Putting Wisdom into Work
The very idea of transforming people (or companies) demands that we think about and apply a word little used in businesses today: wisdom. As defined by the Oxford English Dictionary (OED), wisdom is “the quality of being wise, esp. in relation to conduct and the choice of means and ends; the combination of experience and knowledge with the ability to apply them judiciously; sound judgement, prudence, practical sense.”8 Elicitors require such wisdom across all phases of a transformation. In diagnosis, they need wisdom to distinguish real aspirations from false hopes, lofty goals, and self-delusions. They especially need wisdom to judge whether the individual person or company is capable of the change desired.
In the staged experiences phase, transformation elicitors need wisdom to prudently determine the right “choice of means” to fulfill the “choice of ends” decided during diagnosis. And follow-through involves the same qualified judgments, choices of action, and applications of experience and knowledge required at the beginning of the journey. Without the benefit of wisdom, people will find aspirations very difficult to achieve.
Look again at the OED definition of wisdom and see how it pairs experience and knowledge. As shown in figure 10-3, each level within the Progression of Economic Value corresponds with a level in what might be called the Progression of Valuable Intelligence.9 At the bottom, commodities correspond with noise: the pure abundance of unorganized observations with little or no meaning, through which commodity extractors must wade to find, for example, the nuggets of gold or pockets of oil. When codified, or systematized into a code of symbols, these observations take on meaning and so become valuable data. The collection of physical and financial data is what made the Industrial Revolution possible. It was based on manufacturers' division of labor, standardized specifications, efficiency measures, and so forth. Indeed, the height of the revolution came with the creation of computers from what was once known as the data processing industry. Data became so abundant that it overwhelmed the ability of humans to process it.10
Figure 10-3: The Progressions of Economic Value and valuable intelligence
The term data processing is now an anachronism, a throwback to the 1960s and 1970s, for what we now call the information techno logy industry. This change exactly mirrors the shift from the Industrial to the Service Economy, for information is data communicated or delivered to others (a service) requiring a common context or frame of reference. Goods are manufactured in isolation and distributed to inventory; they are essentially instantiations of codified specifications. Services, on the other hand, cannot be proffered in isolation but require the common context of provider and customer together defining what particular activities the customer wants to execute. And the service of mass customizing goods, of course, substitutes information for inventory.
Now, as we shift to the Experience Economy, the term information technology sounds dated as well. People talk about “knowledge bases,” “knowledge management,” “knowledge infrastructure,” and the like.11 Knowledge is experiential information, intelligence gained from and applied through experiences.12 None of the terms just mentioned relates to the embedding of intelligence within computer systems; rather, they refer to linking people with the right knowledge so that it can be immediately applied.13 And, of course, staging experiences requires intimate knowledge of how human beings react to the cues they receive.
While we have yet to hear terms such as wisdom technology used, that is inevitably the next step. We do know of the first book to discuss moving beyond knowledge in companies: Working Wisdom, by John Dalla Costa. In it, Costa recognizes that wisdom is both the result of experiences—often painful ones (as with fitness centers, psychiatry, and grieving)—and required for transformations:
As a human construct with human foibles, it is inevitable that the practice of business will also include the experience of suffering. However, while other political, religious, and arts institutions see the need for suffering, valuing it as the price for the transformation to a new level of human experience, business organizations still regard suffering through that adolescent perspective of avoidance and presumed immunity.
One reason for this institutional immaturity is that the profits of business are often based on serving a need that eliminates pain, discomfort, or unhappiness. Suffering and sorrow are words that for fifty years have been squeezed out of our consumer culture by the endless stream of products [that is, goods] and services promising relief, convenience, self-fulfillment, and instant gratification. Business in many ways provides the antidote to suffering, so it naturally tends to devalue that which it seeks to profitably eliminate.14
Much greater profits will accrue to those businesses with the wisdom to shift beyond goods and services to the use of experiences, no matter how painful, to transform their customers.
Accomplishing this entails moving up the dual progressions shown in figure 10-3. While the economic offering becomes more and more intangible with each step up to the next level, the value of that offering becomes more and more tangible. Economists often talk about the “line of intangibility” between goods and services—to which we would add the “line of memorability” before experiences and the “line of sustainability” before transformations—but economists refer to the offering itself, and not the value it holds for the customer. As outlined in chapter 1, goods and services remain outside of the individual, while experiences actually reach inside of the individual to affect him in an inherently personal way, greatly increasing the value of the offering. But, no matter how acute an experience, one's memory of it fades over time. Transformations, on the other hand, guide the individual toward realizing some aspiration and then help to sustain that change through time. There is no earthly value more concrete, more palpable, or more worthwhile than achieving an aspiration.
Similarly, while the availability of intelligence diminishes as one ascends each level of the Progression of Valuable Intelligence (background noise is literally ubiquitous, wisdom all too scarce), the intelligence itself becomes more and more substantial. Nothing is more important, more abiding, or more wealth-creating than the wisdom required to transform customers. And nothing will command as high a price.
In his book The Knowledge-Value Revolution, author Taichi Sakaiya demonstrates how people in all societies “develop an empathetic impulse toward their environment that convinces them to hold off on things in short supply while making a point of using up whatever there is lots of.”15 For example, material and energy resources have always been abundant in the United States, so coal, oil, and other natural commodities have been wasted. The wealthy built enormous houses on huge plots of land and then always left the lights on simply to demonstrate their wealth. In Japan, material resources have always been scarce and therefore used sparingly. Human resources, on the other hand, existed in abundance, so to demonstrate their wealth, the affluent traditionally hired legions of people to tend their small houses, lawns, and gardens. With the economic boom of the latter half of the twentieth century, skilled labor became a scarce resource in both countries, yielding, at its zenith, disposable products that conserved labor through Mass Production techniques while simultaneously wasting materials, as they were thrown away after only one use.
In his own take on the same societal and economic shifts we identify, Sakaiya writes that more and more companies, and the people within them, are moving up the Progression of Valuable Intelligence to supply what he calls chika in Japanese. Translating somewhat awkwardly into knowledge-value, this “means both ‘the price of wisdom’ and ‘the value created by wisdom.’”16 Eventually, he foresees wisdom itself becoming relatively abundant:
It therefore follows that in the new society that is now forming, the life-style that will earn the most respect will be one in which the owner's conspicuous consumption of wisdom (in the broadest sense) is displayed, while the products that will sell best will be those that reveal their purchaser to be a person “in the know.” Such products, w
hich more than anything else manifest their owner's access to the best knowledge, information, and accumulated wisdom to be had, possess what I will hereafter refer to as “knowledge-value.” It is my contention that we are entering a new phase of civilization in which the value attached to knowledge is the driving force.17
And it is our contention that the “products” that best display knowledge-value—the economic offerings that result from accumulated wisdom—are those that transform the customer. The offering is not, however, the wisdom itself; that is only a means. The offering is the changed individual. The customer is the product.
You Are What You Charge For: Once More with Caring
Very few of the enterprises that work to change people or companies are truly in the transformation business. Far too many view their offerings as mere services, and, as a result, they far too often fail to elicit the transformation or to capture the full economic value delivered when it is elicited. More important, few charge for the transformation itself. Being in the transformation business means charging for the demonstrated outcome the aspirant achieves—the transformation itself—and not for the particular activities the company performs.
If a fitness center were truly in the transformation business, for example, it wouldn't charge (solely) via membership fees or by the amount of time members spend on machines. Rather, it would charge for meeting the health and well-being aspirations of its members. If the aspirations were not met within a fixed period of time, the fitness center would not be paid—or it would be paid less, on some sliding scale commensurate with the progress achieved. In other words, it would charge not for the pain but for the gain.
Think about what such a business would do differently were it truly a transformation elicitor. First, it would spend much more time up front, before it agreed to accept an individual as a member—on understanding the individual's true aspirations and, more important, his or her current capabilities, both physical and mental. Many people do not have the temperament to stick to a physical regimen and cannot sustain progress toward a defined goal. Indeed, we suspect that many fitness centers derive much of their revenue from people who pay their money but rarely encounter pain on the machines. Signing up such people may be profitable for one period, but surely it leads to the costly churn of constantly replacing expiring memberships. Meanwhile, fitness centers lose much greater profits by not charging for the full value gained by those who do have the mindset to follow through on their aspirations and by not first attempting to change the temperament of those initially incapable of follow-through. (And these diagnostic activities should themselves be treated and expli citly charged for as an experience and, for some, a transformation—yielding profits right up front before someone even becomes a member!)
Once a fitness center determines that an individual can both physically and mentally achieve a specific aspiration, then and only then would it lay out the charge for a specific achievement, including reaching interim goals along the way. And the amount would be two or three or perhaps even ten times what such places charge today for mere machine usage. Who wouldn't pay more for a guarantee that he would lose those thirty pounds, gain those five extra inches of pure muscle around the chest, bench press 250 pounds, or (more subjectively) develop washboard abs or perfectly tight buns? And once it made such a commitment, the fitness center would be sure to design exactly the right set of experiences to make sure the aspirant achieved his goals—and therefore be paid in full. Personal trainers earn so much more than fitness center instructors precisely because they ensure their patrons follow the proper regimen.
Workers need personal trainers, too, such as those supplied by Priority Management of Vancouver, Canada. Using the slogan “A Better Way to Work,” Priority Management changes people's behavior—generally yielding at least a 20 percent improvement in business and personal productivity, among other clear benefits—while they work through a productivity challenge that diagnoses current levels of productivity, stages training workshops, and then gives personal follow-through by a certified trainer. Key to success: a guarantee that if the person does not meet his aspirations, he doesn't have to pay. As retired franchise owner Roger Wangen of Burnsville, Minnesota, told us, “With our training methods, most clients readily achieve their productivity goals. But if someone's in danger of falling behind the goals we've mapped out together or isn't taking to the new way of managing his priorities I've shown him, I redouble my efforts to make sure he gets the results he desires.” It's no wonder that more than 95 percent of Priority Management's customers continue with the program. Even if it doesn't call its customers aspirants, this company truly is in the transformation business.
Consider also the business-to-business example of management consulting, another industry that typically charges for the service activities workers perform, rather than for the actual transformation of clients. If consultants truly viewed themselves as being in the business of transformation, they would, like fitness centers, spend much more time in the up-front diagnosis phase, identifying clients' strategic needs as well as their capacity for change. They would stop writing analytical documents (the tangible goods of the present-day, PowerPoint-driven consulting industry) and start staging memorable events that would enable the client first to experience what it would be like to live and work in a world where the strategy has been achieved and then to actually create that future world (while, of course, providing appropriate memorabilia for each experience that would be very different from today's sterile binders). Most important, they would follow through to ensure that each client actually achieved its stated strategy, or else risk losing some or all of its fee.18 Wholly successful engagements, perhaps commemorated with appropriate emblems, would result in even greater revenue than that received today for mere services.
We already see many consulting engagements paid in whole or in part through stock options or a percentage of the business results achieved. London-based Celerant Consulting, for example, considers itself to be in the transformation business, with its website home page declaring, “We believe the benefits of consultancy shouldn't disappear when the consultant does. Our approach is designed to produce positive change in your business that lasts.”19 So naturally the company, whose tagline is “Changing business for good,” often puts a significant portion of its fees at risk, tied to performance benchmarks. As Executive Vice President Gary Traylor says, “Clients want some certainty. When they hire a consultant, they're taking a big risk. This shows them a commitment on our part.”20 And Starizon Studio of Keystone, Colorado—founded by Gary Adamson explicitly to transform manufacturers and service providers into premier experience stagers—puts 25 percent of its fees at risk through its “transformational guarantee.” Clients may pay all of this portion, none of it, or anywhere in between, depending solely on their view of whether they achieved the transformation they sought.
You really are what you charge for. So let's be very clear about this as it applies to each level of customer value:
If you charge for stuff, then you are in the commodities business.
If you charge for tangible things, then you are in the goods business.
If you charge for the activities you execute, then you are in the services business.
If you charge for the time customers spend with you, then you are in the experiences business.
If you charge for the demonstrated outcome the customer achieves, then and only then are you in the transformations business.
It's not easy being in the business of transforming customers. Extracting commodities out of the ground may be the most physically demanding practice, but eliciting transformations out of customers is the most intellectually demanding, and it sometimes involves great physical (for example, fitness centers) and emotional (hospitals) demands as well.
Work Is Theatre: Act 2, Scene 1
Transformation elicitors still must stage experiences, extending them by orchestrating themes, impressions, cues, and even memorabilia in suc
h a way as to move the buyer toward his aspiration and not only to present the experience itself. Work is therefore still theatre, but an important shift in roles occurs between buyer and seller with this new offering. With an experience, the employees of the staging company are actors performing parts, creating roles, and building characters to engage guests in entertaining, educational, escapist, and/or esthetic ways. With a transformation, all these experiential realms merely set the stage for helping the customer learn to act. Erving Goffman, the sociologist who first proclaimed theatre to be a model for work, points to boot camp as a means of personal transformation from cynical to sincere performance for a “raw recruit who initially follows army etiquette in order to avoid physical punishment and eventually comes to follow the rules so that his organization will not be shamed and his officers and fellow soldiers will respect him.”21
Consider again a birthday transformation offering. The selection of gifts, the invitation of guests, the after-party thank-you notes, and other aspects should all aim to help children learn to act; at first, acting “as if” they are thankful, for example, and later drawing on their emotional reservoir of thankful deeds past to make their own personal statements of appreciation whenever appropriate. Such an offering supplements the parent's most fundamental role, that of developing children into independent adults acting on their own. The entire ensemble of a transformation elicitor assumes a singular role itself, that of directing the aspiring actor to perform new parts. (And remember the metadrama involved: directing is still work, and work is still theatre!)
The Experience Economy (Updated Edition) Page 28