The Experience Economy in a Pandemic: Q&A With a Business School Professor
Before the COVID-19 pandemic, David Solnet advocated that business leaders adopt a new mindset to build innovative, resilient companies. Now, he argues the opportunity for transformation has never been more clear.
“Never in our lifetimes have we seen a global pandemic like this. As incredible as this pandemic is, this is now a golden opportunity for companies and firms and individuals to transform themselves,” Solnet said.
Download Our Free Guide to Business & Management Learning Opportunities in COVID-19
Fresh industry insights
Real learner stories
Top skills & learning opportunities
Solnet is an associate professor of service management and leader of the University of Queensland (UQ) Business School’s Online Master of Leadership in Service Innovation, a cutting-edge business graduate degree focused on organizational leadership, innovation, and customer experience. Over the past several months, Solnet and team have researched the economic effects of the pandemic on the experience economy and how business professionals can adapt. In this Q&A, including video interview highlights, he shares:
The opportunity for change pandemics present to companies of all kinds
Examples of how companies are adapting their business models
How UQ’s Master of Leadership in Service Innovation program teaches the mindset and skills business leaders need to succeed in the modern economy
Need a primer on the experience economy? Skip to the end of the article to learn more.
How is the experience economy changing as a result of the pandemic?
Everything is changing in the economy, period. The whole economy is driven around the customer experience. It really isn’t just isolated to things like travel, tourism, and finance, and banking. If we think about our lives now and think about the future, everything from dining in your favorite restaurant through things like going to a dressing room in a department store, travel, theater, the arts, personal services—everywhere where the organization and the customer and employees have some intersection, we’re looking at a clean slate now. We have to re-imagine all of this.
I’ve done some research on how prior pandemics through the course of history have all led to major changes in the way the world operates. Even the Black Death in the 1300s led to the end of feudalism and to the era of enlightenment. The Spanish flu in 1918 led to governments providing socialized medicine in most countries, and even in the U.S. it led to the whole era of employer-based insurance plans. These pandemics create opportunities for change.
What’s important for companies to be examining during this time?
In my own research, I spend most of my time in the area of service work. What we’re looking at now is how workers’ wellbeing is being affected by these changes. Some have lost their jobs, for others their jobs are changing or becoming less safe, or they’re being asked to transform the way they do their jobs. It’s creating a lot of fear and anxiety.
The other side of that coin is the organizations that employ those workers. One thing we’re looking at is the relationship between the employees and the policies and the trust that’s created between those parties. Because employees and workers are going to really need to trust their workplace. Senior executives are having to think about worker wellbeing, to ensure particularly that service workers are in the best position to serve their customers.
It’s really important that we don’t just think about the worker, we think about organizational policies. Those companies that do these things well already are ahead of the game. Companies that are considered preferred employers are already going to have gained the trust of their employees. A lot of this conversation is around innovation and forward thinking. They don’t have to start re-imagining things they’ve already been re-imagining.
What are some examples of ways companies are adapting and reimagining business models?
I think what’s happened now is people have gotten used to being at home and it’s going to be a bit of a hybrid between going out to have an experience and having that experience brought to your house. We’re seeing a lot of restaurant companies investing in their own delivery process, rather than paying the big fee for the number of third party food delivery companies that are involved. That’s very expensive for the restaurant, which the costs have to often be passed on to customers. That’s a big change.
We’re also seeing a lot of passenger airlines being used for cargo, airlines have transformed their airplanes. That’s a big change. I’m interested to see what’s happening now with some of the restaurant chains about how they’re delivering and selling non-restaurant food. Panera, California Pizza Kitchen, Subway, and others have begun to sell elements of fresh groceries. They had those anyway. Now customers can order fresh vegetables and meat and eggs and so forth, even alcohol, and have curbside delivery along with their restaurant owners. That’s a nice innovation that’s occurring.
There’s just many, many examples of how firms are transforming themselves. As I said earlier, those firms that have already been in the mindset of transformation and have innovation as part of their DNA. They have a great connection to their employees to be able to get them to come along the journey with them. It’s those organizations that are going to come out of this in a much better position.
How can companies struggling to adopt new mindsets become more resilient moving forward? How does UQ’s MLSI program help?
Leaders that were trained yesterday were not trained for the rapid pace of change that occurs in the world today. Many leaders were educated on the basis of a product and a goods economy. The Master of Leadership in Service Innovation was developed to take that old mindset and transform it into a new mindset. To change your thinking from selling things to selling customer value and customer experience, using the product that you sell as just a little small part of the overall package of value that we deliver to customers. Never has this become more important now.
This program is really good for those that don’t understand the experience economy, but it’s also good for those that do understand it but haven’t been able to connect it to academic literature. Some of the learners that we’ve had in the program that worked for great companies doing this already and have still been able to learn because they’ve now found words and vocabulary that helped define and explain what they’re doing, which makes it easier for them to teach their staff and develop new materials in the organization.
Some companies just have it in their DNA and some don’t. In this program we deliver a lot of amazing and interesting and relevant material about not just what innovation is, but how do you create the innovation mindset in the organization? We’re going to need that. We’re going to have to be agile. We’re going to have to be able to think on our feet, make changes, and understand that the market is changing dramatically more so than ever before.
This program really is about reinvention. The current pandemic presents an opportunity for many companies to create, define, innovate, and transform their competencies. To invest in areas where they probably wish they would have invested before. Data-driven, digital, cloud-based, variable cost structures, agility to create stronger opportunities and capabilities for the future. I believe that the Master of Leadership in Service Innovation is the perfect platform to be ready for the next period of enlightenment.
Become a Modern Business Leader With UQ’s Master of Leadership in Service Innovation
The University of Queensland Master’s degree program of Leadership in Service Innovation takes a cross-disciplinary approach to help students develop the transformational mindset and leadership skills needed to succeed in the modern economy.
Primer: What is the Experience Economy?
In the experience economy, value isn’t created solely by physical products, but co-created through experiences, from digital experiences to physical and social realms. An experience lens looks at the customer journey and customer needs through all interactions with an organization, vs. just the product.
“The reality is that 80% of the global economy or certainly in developed countries now is in the service sector. It’s on non-rigid things. It’s hotels and restaurants. It’s healthcare, it’s finance, it’s education, it’s government,” Solnet said.
The term “experience economy” was first used in the 1998 Harvard Business Review article “Welcome to the Experience Economy” where co-authors B. Joseph Pine II and James H. Gilmore wrote that the economy is in its next moment of change, after changing from an agrarian economy to an industrial economy to a service economy to now, the experience economy. The article explains that “an experience occurs when a company intentionally uses services as the stage, and goods as props, to engage individual customers in a way that creates a memorable event” and likens designing memorable experiences as becoming “as much a business art as product design and process design are today.”
While Airbnb, Uber, Starbucks, and Apple stores may come first to mind when thinking about the experience economy, the concept that all businesses can benefit from shifting their mindset from product-centric to experience- and customer-centric is even more relevant today, in a world where social media and smartphones mean customers and companies are more connected than ever through virtual experiences, in addition to live events, trade shows, and other more traditional touchpoints. Of course, as this article discusses, the COVID-19 pandemic has changed what compelling experiences and business models look like for the foreseeable future.
“[Shifting your] mindset from, we’re selling a product to a customer to we’re selling experiences, what that does for loyalty is extremely powerful. What the MLSI program is doing is allowing you to learn what the greatest companies are doing now and what the future is likely to hold, and allowing our students to bring that back into the workplace with them,” Solnet said. “This program really is about reinvention. The current coronavirus pandemic presents an opportunity for many companies to create, define, innovate, and transform their competencies. To invest in areas where they probably wish they would have invested before… to create stronger opportunities and capabilities for the future.”
Last updated: July 2020