IPMA International Project Management Association
31 May 2021 / 9:21

Experience Economy: What it means for Project Management?

Times are changing and so should the mindset and thinking patterns. The shift from manufacturing to a service economy has already brought about sea changes in the way businesses interact with customers, suppliers, partners, employees, and the overall ecosystem. If anything, the after-effects of covid-19 have further fueled the need for more changes to enhance customer experience. The focus is thus shifting to Experience Economy.

The experience economy is not a new concept. It is characterized by “an experience (that) 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. Commodities are fungible, goods tangible, services intangible, and experiences memorable” (Pine and Gilmore, 1998).

What it means is that making the customer experience memorable is of paramount importance in the new normal. The value is created by focusing on what experience means to the potential or target customer audience. Please read more on customer experience and customer disappointment experience at this link: https://www.ipma.world/customer-disappointment-experience-cdx-why-does-it-matter-in-pm/

One of the key mechanisms for making the customer experience memorable is to connect with customers at an emotional level. Organizations can do a number of things to achieve that which include (but not limited to) understanding emotional triggers, integrating emotional benevolence in product/service design, and following up to assess whether the organization was able to emotionally connect with customers.

Given that product/service design and development is typically done by using project management (PM); it raises the question: What Experience Economy means for PM and how PM can contribute to further developments of the Experience Economy?

To answer, we have discussed some of the areas where PM will be able to contribute to the integration of emotional connectivity and customer experience elements in product/service design and construction.

Areas of focus for building value keeping in view experience and emotional connectivity

1) Develop a plan for delivering emotional benevolence

Organizations need to have a tangible strategy and plan for delivering a memorable experience. An understanding of emotional triggers will help in building such plans to deliver emotional benevolence. For instance, when designing a new product or service; keeping the design simple, modern and functional will increase the likelihood of people connecting with the offering.

Hence, emotional benevolence must be planned at the product/service design and construction stage if the organization intends to build a memorable experience into the product/service. There should be well-defined strategies to build products/services that lead to the creation of an experience eco-system. If that can be achieved, there is a good probability that organizations will be able to connect with their customers at an emotional level. Organizations should not leave the matter open and hope that distribution channel operators will build that connectivity latter-on in the process.

2) Focus on the customer journey

Understanding customer interaction at various instances with an organization’s touchpoints is critical to building emotional connectivity in products/service design and development. Realizing that it is not about just selling a product/service, but is about nurturing relationships is key in the customer journey. What it means is that knowing a number of things including how to make it easy for the customer to purchase a product, what information customer will be keen to know to make a purchasing decision, how the customer will be supported post-purchase, what type of after-sales services and support infrastructures are available, and how returns will be handled are some of the many instances in the customer journey that should be considered.

For instance, often customers have a preference for buying a product/service from a certain place, location, or store. It indicates an emotional association. Customers may do that out of many considerations such as quality assurance, good customer service, price competitiveness, accessibility of location, after-sales services, and ambiance of the place. All these factors are important to understand customer journey as they trigger emotional association and impact customers at an emotional level.

3) Leverage cooperative relationships

Building memorable experiences is not a solo flight but requires cooperation and collaboration. Organizations wanting to connect with customers at an emotional level will need to leverage upon their networks of suppliers, partners, channel service providers, and regulators.  That means organizations need to build emotional relationships with their collaborators first to be able to translate the momentum to achieve the same with their customers.

The need to collaborate and cooperate with up and downsides of value chain stakeholders is not a new phenomenon. However, with an increased focus on emotional connectivity, it is imperative that organizations should re-evaluate their leverage capacity and assess whether they can bank upon their collaborative strengths to deliver emotional benevolence.

4) Re-invent organization culture

Organizations are human-made systems. Their production is also human-driven. Hence, if an organization is wanting to integrate memorable experiences into its offerings, they need to ensure that people working within the organizations are aligned to the vision of delivering value through the integration of emotional connectivity.

Organizations, therefore, need to examine their cultural capacity and identify areas of cultural strengths and weaknesses. Based on such an evaluation, they need to re-invent their culture – easier said than done though. Changing culture is a mega-effort, so using the Kaizen philosophy of small continuous improvements could be a good starting point.

5) Watch out for experience – expectation gap

To be able to deliver value keeping in view the experience proposition, organizations must watch for the experience–expectation gap. That means organizations must understand the experience-related expectations of customers on an ongoing basis and re-align their offering and associated services when there is a gap. Not letting the gap happen should be a priority, but keeping it to a minimum level should always be ensured.

For instance, customers might expect that the food delivery at a restaurant will be within a half-hour of placing an order. The service provider needs to understand the average flow of customers and the orders placed during rush and off-rush hours. Such an understanding will then help in organizing having a sufficient number of staff and associated resources for delivering food within the expected time and not letting the experience-expectation gap occur.

Customers are central to the survival and growth of every type of organization. As such, building a positive experience with the product/service is critical to connecting with customers at an emotional level. This has become even more important in the post-pandemic life as face-to-face connectivity has lessened. Organizations have no choice but to ensure that they design and deliver products/services in such a way that induces emotional connectivity with customers.

Project management plays an important role in the design and delivery of products/services, so PM is expected to make significant contributions towards creating products/services that embed value based on customer experience and emotional connectivity. Obviously, both experience and emotions are intangibles, so out of box thinking will be needed to embed experience-focused value propositions in products/services.

Given the above discussion and increased focus on the Experience economy, we have discussed some areas of focus that require attention. Needless to mention that the areas discussed in this article are neither conclusive nor exhaustive and are only meant to spur thought on the subject.

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Joseph B. Pine and James H. Gilmore, 1998, “Welcome to the Experience Economy.” Harvard Business Review, July 1, 1998. https://hbr.org/1998/07/welcome-to-the-experience-economy.

© 2021 Jiwat Ram, All Rights Reserved.


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Author of this post

Jiwat is a Professor in Project Management. He has considerable experience of working internationally in diverse cultures and business environments.

Jiwat is currently serving on the Editorial Board of International Journal of Project Management.

Jiwat actively contributes to project management community. His work has been published in top scientific journals and Four of his published papers have remained in Top25 most downloaded papers. Additionally, two of his papers have been ranked as the Most Cited article published since 2012. More recently, he has published a number of articles on some of the issues confronting project management in various industry based outlets.