The logic is understandable... Commodity goods have small margins, as they are undifferentiated from each other and relativly easy to reproduce. Manufactured goods take things one step further, providing higher margins due to some level of product differentiation and brand specificity. Above that are Services, where the products don't last long enough to be copied and are customized enough to prevent easy manipulation. The higher margins should lead to higher profitability and better staying power. Fair enough.

Where the book's logic becomes strained, however, is where it strethes out towards the next generation of higher margin offerings, "Experiences." While it is true that experience companies my be able to provide higher margins than can older economy companies, experience companies tend to suffer from a fatal flaw that has infected many of the companies praised in the book. That flaw is the utter lack of repeat business generated by most experience economy companies.

Take two of the companies mentioned in the book as companies to emulate -- Planet Hollywood, the restaurant chain, and Peapod, the online grocery store. Planet Hollywood is under bankruptcy protection, because people are simply unwilling to pay through the nose repeatedly for the same experience over and over again. Peapod ran out of cash and is limping along only after being bought out by a Dutch firm. Hardly two stellar companies to emulate when searching for ever expanding profits.

Throughout the book, by expounding the virtues of ever expanding margins, rather than focusing on goods, services, and 'experiences' that people would be willing to repeatedly pay to have, the authors make the mistake of ignoring the overall forest for the sake of a single tree.

In the real world, experience companies know their limitations and create their pricing scheme to represent that fact. Amusement parks sell season passes for less than the cost of two visits -- acknowledging the fact that people may pay more for experiences, but only once, and repeat business depends heavily on making the repeat worth the cost.

Had the book focused more on successful ways for experience economy companies to thrive, rather than spending its time drolling on about the virtues of failing companies with the right plan, it would have been far more believable and enjoyable.

136 of 145 found the following review helpful:


Show Time!  Jan 30, 2000 By Robert Morris
First of all, I urge anyone thinking about buying this brilliant book also to consider (or to re-read) Schmitt's Experiential Marketing and Wolf's The Entertainment Economy. Although the three books differ significantly in terms of thrust and content, together they help us to understand a New Economy which is perhaps best exemplified by Las Vegas. According to Pine & Gilmore, "Virtually everything [italics] about Las Vegas is a designed experience, from the slot machines at the airport to the gambling casinos that line the Strip, from the themed hotels and restaurants to the singing, circus, and magic shows; and from the Forum Shops mall that recreates ancient Rome to the amusement parks, thrill rides, video arcades, and carnival-style games that attract the twentysomethings and give older parents a reason to bring their kids in tow."

Pine & Gilmore explain The Experience Economy; Wolf calls it The Entertainment Economy. Schmitt suggests that Experiential Marketing creates or sustains demand for this New Economy, however it is named. For all of these authors, "work" should be viewed as "theatre" and every business should be viewed as a "stage." If they are correct (and I believe they are), the quality of sensory experience is critically important. That is to say, it is no longer sufficient to offer high-quality goods or services for sale at competitive prices. Most (if not all) goods and services have become commodities. Competing on price alone seldom succeeds...especially against those which have superior purchasing power. Competing on quality alone succeeds only for those who offer what no one else has. The challenge is to achieve differentiation. According to Pine & Gilmore, this challenge is best met by understanding what the Experience Economy is (and isn't) as well as how it works; only then, thus informed, can an organization (almost literally) function as a theatre company: formulating a script which has both an exciting story line and interesting characters; assigning roles to those who have the appropriate talents; and then conducting rigorous rehearsals. Finally, it's "show time"!

Pine & Gilmore observe, "Since all commerce is moral choice, every business is a stage for glorifying something. Who or what does your business glorify? Your answer may not help you accept what is next, but it will certainly help guide what you do today." At its best, live theatre can delight, amuse, excite, inform and even inspire those who experience it. Why cannot it also be true of business relationships? Of course it can. It is certainly true of those organizations which prosper. Southwest Airlines is but one example. Its CEO once observed:

"I keep telling [those interested in Southwest Airlines] that the intangibles are far more important than the tangibles in the competitive world because, obviously, you can replicate the tangibles. You can get the same airplanes. You can get the same ticket counters. You can get the same computers. But the hardest thing for a competitor to match is your culture and the spirit of your people and their focus on customer service because that isn't something you can do overnight and it isn't something you can do without a great deal of attention every day in a thousand different ways. That is why I say that our employees are our competitive protection."

Kelleher's comments are relevant to virtually all organizations which now struggle to succeed in the New Economy (however it is named). To understand this economy, to understand what it requires of your own organization, I urge you to read The Experience Economy...as well as The Entertainment Economy and Experiential Marketing.

34 of 36 found the following review helpful:


The Most Disappointing HBS Book I've read in Years  Jul 12, 1999
It was painful getting through this book. Partly because of the content, but mainly because of the writing style of the authors. That aside, let's talk about why I didn't like the book. First, the economic arguments for the 'Experience Economy' were flimsy at best. It seemed to me they were overly selective in choosing their supporting arguments, mainly because they needed to make their work seem larger and more broadly applicable than it really is. Second, much of their 'new economy' is really just an as-yet-little-discussed market segment. And many of their groundbreaking ideas traditional (and fundamental) marketing. Third, I found the religious (sorry, world-view) over- and under-tones of the last two chapters almost insufferable. Quite frankly, for two authors who talk about the importance of customization and segmenting according to world-view, they should have known better than to discuss religion in the manner they chose. Don't get me wrong, the book did have some very interesting points. I found the 'work as stage'concept and the review of 'experience development' concepts fascinating and applicable. I cannot, however, recommend this book to you. If you want the critical insights, borrow it from someone who did buy it, and read Chapters 2,3,6, and 7. Oh, and mind the typos, a few of them happen at the WORST possible places (like the misdrawn table 5.2).

70 of 81 found the following review helpful:


Business as Performance Art. Yes!  Jul 23, 1999 By Christopher Locke
As co-author of the cluetrain manifesto .......... I'm often asked by companies how they can implement the ideas we talk about. This book is a great place to start. Unfortunately, the listing here leaves out the subtitle: "Work Is Theatre & Every Business a Stage." That's what got to me. Acknowledging the role of serious play in serious commerce is long overdue, but The Experience Economy makes up for lost time. While most business books are little more than literary Sominex, this one will stretch your head in new dimensions. Even if you disagree with bits, it'll wake you, shake you, make you think.

At first, I was put off by the notion of the Internet as "the greatest force for commoditization known to man." This is only true when the net is seen as an extension of the broadcast model: think TV. But that's the wrong approach, as the authors later make clear: "Cyberspace is a great place for such experiences, but many businesses still don't get it. They're heading into the commoditization trap, trying to figure out how to better sell their company's goods and services over the World Wide Web, when in fact most individuals surf the Net for the experience itself."

E-commerce as performance art, I love it! So step right up, boys and girls, and get your ticket to the Pine & Gilmore Masque. The show's just about to begin!

26 of 28 found the following review helpful:


looking at 'taking care of business' differently  Aug 07, 2000 By Carol H. Tucker
The Pine and Gilmore book about work and theater is a different, but not unique, way of looking at business. By concentrating on employees' ROLES instead of jobs and functions, this book encapsulates new thinking about:

-how a company presents itself to the customer -internal customer service

-the need for aggressive change management

-differentiation of products

-dynamic strategic planning [no more five year plans] -where actual economic value is found

A very quick and dirty overview of their concepts can be accomplished by looking at their definitions:

[cast=employees]must take on [roles = responsibilities] by each making choices to develop compelling [characterizations=representations] that form(s) a cohesive [ensemble = organization] to engage [guests = customers] in memorable ways

workplace = theater drama = strategy

script = processes

producer = shareholders, investors director = leader

Perhaps the most memorable section in the book that resonated with me was the statement that for every piece of work, one must describe his [or her] intention using the phrase "in order to"

what a powerful way to keep the focus! It brought to mind the story about the cathedral builders that I have seen in so many places....

And I was left with a solid suggestion on how to recognize the role of support departments -- those people who get left out when the sales incentives and bonuses are given out but without whom the entire organization will falter -- see the chapter on movie and stage credits!

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