What is the Experience Economy?

Customer Experience Strategies for Increased Revenues & Sustainable Growth


The Experience Economy refers to a long-term structural change in our economy that has been underway for the past two decades. Authors Joe Pine and Jim Gilmore first mentioned the term in a 1998 Harvard Business Review article and their subsequent book by the same title.

Pine and Gilmore had analyzed consumer economic trends and observed that consumers were increasingly gravitating towards purchase behavior dictated by the quality of the experience in addition to the quality of the service or good itself.

Their latest book, Authenticity: What Consumers Really Want, was published in the fall of 2007. Their work has been recognized by TIME Magazine as one of “Ten Ideas that Are Changing the World” (March 10, 2008 issue) Pine and Gilmore They developed a compelling model that serves to explain what’s happening all around us called The Progression of Economic Value.




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The Progression of Economic Value


Beginning with the agrarian economy of the mid 1800s, they have documented how the economy has evolved and expanded in response to increasing productivity and automation. In the early 1900s, the predominant form of labor shifted from the farm to the factory, all a result of automation in farming and the rise of the industrial age. A similar shift occurred by the 1950s, as increased automation in manufacturing (as well as outsourcing to less-developed economies) gave rise to the service economy.

Every accountant, salesperson, and hairdresser is part of the service economy. Entire service industries have emerged that created jobs and employment. Today service workers – performing intangible activities on demand for customers –account for over 80% of the labor force (Farming, which used to employ 90% of the workforce, now produces more food with only 3% of the workforce. Similarly manufacturing, once accounting for 50% of the workforce, now employs 12%.)
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But as was the case with the farm and the factory, service jobs are being automated. Voicemail, the ATM and online travel booking are just a few examples of service jobs (secretary, bank teller, and travel agent) that are being automated. Companies are recognizing that their competitive edge can no longer rest on “great service,” which has become the norm (whether done live or via automation). Instead, they are shifting more and more resources towards “staging” (a term Pine and Gilmore use) experiences.

Everywhere you look, society is embracing the value created through experience, from big "Disneyland moments" to daily activities.   Take coffee.  The value of a cup of coffee has increased from several pennies per cup as a commodity to several dollars per cup as an experience.  This 2005 image from BusinessWeek exemplifies how the business world has embraced The Experience Economy and how it can be understood to continue to grow our economy overall.   ​​​​​​​

Experience Economy In The World Of Medicine


Having become a fan of the book and the work, Shareef Mahdavi was part of the first-ever certification process conducted by Pine and Gilmore. He was one of the first ten to obtain the status of Experience Economy Certified Expert in 2006. To date, several hundred individuals from multiple industries have gone through the training and education process to earn the distinction as certified by Pine and Gilmore as experts in the Experience Economy.

A main thrust of the work done by Shareef Mahdavi and SM2 Strategic is to bring the experience economy to the world of medicine and help doctors and manufacturers significantly improve their respective customer experience. Doing so creates a win-win at many levels: for doctors and their employees,for manufacturers and their shareholders, and, most importantly, for patients and their overall experience with healthcare.

The underlying goal of improving customer experience is to build the business of medicine through word of mouth rather than relying on advertising and promotion. SM2 believes that Cycle of Great Experience is what can help a business or practice grow sustainably over the long term.



2011 Experience Management Achievement Award 


The annual EMA was established by leading business thinkers Joe Pine and Jim Gilmore (co-authors or The Experience Economy and Authenticity: What Consumers Really Want) in 2005 to recognize individual accomplishment in creating new-to-the-world experience offerings and approaches. They presented Shareef Mahdavi with the 2011 Experience Management Achievement Award for being the leading voice and advocate for improving the patient experience in the refractive eye surgery industry.


“Shareef is on a mission to change the patient experience in medical practices. One small piece of this is the elimination of the Waiting Room.  To Shareef, this common piece of real estate is symptomatic of a wide range of problems in healthcare.
In his more than two decades of work in the medical device field, Shareef has helped to launch numerous new technologies including the laser used in Lasik eye surgery. 

He was one of the first ten to obtain the status of Experience Economy Certified Expert in 2006.  Since then, he has used his growing understanding of experience creation to help an entire industry re-think itself.

Most of his work has been with medical technology manufacturers and their physician customers. In the process, he has generated a following outside of healthcare with his periodic blogs that have covered the range from ordering shoes from Zappos to sampling the food trucks in Washington, D.C.  As Shareef puts it, “I go outside the field of medicine for inspiration to change it from the inside out.”  It seems to be working.”


Read the full story at >> The End of the Waiting Room | Macdonald Group
“Quality is defined by the customer, who uses a much wider lens than you do.”