to live long enough to see people actually come around to understanding.

They're missing a huge, huge opportunity Joe pointed out to create distinct economic [00:43:00] value. I think that what we're going to run into is the commoditization and homogeneity of experience because everyone is literally using the same metrics. Everyone is. It's just very scary in terms of optimizing the impact that can be made in this experiential and experience economy.

Aransas: [00:43:26] As you bring up that homogeneity and the risk therein, of sort of our shared interpretation of experience, let's talk about what's next. And either in terms of what you fear is next, or what you hope is next, or maybe they're intertwined.

Bernd: [00:43:44] Well, could I maybe start with what's next? I mean, we know what's next IOT, AR, VR, AI and robotics.

Right? So there is a question for us because we are all very proud of having created these frameworks. Having [00:44:00] worked with these companies, make them more experiential and all of that. But frankly speaking, I think the experience changed entirely. I mean, a lot of the ideas that we had in the 1990s, we further elaborated as well.

I've worked with companies and through our speaking and consulting and all of that some of these ideas will radically change because the world is changing. I mean there was the digital revolution, which started roughly in 2000. A lot of work came out right at that point and through the digital revolution, of course everything has become more focused on the seamless integration in a digital way.

Our lives have changed. Work lives have changed. Private lives have changed and we're in the middle of it still, but you know, there's another major digitalization coming and radical change. And that's characterized by the technologies. I just mentioned IOT like these smart, intelligent [00:45:00] devices that communicate with each other in a smart home, for example, the possibility of imagining two augmented reality and virtual reality, tying new worlds. AI that does things much better than we, as humans can ever do, including design, frankly speaking.

And then there are the robots, right? I mean, they can replace humans and they may be doing it, but our job in service and that sort of stuff. How will we experience change? I think there will be a radical change. And the major change I see is that a lot of it will no longer be just understanding customers in the sense of humans, but understanding technology and how technology interacts on its own and thereby creates a good or a bad experience.

Dave: [00:45:52] Totally agree. Totally agree with what you're saying.

Lou: [00:45:56] I actually agree wholeheartedly. I think [00:46:00] that the one thing that's quite interesting is as I think of technology as an infrastructure for the experience. And I believe that we're now going through a period of what I would call fusion genomics, which is literally the fusion of all of these pieces coming together and never before.

Has it been more complex? There was an article that appeared in the Harvard business review there, Dave Nolan at the Harvard business school and Stephen Heckle wrote, which was called, Managing by Wire. It's very hard to predict. I think that at one point, general motors invested billions of dollars in robotics, and probably the area that was most affected by robotics in the auto industry.

The idea of the fusion of humans and robotics and in particular work that we're doing in medicine right now, [00:47:00] in terms of how do you maintain a sense of unconscious connection in motion? Et cetera, as we're going through telemedicine, as we're going through monitoring where I can wear a monitor or my iPhone now can do blood pressure with one app.

Now that does blood pressure, an EKG, et cetera. So I think that it is really important to realize that technology is not an experience, but I think that it's the infrastructure of our experiences. It's almost like building the interstate system here in the U S changed the way that we traveled and traveled faster to put it into [00:48:00] something.

Change the way the world looked at not traveling U S one from Maine to Florida, but interstate 95 and the internet of things is really fascinating. One of our clients, Aero Electronics actually has created a car called the Sam car that can be driven by, uh, Sam. Actually, their racing team is Peterson racing and Sam was a quadriplegic and they built a car that he drove as an Indy pace car.

Just last week introduced a suit that he could wear as a quadriplegic and actually walk. So what technology can do is unlimited the experiences that it creates, but it's the infrastructure for the experience of walking the experience of a quadriplegic and driving a car. I think [00:49:00] that as Steve had pointed out in the article Managing by Wire, the world is so sophisticated and business data is so sophisticated and all of these pieces are so sophisticated.

It's like a fighter plane that you can no longer fly manually. You need the assistance of technology to be able to fly a fighter jet, and it is not possible for a human being to monitor all of the systems simultaneously.

Bernd: [00:49:30] Does anybody remember the term information superhighway, you know what Al gore 2000 either way it's happened.

So that was the end of the 99 is actually the campaign for 2000 elections. Right. That was the term. I, we are all on an information superhighway now, and it's not only by wire it's by bits, but it's also by strings, you know? And it's just absolutely amazing. Technology. [00:50:00]  

Joe: [00:50:12] You mentioned one other direction that we're, that we're going in that relates directly to all this technology that you're talking about and that's that increasingly more and more experiences will be bought and sold on platforms. Just like, platforms revolutionized the commodities business by being able to, uh, digitize the, the buying and selling and shipping of them.

Like they revolutionized the goods business with the eBays and the Amazons of the world. Being able to connect far-flung suppliers with consumers anywhere in the world, uh, as they revolutionized, uh, services with the Uber is, uh, Lou mentioned. Uh, lift and fiber and task rapid and all these things where you can instantly connect with somebody around the other [00:51:00] world or in your neighborhood, that's nearby to be able to do something for you.

Some activities, in the same way, will increasingly by experiences on the platforms. Perhaps the first, I mean, they've been around for 20, 25 years, like a red balloon in Australia and Virgin experience days and so forth, but it's probably really Airbnb that really was the lighthouse example of what is possible, where you can buy that just a couch, not just a room, not just in an entire house, but you can buy experiences of what you're going to do when you rent that couch or a room or house.

And of course, they pivoted to digital when the pandemic hit. So you could now access all these digital experiences from around the world and bring them into your own. I just finished a multi-client study on experience platforms and there are hundreds of these around the world. And in particular, what I think you'll see is that loyalty [00:52:00] programs, which are not loyalty programs today, for the most part, they're bribery programs, which is completely different, but loyalty programs will shift more and more to experience platforms such as Delta has done with its sky miles and Marriott with Bonvoy and MasterCard with its Priceless, Moments and so forth, that they're really offering you experiences for these points rather than just get discounted free stuff that we bribe you with.

I think that's one of the big things that technology enables also go a little different direction and something near and dear to your heart. We increasingly want experiences that are not merely memorable, but they are meaningful as well. And you know, you've done a lot of study around that at Stone Mantel.

Where it's one of the reasons why I say that the experience time is going to be accelerated by the Corona crisis because it makes us understand that what matters to us and [00:53:00] gives our life meaning is the experiences we have with other human beings. And then the third thing I'll mention is this progression of economic value that we've talked about a couple of times, last time I mentioned, I said five economic offerings because in fact, there's one more after experiences and it's related to more meaningful experiences.

But in fact, I call them transformative experiences, experiences that actually change us in some way. And from the very beginning, when I first came up with this in 1994 was the idea of transformations as a distinct economic offering. And in fact, it is what the real business of many companies, particularly you think about healthcare and fitness centers and management consulting and coaching. Aransas, you know, your work at WW, you're really in the transformation business because no one buys from you unless they have this weight aspiration that they want to achieve and they're [00:54:00] hiring you as a job to be done, to help them be able to achieve that aspiration of, of losing weight. I think

Dave: [00:54:07] What's interesting about what all of you were saying is that you kind of predicted these things in the 1990s and now the technology is almost there to deliver on transformations to deliver meaningful experiences.

And yet we're still kind of fighting the old battles. Gosh, what business are we actually in? Are we actually just a service provider or are we actually delivering on experiences? We're still fighting that battle even as we're moving to the place where we could deliver at levels, never thought possible when Bern was wearing his road warrior outfit.

Bernd: [00:54:56] Well then frankly, we should also not be so [00:55:00] us-centric. We should really look at the world outside the US as well. China, let's say where you have these massive technology platforms like Wechat for example, or Alibaba, where you can do anything. I mean, you can chat with your friends. That's an experience, isn't it?

You can rent a car. That's an experience. You can get insurance for your car. That's an experience. You can book a train ticket with it. Okay. I mean, you could do anything on recharge now. There's no integration like this in the US it seems to me. That's really the future, because what is the customer looking for?

They're looking for being accompanied through technology, maybe in terms of solving the problems of their everyday lives and having fun in doing this and not having a hassle with it and having a good experience in the sense of great service with it. That does not have to mean human service at all.

The US is actually lagging behind when it comes to great technology experiences. You get it a little bit, of course, with Amazon, there's a [00:56:00] lot of stuff happening also in Asian economies and in other parts of the world, is experience creation with technologies.

Lou: [00:56:11] You know, the interesting thing around technology was at National Car, we created the first electronic rental agreement and created the first counter bypass, and created the first ability to choose your own automobile.

I think it's really difficult for an organization when I did some work with Avis, all of their training and education still went into counter people. And the only person that you encountered was the security guard and someone had a booth and they just put a security guard from a security company in the booth and never thought that this is where customer contact was.

So as you look at technological transformation, there are a lot of ancillary pieces and that's why I believe this construct [00:57:00] of fusion, economics, and understanding how the new pieces fused together in terms of balance on all of these platforms becomes extraordinarily critical because you can add all this technology and still have habits that reside in the old world.

I think you're right.

Bernd: [00:57:20] Well, we went through thousands and thousands of years of probably. So we are conditioned to act in a certain way. I think the products that surround us, that I need to be sensitive to, that they need to be constructed to be sensitive to that. And I think Lou, you've done this, you've captured this very nicely in the idea of providing the right cues for humans, given their sensory system, given the brain that they have because of air pollution.

And unless the technology is ultimately sensitive to that I don't think you can have a great experience with technology.

Dave: [00:57:55] This has been a great conversation and I got to [00:58:00] say how grateful I am to each of you. Each of you has been inspirational and mentors and really helped me to understand what experience strategy was all about.

I'm just really grateful for this time that we've had together to kind of talk about the past where things are at today and a little bit about the future. And we would love to have you guys back at some point maybe together maybe individually to go deeper around some of these topics.

What are your thoughts? Yeah. Yeah.

Aransas: [00:58:35] I can't even begin to articulate them. My mind is kind of blown right now, Dave, I think about the degree of influence these guys have had over my entire professional career and I have really not gotten to spend any time with any of you before. Through your work, you [00:59:00] have profoundly influenced my professional career.

My understanding I've experience and frankly my life as a consumer of experiences. I just want to take a moment to thank you all. It has really been a gift to me to have you in my lives from the outside. And now to have this conversation with you today and be able to get a glimpse back into what the world was back in the nineties.

I was still in high school when so much of this work was happening and to emerge into this world. Now with that, that those wins behind the entire industry is pretty extraordinary. I guess as I look back with you way back down the road, the thing that strikes me most. It was a state of disintegration [01:00:00] of understanding human behavior that really led to this work that we were looking at the outcomes and not the process for a long time.

And when Lou talked about the painstaking work that went into creating advertising that converted into sales, it makes perfect sense how we got so outcome-focused, but then to look back and say, wait, what were these customers experiencing? How are we meeting their needs? What do they care about?

What do they feel? And how does that lead to deep loyal relationships with brands? To me just seems like such a fundamental mind shift collectively that you ask us to undergo, and it speaks volumes to all of you and your persuasiveness that you were able to create that understanding and that profound shift, and then to see how it's played out and maybe it started with these big players, like [01:01:00] Disney, Las Vegas, but the way it has seeped into experiences with my local dry cleaners and my local pizzeria and how collectively we've come to understand and bed this thinking into our work. It's also really striking though to think about how far we have to go. As you said before, we're still wallowing in the industrial age and we've still seeped in process improvements and efficiency over the customer's perspective and experience.

I think today there was a huge expo, a that came out from the New York times about the Amazon employee experience. Exactly this guys. It is exactly what you're talking about. Process improvement, over experience. We still have so much learning to go, but I think you're totally right. That the future is tech.

It is the infrastructure that integrates the fusion as you said that helps us integrate touch points and back. I'm [01:02:00] excited for what's next. When we talk about Joe platforms being integrators about meaningful experiences and transformative experiences beyond that, they leave a deep and lasting impact through adding value to humans’ lives.

I get re-energized and excited for the work that's ahead. So thank you all for bringing us down this big dusty road and helping us move toward a hopefully bright, shiny, meaningful future.

Dave: [01:02:37] Wow, like you. I am just blown away with what Bernd Schmidt and Joe Pine and Lou Carbone and others did in the 1990s.

That really changed the way we think today. Their influence has been tremendous and on my life as well. [01:03:00] We're excited to continue to explore these topics around experience strategy. There's so much more to learn. Not just from these guys but from everyone out there, that's working on experience strategy and I look forward to continuing the conversation.