Experience Innovation

Experience InnovationA few years ago I gave a boardroom talk in Milan, Italy, to a number of executives from different companies. One was the vice-president of a global coffee manufacturer, who said something that floored me: “There’s been no innovation in the coffee industry in fifteen years.” I responded: “Have you never heard of Starbucks?” This gentleman could only conceive of innovation in physical goods, not in experiences – a particularly ironic stance given we were in one of the foremost coffee meccas of the world, the city that inspired Howard Schultz to create the Starbucks coffee-drinking experience.

The Experience Economy

That is what we desperately need in business today: experience innovation. Why? Because we are now in an Experience Economy, where experiences – memorable events that engage people in inherently personal ways – are becoming the predominant economic offering. It supplanted the Service Economy that flowered in the latter half of the twentieth century, which in turn superseded the Industrial Economy, which itself displaced the Agrarian Economy. Experiences are what people want, and therefore what companies must offer.

And yet, governments still shovel money at farmers to subsidize their crops and their way of life. They shovel money at universities for research into more and more goods while protecting manufacturing jobs, reducing the economic dynamism that will create new experience jobs. And now, with a global financial crisis in full boil, we see governments doing everything possible to protect financial services. As my partner Jim Gilmore likes to point out, most all the recent innovation in financial services has served to prop up goods (primarily houses and cars) in lieu of financing true economic growth through innovation in experiences.

The Path Forward

Let us stop. Not stop innovating goods and even services, for they will always be necessary parts of the economy. But let’s stop favoring them over experiences. Governments should stop protecting the old while slighting the new. Companies should start looking to experiences for growth. And consumers should just keep on doing what they’ve been doing, seeking out new experiences, forsaking old goods and services, and rewarding those companies that give them what they want.

We need more countries like New Zealand – a fount of new and wondrous experiences, including bungee jumping, Zorbing, and canyoneering – which even created a cabinet-level position to leverage the tourism possibilities flowing from Peter Jackson’s Lord of the Rings movies. We need more companies like Apple, which realized that the best innovation in goods should be about enabling great (computing, music-listening, and communicating) experiences while the marketing of those goods would best be done inside engaging retail experiences. We need more experience entrepreneurs like Howard Schultz, Chip Conley (founder of Joie de Vivre Hospitality), and Robert Stephens (founder of the Geek Squad). And we need more innovators like Tim Berners-Lee, Wil Wright, Philip Rosedale, and Jane McGonigal who recognize the almost infinite possibilities inherent in digital technologies for creating the new, the wondrous, the engaging.
 So how about you. Are you ready to pioneer such experiences?

image credit: starbucksmelody.com

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Experience InnovationJoe Pine is Cofounder, Strategic Horizons LLP. Formerly with IBM, he is an internationally acclaimed author, speaker, and management advisor to Fortune 500 companies and entrepreneurial start-ups.

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  1. Pingback: Innovation Excellence | Innovation Quotes of the Week – September 23, 2012

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