CHRIS PARKER: Hello, this is Chris Parker with the Business Simplicity Podcast. I just had another amazing conversation with Joe Pine — second time on the podcast — and this time about his book The Transformation Economy, which gets into the evolution of economic value beyond the experience economy, which he’s so famous for around the world. We get into not only the concept of the transformation economy, but a lot of personal anecdotes and some fun little corners of that universe. But Joe, maybe in your own words, can you share why it would be really valuable for people to spend the time listening to this episode?

JOE PINE: Well, value is exactly the right word, Chris. It’s about creating greater value for your customers by helping them achieve their aspirations. And there’s no greater economic value you can create than to help customers achieve their aspirations — to become who they want to become. And that then increases the value of your business and what you are doing for them, so in the long term you can actually thrive forever, as I like to say. And it’s also about value for you as an individual. There are things that I talk about in there that allow you to see what your own aspirations might be and how you can in fact achieve those, and viscerally understand what transformations are about, and do it for your customers as well.

CHRIS PARKER: Welcome back to the Business Simplicity Podcast. I have Joe Pine on the podcast again. It was back in 2020 when we had the first conversation, and in that we were talking more about the experience economy. Today we’re going to be taking the next step into the transformation economy. Maybe my own little personal anecdote is — it was when I was a young CIO, and I was, shall we say, frustrated at the amount of waste we were spending on what I call executive ego hobby projects. That’s when I realized — and that was right around when your book Authenticity was first published — I was able to grab on to this thing around the experience economy, like, oh wait, as a north star, this is a framework. And I could never unsee it since then — how we can basically connect the investments of the organization into something that’s meaningful for the customer. So first, thank you for publishing mass customization and then the experience economy. There’s so much that’s been so influential.

So Joe, welcome. One thing I want to kick off on — I know you’ve been asked this before, and when we saw each other a month ago at the kickoff in Amsterdam — I think that’s where you mentioned that this is a book you wanted to write for like 20 or 25 years, that people were basically saying, “Hey, there’s something missing here.” My question to you is: why now? The experience economy, now the transformation economy, which is an evolution of that — can you give us a “why now?” and then maybe a little primer on what the transformation economy is, and we’ll kick it off from there.

JOE PINE: Sure. And I remember the first time we met when you brought your CEO — I think to the Amsterdam area from Belgium — and we talked about these ideas. Even then I think we talked about the transformation economy, because it’s been there from the beginning. I first discovered — I didn’t invent, I just discovered — what companies were naturally doing. The experience economy back in early 1994, and I recognized that experiences were in fact a distinct economic offering, as distinct from services as services are from goods. And I’m always asking, what’s next? What’s next after experiences? I recognized, well, if you take experiences another level, it’s what we often call a life-changing experience — an experience that changes us in some way. And that’s what a transformation is.

So transformation is a distinct economic offering — the fifth and final economic offering: commodities, goods, services, experiences, transformations — where you use experiences as a raw material to guide people to change, to help them achieve their aspiration. Guiding is the economic function of transformations. Like you deliver services, you stage experiences, you guide transformations.

CHRIS PARKER: So if you knew this then — I think that was in 1999 when the experience economy was published — what was the thought process to leave it out?

JOE PINE: No, I didn’t leave it out. It was in there. Well, it’s not on that little progression of economic value — the graph. So yeah, we first published it — Jim Gilmore and I, my partner — first published it in 1997 in an article on strategy and leadership. But in the book, The Experience Economy from 1999, the last two chapters are on transformations. So many people forget that, or didn’t get to the end of the book. I’m not going to accuse you of that, Chris — just that you forgot that we did talk about it there.

And it’s to some degree — the first eight chapters were like a Trojan horse to get you to read the last two chapters, because this is where I knew we were going. But I had been asked since 1999, when are you going to write the full book on transformations? And I just felt two things: one, I didn’t know enough about it, as opposed to all the research we had done on experiences, and two, the world wasn’t ready for it. Transformations is a big, scary word. People — I still had to argue with people about experiences back then. I no longer have to argue that. I just say it and people get it. And now I just talk about transformations and people get it as well. So that’s why I know the world is ready for it.

Part of it is — 2020, we were in COVID, and experiences were all shut down. Coming out of that, I recognized that people, as soon as any experience opened, it was filled to capacity. We so missed having experiences with our loved ones, with our friends, with our colleagues, and even complete strangers in arenas. And what I saw going on — because COVID sort of supercharged this — is that people increasingly wanted not just memorable experiences but meaningful experiences as well. I always considered meaningful experiences as sort of a half step to transformations. Partly Albert Boswijk there in the Netherlands, who I co-founded the European Centre for the Experience Economy with — his book talked a lot about meaningful experiences and impressed that upon me.

And then I realized that half step to transformations means that people were more open to transformations. You see things like the rise of coaching over the last two decades, which was a small little field and now there are hundreds of thousands of coaches around the world helping people achieve their aspirations.

One of the key things — and I didn’t emphasize this as much in the book as I think I should have — is the factor of time. Time is the most precious resource on the planet — the time of individual human beings. And in today’s world, where we have so much abundance compared to not just 250 years ago, but just 50 years ago, 20 years ago — how much more precious our time is. If you look at the opportunity cost of that time, it’s become more precious. We live longer as well. And we want to fill that with experiences. But as it becomes more precious, it’s like — not just how do we spend our time, but how do we invest our time? And that’s what transformations are. Services are time well saved. Experiences are time well spent. Transformations are time well invested — that we invest our time in becoming a better me.

CHRIS PARKER: Now that you bring that up — it’s interesting — there was a review by a Western Kentucky University professor that said this is not a self-help book, but it’s almost like one.

JOE PINE: And that is intentional. I intentionally wrote this so that people would think about themselves. One of the things I’ve always done to get people into experiences is take them on experience expeditions. With clients I’d often take them into a city and say, let’s experience some of the best of the city as consumers — a few of the worst as well — so you can see what a not-good experience is all about. Get them to viscerally feel that, yes, as a consumer I want experiences, and therefore how do I help my customers — even if they’re business people — have those same sorts of experiences?

And here in the book, in the same way, I want people to understand that you as a reader have aspirations. You want to become better in some ways. You have aspects of identity that you want to enhance, or new aspects of identity that you want to gain. And I felt that if they could feel that viscerally, then they’d be more open to the fact that hey, our customers are that way. Our customers have aspirations — and how do we help them achieve that?

CHRIS PARKER: Well, I posted this on LinkedIn as well, and you were kind enough to comment on it, but it’s on page 29 — something just slammed home. I don’t have the book in front of me, so…

JOE PINE: I’ll read it. It’s: “At the heart of business — fostering human flourishing is the true purpose of business. It’s its raison d’être.” So, fostering human flourishing is the true purpose of business.

CHRIS PARKER: I can’t agree with that more, for so many reasons. Can you unpack that? The book is mostly written from the perspective of a company providing transformative experiences — yet this also applies to the staff and the inward-looking dimension, and that’s a bit closer to my heart. My hope is that when people read this book, it’s not only about transforming your company into some sort of guide or sherpa. You can actually apply this really, really close to home. Can you dive into human flourishing and why that is the anchor of all of this?

JOE PINE: Yes. And don’t let me forget to talk about staff as part of that. When I outlined the book — and I always outline my books, but I never follow the outline completely — human flourishing was this little kicker at the end of a chapter where I talked about the four spheres of transformation: the four primary sectors. It keys off of the old English proverb about being healthy, wealthy, and wise. I recognized that the spheres were any business that helps people have health and well-being, wealth and prosperity, knowledge and wisdom, and one that the proverb didn’t have — purpose and meaning. Those are areas where people have aspirations and you can help them transform.

I put them in a Venn diagram and they look like petals. And because I knew they all overlapped — you think about well-being and prosperity, is there a big difference? — I said, well, what’s in the middle? And I recognized, well, that’s human flourishing. What they do is they help us flourish.

My definition of flourishing is the extent to which you are who you are meant to be. I looked up other definitions of flourishing, and some had things like, well, you need four of these seven elements — and I’m like, that’s crazy. It’s going to be different for everybody. What how I flourish, Chris, is different than how you flourish because of the unique human beings that we are.

It became so much bigger that I actually moved it up to the second chapter. I almost think it should be the first chapter if I did it over again. Human flourishing has seen a renaissance in the last 20 years or so in positive psychology. Psychology forever has been negative psychology — we help you recover from trauma. Positive psychology asks: how do we help you flourish? It goes back to Aristotle and the Greek word eudaimonia, which is sort of like living a good life — often earlier translated as happiness, but all the recent translations basically use the word flourishing. And all economic offerings help us flourish — even commodities — because we only ever give up the money in our account for an economic offering if we think that offering has more value than the amount of money.

CHRIS PARKER: Let me grab onto a few of these nuggets and propose something. If the purpose of business is to maximize or enable human flourishing — defined as people becoming the people they should be — is it true then that a primary role, or the primary role, of a business as a collection of humans is to enable flourishing within itself, to enable these humans to be the people they should be, so that they can serve their customers and help them be the people they should be? Because that is somewhat counter to “maximize shareholder value” — in principle they say no, we’re going to hammer these human resource widgets into little boxes so they squeak on demand and squirt out the output that they need. How does that resonate with you? Is this the reason for business? Is this why we congregate as humans?

JOE PINE: Yes. Yes, it absolutely is. Work has forever given people dignity. Work gives life meaning. Where do staff and employee flourishing come from? It’s in that purpose and meaning in large measure. And it doesn’t have to be just professionals — even grunt work can give life meaning. You remember the old parable about building a cathedral, where they got people chipping rocks? You go up to one person and they say, “What are you doing?” — “Well, I’m cracking rock. What does it look like I’m doing?” He’s not getting any meaning out of that work. But you go up to another person and he says, “I’m building a cathedral.” He recognized that his job is crucial to building a cathedral in which people will worship God. And he gets meaning out of that. That is why we congregate together — to get that meaning.

One of the stories in staging transformative experiences is the Crown Worldwide Group as a case study. This was a purpose, meaning, and values initiative where some agencies worked with leadership to discover the deep purpose of the people that work there. What I really liked about it is they didn’t come up with some buzzwords for a poster and try to push it on people — they really engaged with the people in the organization. And they came up with: “We make it simpler for people to live, to work, and to do business anywhere in the world.” They came up with a purpose statement, but they did it in a very experiential way.

CHRIS PARKER: So how was that a transformative experience? I’m asking because I think this is how any company could apply this book at the most basic level. That’s why I grabbed onto that particular case study.

JOE PINE: Exactly. It is a transformative set of experiences for the employees in the organization. And if you want to become a company that guides transformation for customers, and you’re not that today, you’re going to need to transform the company, transform the organization, transform the individual employees within that organization to make that happen. And I do think the first step is coming up with the meaningful purpose of your organization — your corporate raison d’être. Why do you exist in the world other than making a buck?

And I use the words “come up with” — I don’t mean invent. It is uncovering what the purpose of the organization is that people have never really thought about, laid out, and put in stone. It should last for decades, if not forever. And when you do that, you’ll find there’s always some sort of transformational aspect to it. There’s always a reason why people work. It is that meaningful purpose — why people get meaning out of work. Crown Worldwide was a great example of that. Making businesses simpler is a very simple thing, but it actually has a little emotional component too, which I think is important: we exist for others. We’re serving others in making their businesses simpler, and they have this aspiration for their businesses to become simple. It is an aspiration that helps you transform your customers while at the same time transforming yourselves.

CHRIS PARKER: Let’s grab that and connect it to shareholder value, because we pinned that. Can we close that circle?

JOE PINE: Sure. I’m actually writing an article for more of an investor-type audience, and the first line is — paraphrasing a little bit — if you’re a short-term investor, stop reading this article. If you think that shareholder value is maximized on the short term by treating people as widgets, then yeah, you can get a lot of short-term gain, but you’re setting your company up to fail eventually. Instead, you need to set it up to thrive forever — and having meaningful purpose is a key aspect of that.

I do believe that if you understand that your raison d’être is to foster human flourishing — for your customers, but also for your employees, and also for the communities in which you reside, and the greater society, and the planet overall — and to be very clear, I’m not talking about stakeholder capitalism. I’m not talking about these entities having rights on you. I’m saying you have a responsibility to them. And if you understand that and you operationalize it, you will gain much more shareholder value over the long term. You will set yourselves up to thrive forever, as opposed to short-term investment that rises up and then falls into mediocrity and eventually fails.

CHRIS PARKER: Let me maybe confront you with something. The experience economy — you observed it well before 1999 when you published it, and it’s been updated — a second edition, a third edition in 2020. Not all companies around the world consider themselves experience-based organizations, nor should they. So my question is: what is your ambition for the impact of this? Do you feel the experience economy, as an investment of your life energy, made the impact you wanted? And do you feel the transformation economy — the evolution — what impact do you hope that makes?

JOE PINE: I’m very gratified for the impact that the experience economy had. Almost literally not a week goes by without somebody telling me they read it and it changed their lives in some way. It’s just amazing how that happens — many of which I know about, I’ve worked with those companies, or they come up to me. Often just like — I had one last week where somebody said, “I read your book 20 years ago and here’s how it changed my life.” Hearing about those is very gratifying.

I think the transformation economy will have an even greater impact. It’ll take another 10 or 20 years for people to really ascend to the proposition that human flourishing is the raison d’être. There are other people talking about it — John Kay, a professor at London Business School, published a book on 21st century capitalism. I read a review of it in The Economist and they quoted this really ancillary, almost off-handed remark about human flourishing and said, “Hey, this is why this book is so important.” People are starting to recognize it.

And even if they don’t fully ascend to that proposition, but they do recognize that they’re in the transformation business, think about how much more human flourishing will happen because they’re helping people achieve their aspirations — or helping businesses achieve their aspirations, helping their customers achieve their aspirations. I feel that this human flourishing dimension is having the same sort of resonance.

CHRIS PARKER: Let me grab onto terminology. I don’t want to get into too much word-smithing, but way back in the day, we were talking about customer relationship management as a strategic concept of deeply understanding customers — and that turned into Salesforce.com, it’s software now. Then we got customer experience, and now a “customer experience associate” is a call center staff member. Not to diminish that job at all, but I thought this customer experience movement was so much more. It’s been somewhat packaged into tasks and jobs.

JOE PINE: I have a very technical term for this. It’s called bastardization.

CHRIS PARKER: Bastardization. Okay. And now let’s go into transformation — when I first read that, the word transformation — I got it, but I was like, this is such a burned word for me. There are people like myself who have been in corporate transformation, and the T-word is like, we don’t even want to use it anymore because it’s so bastardized already. So what is the ethos of transformation, where can it go, and how might it get bastardized?

JOE PINE: So, CRM was basically a bastardization of my first book, Mass Customization, about understanding individual customers and giving them exactly what they want. Whereas CRM is about understanding individual customers to better sell what we already have — which is very different. CX — bastardization of the experience economy — is about making things nice and easy and convenient, which is the antithesis of an experience, which needs to be memorable and personal and frictionful, not frictionless. CX just gives you great service.

Maybe you’re right that the bastardization of transformation happened before the full book was published — but maybe digital transformation, as it’s so often called, is that internal transformation that is the bastardization. It basically means: let’s not create a better company with better outcomes, let’s get rid of people and lower our costs. That’s what internal transformation so often means. And AI of course can turbocharge that — people think incorrectly that it’s a way of reducing overhead, reducing people, reducing headcount, doing things more efficiently — instead of understanding that what AI is really great at is augmenting people’s skills and abilities. It’s going to be the greatest boon for employment we’ve ever had, as the greatest technological tool invented so far. But I think you’re right — it is that internal transformation, digital transformation, AI transformation that is the bastardization.

CHRIS PARKER: I think let’s grab onto that, but I don’t want to let it pass that you have just explained that you are the father of some major management concept bastards running around the world.

JOE PINE: That’s right. Thank you.

CHRIS PARKER: So okay, we have a title for this episode. I had not made that connection to the word, but yes, I guess you’re right. Remember that word — we have a title for the podcast.

Now, I am busy in the AI space and I am busy in the AI transformation space. One of the clients I had — no lie — called me three or four months ago and said, “Okay, our cloud transformation is done and now we want to implement AI and reduce headcount by 30%. Can you help?” And I was just like — no. I can help with those two separate things maybe, but not in the same breath. Maybe this is where we can start to close the conversation a little bit. You mentioned AI in the book a few times, but it’s light — which I liked, because this is much more of a timeless thing. When organizations are confronted with this superpower of AI augmenting their human capability, what can we take from the transformation economy concepts in order to not mess that up? What are some patterns and anti-patterns that people can use as guiding lights? You want to do AI change right — well, I would say start with human flourishing. Are there other things we can pull out as guiding lights to not destroy companies?

JOE PINE: Yeah. So I agree — start with human flourishing. One of the things I talk about in the book where AI is particularly helpful is experience and transformation platforms. Platforms where you can basically create the set of experiences by which people or companies can transform. One example I give is BetterUp, which is a coaching platform. They work with companies — often when they’re undergoing a digital transformation — and they want to get new behaviors and new mindsets out of people. They open it up to coaching their executives, managers, sometimes frontline personnel. You basically get an app where you provide some personal information, including what you’re looking for personally — so it’s not just what the company wants, but where you want to go in your career. They recommend three different coaches that could best fit with what you’re doing — sort of like swipe left, swipe right — and then you do coaching, often weekly, that helps you transform into who you want to become, combined with who the company wants you to become. And in between, AI fills in the pieces. AI can provide daily inspiration, understand what’s going on on a more daily basis, in concert with what the company wants as well. In the longer term, it’s a great platform to get that internal transformation going.

CHRIS PARKER: I think it’s interesting the path you took on that — BetterUp, and also in the book you talk about Chip Conley’s Modern Elder Academy, which is a mentoring and education platform. My belief is that all of us will need to redefine ourselves professionally in the next five years because of AI. There are some people who will approach that from a position of fear and scarcity and maybe avoid it. And then there are going to be other people and other organizations that lean into these new capabilities — like BetterUp — in order to provide that guidance. Because like it or not, I think we will all have to make that metamorphosis into something new — and still, I hope, become the people that we should become. That’s really the essence of flourishing. And with Modern Elder Academy, the term “chrysalis” was defined — and in that case, we are all, I guess, in that chrysalis right now. Maybe that’s the invitation with AI changing so much — this is the opportunity for organizations to really rethink themselves from the inside out and come up with some new economic offerings as they move forward.

JOE PINE: Exactly. And the chrysalis is a great metaphor for transformation. You go in a caterpillar, you come out a butterfly — that’s a metamorphosis. You’re completely changed. You can’t go back. And organizations can become chrysalises in which you are changed. The Modern Elder Academy — Chip Conley describes it as a chrysalis in which you go.

When I was in the Netherlands and we met again in Amsterdam for the European book launch, I spoke in Rotterdam at a Third Place Summit — all about third places, cafes, bars, libraries, etc. And I emphasized with them that they can be a chrysalis, because a third place is already liminal. It’s neither home nor work — it’s a third place. It’s where people go, and by definition, people come to it often. Every person that comes is undergoing some sort of transformation — maybe multiple transformations at a time. And the third place is a great place to reflect on what’s going on, because your breathing slows down. You’re in this liminal place where you don’t have to think specifically about what’s going on at home or work, but you can think about your life — personally and professionally. I encouraged them to make it a place of reflection, where people are thinking about these things and preparing for the next step in their journey. That’s what a chrysalis is. And there are many organizations — particularly when they have physical places that people come to again and again — that should begin to think of themselves as chrysalises and ask: how do we help people on their transformation journeys?

CHRIS PARKER: Before we pressed record, we talked about connecting somehow to my experience — more in the business-to-business domain, enterprise, oftentimes regulated. There was an organization I was talking to not long ago — a small equipment leasing company based here in Rotterdam called Bquip — a really interesting company. What was fascinating for me in that conversation was that they didn’t really see themselves as a leasing company in a financial sense. In fact, they didn’t want that. They said, “We are not a bank. We do not want that.” And they did large ticket stuff, which inherently is risky. Basically what they’re looking at is: how can they rethink the experience of financing large ticket equipment so that they can enable entrepreneurs to succeed? And I thought that was a transformational view — a really interesting and resonating approach to something I’ve seen done many ways. At LeasePlan when I was there, the tagline was “it’s easier to LeasePlan,” which I always struggled with because we absolutely knew from research that we were not the easiest. So it was aspirational, fine — but also confrontational.

JOE PINE: That’s the bastardization of Authenticity, by the way — x-washing, right-washing, marketing-washing, whatever it is. That’s the bastardization of authenticity. And this is where I love the case of Crown Worldwide — instead of coming up with the x-washing and imposing it, it was really figuring out: for the people that are there, why are they there? What is that evolution, that transformation they’re going through as individuals, and how do you connect that to a greater good?

With B2B in particular, it’s important to understand that no company ever buys your offering because they want your offering. It’s always a means to an end. And if you sell the end rather than the means, you create much more value. You really need to focus on the outcomes your customers achieve. Whatever business you’re in, you need to ask why. Why do they want our offering? Understand that — then ask it again and again, however many times it takes to get down to some core aspiration that you can then think about: how do we subsume what we’re doing today in helping them do that? And that will create the shareholder value when you figure that out and are able to help them achieve those aspirations.

And what Bquip did — and I’ve seen a lot of leasing companies and it’s a little counterintuitive — if they’re there to help entrepreneurs succeed by providing the financing, they don’t look at the entrepreneur first. They look at the asset first. That’s very interesting, because typically with every other bank-based leasing company, they do the credit review of the client first and say, “Okay, this is how much they can afford,” and then try to fit the asset into it. In this case, the company specializes in just a handful of assets they know very, very well — and they say, okay, you need, let’s say, a container — some large metal thing — and they know exactly the lifecycle of that container, the residual value, and from that they’re able to come back and make a really creative deal. To be the experts in something the entrepreneur is not — and then figure out how to make it work. That’s it.

CHRIS PARKER: I don’t know. I think with inspiration from the transformation economy, people can — if they allow themselves — really start to reimagine some of the things that they do, who they do it for, and why they do it. And just do it in a non-bastardized, authentic way.

JOE PINE: Exactly.

CHRIS PARKER: So Joe, how can people benefit from you? Obviously The Transformation Economy has been released about three weeks ago. We’ll put the links in the show notes. I personally would absolutely recommend it — not only for those creating transformational experiences as an offering, but also as a way to just look at their business. Beyond that, Joe, I’ll put Strategic Horizons in the show notes as well. Can you explain a little bit about Strategic Horizons and how people can benefit?

JOE PINE: Sure. We call it a thinking studio, as opposed to a consulting company — a thinking studio that helps people create and design better economic offerings that create more economic value. On that website, at the end of the book, we talk about strategichorizons.com/integration. There’s a framework in the book called Encapsulation, Preparation, Experience, Reflection, Integration — and I model that in the book so the book itself can be transformative. But I can’t do integration — I can’t help you integrate the ideas — so we do have a set of offerings on that page, including one-on-one consulting by the hour, so we can help you think through your offerings.

We also published the Transformation Toolkit at the same time we released the book — a high-value offering on how to do everything that’s in there. There are eight different tools, one for every chapter, plus one that encompasses both the first chapter and the last chapter: if you’re in the transformation business, you actually need to charge for the outcomes your customers achieve, because inputs don’t matter — only outcomes.

And then we’re going to have in August our first Transformation Economy Expert Certification Course. We’ve been doing Experience Economy Expert Certification Courses since 2006. I’m going to start that based off the workbook so that people can get certified in this and really know how to do it inside of their company or with their clients. It’s my full transformation offering, which will come with a transformation guarantee on the outcome you get out of it — to help people really embrace the concepts in the book and have an impact on the world.

CHRIS PARKER: I’ll include all of that in the show notes. Joe Pine, thank you so much for this. It’s always inspirational, fun, and educational. I really appreciate it.

JOE PINE: Thanks, Chris.