BUSINESSWEEK ONLINE : JUNE 7, 1999 ISSUE
BOOKS

It's Showtime


THE EXPERIENCE ECONOMY
Work Is Theatre & Every Business a Stage
By B. Joseph Pine II and James H. Gilmore
Harvard Business School Press 254pp $24.95

Every 20 minutes or so at theme restaurant Rainforest Cafe, the dining area appears to burst into a full-fledged Amazonian shower. Lightning flashes, thunder rolls, birds and animals screech, even a mist rises. The diner experiences everything but the drenching rain.

In exchange for the simulated storm and niceties such as table-side tanks of tropical fish, the consumer pays a hefty price while getting pretty ordinary food. Why? For the experience. In The Experience Economy, authors B. Joseph Pine II and James H. Gilmore argue that just such offerings will surpass the proffering of goods and services to become the defining characteristic of successful businesses. Those who miss the experience trend, they add, will spend their careers fighting price wars.

Although it comes up a bit short on concrete advice, the book provides a compelling argument. Goods and even services are rapidly becoming commoditized. Great service once sufficed to distinguish you from the competition--but today, it is expected. This pressures businesses of all kinds to create new, enticing experiences for consumers.

Although several companies such as Walt Disney Co. and segments such as theme restaurants make recurring appearances, the authors work to include many industries. East Jefferson General Hospital in Metairie, La., for example, is cited for arranging its activities in ''on stage'' and ''off stage'' arenas. Unpleasant activities, such as transporting blood, are hidden from visitor view. Suave decor and easy-to-read staff name tags make public areas visitor-friendly. These highlight the hospital's efforts not just to provide medical care (goods) or support and information (services) but a sense of caring and concern (experience).

The Experience Economy also applies its thesis to the individual. This section is less interesting, possibly because it's not the first to say that a bit of the theatRical can help presentations.

Most persuasive are the authors' exhortations to the retail and service industries, whose efforts are most at risk of commoditization and who have the best opportunity to turn their wares into experiences. The advent of E-commerce underscores this point, since it makes it far easier for consumers to compare prices. To get them to brick-and-mortar stores, businesses will have to creatE experiences that will lure people away from their computers.

Still, The Experience Economy has a troubling blind spot: making money in this new environment. In fact, the authors concede that several star experience-stagers, such as theme restaurants, have a hard time turning a profit. The authors' solution: Charge admission. It's an interesting notion, but it is, at best, ahead of its time. The goal of creating an experience out of your good or service is a worthy one. But how we'll all stay in the black while creating these experiences remains unclear.

BY ELLEN NEUBORNE

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It's Showtime

PHOTO: Cover, ``The Experience Economy''



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