5 days: 5 issues. Experience Academy Issue 5 - Positive externalities |
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The thing that stuck with me most of many of the cases was the importance of ‘externalities’. Externalities are usually defined as third-party or spillover effects that happen in economic activity. It was remarkable in how many cases that were discussed and presented during the Experience Academy this type of externalities was involved. It could be that these are an important part of experiences in general and that they have to be taken into account if one wants to understand what the actual value of the experience is.
For example in the case presented by Cliff Crosby, Nokia, in the discussion of how they train their employees, Cliff shared with us that all employees get 6 weeks of training , and in Shanghai even 12, of which 4 weeks are dedicated to teaching them the English language. Of course these language skills are not only useful at the job. If you teach people English, you give them a life skill. Teaching individuals something relevant to them, whether that individual buys from you or works for you, makes you meaningful to their lives.
Another example was shown by Mark Hansen in the Lego-case. Lego Factory is a product of Lego for which the users themselves upload their designs and they and other users can order the exact amount legobricks that are needed for building that design. The tracking of Lego Factory shows that kids who post their designs, also become better builders. Again: they learn. In fact, they aspire to be better and learn, which makes the activity they are involved in in Lego Factory a so-called Serious Leisure activity.
In both cases the interaction is more valuable because of spillover effects. In the process of doing business, some added value is created, which may make the experience even more meaningful than it already was. However, spillover effects can also refer to the parties involved. For example, what Nokia did, was sharing everything they had learned and developed (manuals, personnel training etc) with their business partners. So for example 50 store managers of AT&T have been trained in the Nokia Flagshipstore. They could have kept everything for themselves of course but the sharing of immaterial things like information or knowledge can help you provide much more value in relationships, without any additional cost (after all you already were sitting on the information).
Yet another example was given by Olaf Boswijk, who presented the Red Bull Music Academy case. First of all, this Academy takes place in a different city every year. For the RBMA in Rome and Cape Town, the organization had to make the old buildings that were going to be used completely ready for the Academy. After the Academy was over, these buildings were donated to the respective cities, so a new purpose could be found for them. Also, there is an extensive online archive with unique videos, photos etc that have been made during the Academies. One might think why the RBMA would give away all this valuable material for free. However, just like MIT with their MIT Open Courseware discovered: people don’t come to the RBMA, or for that matter MIT, for the information. They come for the experience. But in the meantime, all this information is available for everyone to enjoy and learn from.
My point is: in the experience economy we have already learned that value is not just created in the transaction from the moment the customer walks in until the moment he has paid and walks out, but extends way before and after these moments. This is the difference between the typical service value chain and the experience value chain. But in these examples we see that the value of experiences can include positive externalities that are often neglected. The value can extend beyond the value that is explicitly offered, to include value that is created as a side-effect (like improved language or building skills), and it can extend beyond the person (customer, employee) that is focused on, to include other third parties, like the partners of Nokia or everyone who is interested in the information that RBMA and MIT offer online. By including these extensions of value, one might get a better perspective on the actual value that is created in the experiences.
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