I had the realization the first time I encountered The Experience Economy, post my music industry ambitions and at a very early stage of financial industry career, well before the media stuff entered the equation, that you could understand every business by the economic ladder Joe Pine laid out.
Joe didn’t discover it so much as he described it. I love framework people like Joe for this. He’s a business poet and for non-business thinker people, or ones who are just getting their feet into the inside and still feeling like an outsider, it’s an incredible communicative gift that he has.
The ladder’s been expanded recently, which was good enough reason to invite him onto Just Press Record for a surprise introduction to somebody who also lives his lessons without having the labels (well, she does now, and that’s Shannon Staton, creator of The Collective - a high-end community and events curator that will put ever conference you’ve ever been invited to to shame). I’ll outline them here.
The Five-Rung Ladder Every Business Is Living On:
Commodities (undifferentiated, price-driven - think: generic coffee beans, in a random location you’re visiting, where you go “what’s that” and somebody says “coffee” and you go “neat!”)
Goods (manufactured, feature-focused - think: packaged, ground coffee you can buy at the store)
Services (delivered on demand, intangible relative to commodities and goods - think: any non-descript coffee shop where you get coffee when you’re traveling just to get the fix your after without a second thought)
Experiences (memorable, engage the senses - think: your coffee spot where you go in, feel at home, can’t wait to get your order and maybe you even know the people there and they know your order and there’s a whole feeling to it)
Transformations (guide people to aspirations, change who they are, this is the frontier and the polar extreme of commodities - think: your favorite coffee shop is up for sale as the owner retires, and since you’ve befriended them over the years, you wonder if you should buy it and start a whole new life dedicated to this small joy)
Now, I don’t want to get too carried away on that last step, but this is a nagging detail from The Experience Economy I couldn’t quite put my thumb on until Joe wrote this book and I had to yell, “Damnit. He did it again!”
See, every rung of that ladder gets commoditized over time. Repetition makes stuff boring. Or turns it into wallpaper. Even experiences are susceptible to this. The first time you have the experience it might be amazing. But the 64th, it doesn’t always hit the same way.
So companies customize and tweak - which is the idea of mass customization that was promised to us all, years ago - and even that only works for a while, because either you can’t be everything to everyone and you get spread too thin, or once you understand your limits of how much you can be to how many people, you settle into a new type of grove.
Different parts of life make you notice it more than others - but we all know that feeling. My wife and I stopped at a Starbucks drive through when we were driving home at an ungodly early hour and in need of caffeine and, in that drive-through I ordered, half awake, two large iced coffees the ways we each get them (me: black, hers: splash of skim because have you seen what the charge for almond milk), and as we waited in the line my brain drifted to back when they wouldn’t let you say medium and they’d make you translate it to Italian or - remember those times?
The experience had a transformative aspect. I had to learn new words to go to the local Starbucks sometime in my college years. It was weird, and fun to make fun of, but also - kind of cool. How a business could do this. And then as life went on, I was equally fascinated by how, somehow, they just stopped.
Joe, of course, wrote about this a few years ago and that’s what got me all fired up for this new book. His “How Starbucks Devalued Its Own Brand” HBR post is still outstanding, by the way. And, the new book, The Transformation Economy, is everything I wanted it to be.
No business is static. So how do you keep things fresh? How do you, once you know what love is, make love stay? You nail down your experiences, and then you figure out your transformations. And then you do it again. And again.
The trap comes from transforming only once. You learn to order that grande at Starbucks to avoid a repeat barista shaming - and then what? You don’t get to the top of the ladder and stop, only to climb back down! You need the choice to keep climbing or at least the incentive to stay.
Shannon gets this instinctively. She doesn’t ask for what other experience she can sell (or up-sell). She's exclusively focused on what love is and making it stay. That means presenting an experience designed around one question: Who do my people want to become? Everything else - the venue, the timing, the people in the room - is presented in service to that.
That requires a detailed eye for curating those conditions, but that’s her intuitive superpower. And that’s where you make an incredible experience stay. You keep some mystery that has to be chased by the provider and the consumer, together.
Shannon’s business is small-community events. She learned this skill from retail staging and then executive assistant/all size of event management and probably 15 other places she hasn’t told me about yet. The key part is the commodity, goods, and even most of the service variables are nearly inconsequential to her, she knows what “good” is and she trusts that instinct there, so she can put her entire focus onto experiences and transformations.
You can see the words unlock an understanding for her in the full conversation. Her instinct was there all along - but the words. There’s power in the words.
But what I had to flag here, is that in making sure an experience doesn’t go scale, you are constantly reassessing who they people you are serving want to become. Because that’s what changes over time. After I got trained to order a grande at Starbucks, I was transformed, and then… cool, ok? This is the trap. That was what I was always fumbling with in the post-Experience Economy laddering I constantly do in my mind.
You escape that trap by evolving as a business alongside your customers. You have to figure out who they want to become, and then deliver an experience that also serves that, very bespoke, very customized desire, to transform into whatever is next.
So the first time you go to one of Shannon’s events she helps you get “from handshakes to hugs” with a bunch of super-smart people that you’d love to have as not just acquaintances but contacts, if not friends. The second, or third, or fifth time you engage, she’s searching for ways to reassess where her members are in life now, and where they’re interesting in going, so her community can play some role in helping you determine where to go next and how to get there.
The transformation is what keeps you coming back.
And not every business has to aspire for this - we still need people to make commodities and goods, and provide services, and even do an experience that’s great for the first and fifth time but never punch through to more (I am a man of convenience and - just come to one of my favorite local spots and I’ll relish in that lack of transformation they’ve gone through, all while transforming you into a fan, ahem).
The framework is complete. Joe Pine is on fire. Shannon Staton has been transformed. Now it's your turn. Just press play:
