The Experience Economy

October 13, 2007 in insights, research

Service designers are pretty good at explaining the difference between products and services. We’ve had 30 years to articulate the distinction to the point where it’s become boilerplate for the first five minutes of any service design pitch. But we’re not as good at articulating the difference between services, experiences and transformations. Chris Downs talked about this problem during his keynote at Emergence this year.

The Experience Economy by Joseph Pine and James Gilmore presents a framework for understanding the distinctions. Most people remember this book for its emphasis on theatre and the staging of experiences and I’ll come back to those topics in a future post, but for now I want to focus on their framework for understanding services, experiences and transformations.

Their basic argument is that a natural progression of economic value exists, starting with basic commodities and building to products, services and experiences before culminating with transformations as the offerings becomes more customized and tailored to the individual.

Here’s their table of Economic Distinctions.

• Commodities are fungible materials extracted from the natural world. The raw materials are the offering.
• Goods are tangible products that companies standardize and then inventory. The products are the offering.
• Services are intangible activities that are delivered for a particular client. The operation is the offering.
• Experiences are memorable events that are staged for individuals. The event is the offering.
• Transformations are custom experiences designed to guide individuals through a process of change. The individual is the offering.

Pine and Gilmore see services, experiences and transformations as distinct economic offerings, each incorporating the previous levels of the hierarchy, just as services depend on products as key components (touchpoints) for their execution.

Using this framework, service design itself seems a little dry. Very much about operational efficiency. Blueprinting processes and executing them. More about the system than the individual. Much of the service design literature from the 1990s reflects this industrialization of service.

My hunch is that most service designers embrace goals that go beyond simple transactional models of service delivery. They aspire to work in the realm of experience design and transformation design. The problem is, those still sound a little exotic to most clients, even eight years after The Experience Economy was published. I’m fine if we use “service design” as a less pretentious umbrella term to get through the door.

But experience design and transformation design are still lurking just beneath the surface and it’s important to tease out the distinctions as we go along. Pine and Gilmore’s work provides the best roadmap I’ve seen for finding our way.