A company's capacity to create economic value determines its prospect for growth. Some new-age entrepreneurs are attracting massive investments from venture capitalists. And it is because they can project the economic value they will create in the future.
So, how do we evaluate the capacity of a company to create economic value? One of the ways to assess any company's potential is by looking at its position in the progression of the economic value chain.
If you take a look at the progression of economic value creation, you will notice that commoditisation forces businesses to develop a new economic value model. Today, we are living in an era of the experience economy, and customers nowadays want more than just the delivery of a service; they want more. So businesses, both B2B and B2C, are now staging experience for their customers.
Serving great food isn’t enough for a customer at a restaurant. You need to give the customer a comfortable place, along with excellent customer service, and perhaps some live entertainment to unwind or give privacy to run a business meeting. It’s all about staging experiences. Many B2B companies have invested heavily in their experience centres for their customers to experience their products in action. They are no longer selling the product or services; they are merely staging the experience. Today, staging experience is the new marketing mantra.
But then, soon, most businesses will follow suit and commoditise experience economy, and staging experience will become yet another normal. Luxury travel and tourism businesses are now at the cusp of creating new economic value. Have you noticed that some of the unique 5-star experiences are now common in 3 Star business hotels?
The transformational economy is the 5th and final stage of economic value creation; here, your customer is the product. Your customers are not just using your products or services; they are being transformed by it. For instance, you become the product of your fitness coach. If you are a B2B company, your services or products are changing your customer organisations.
Now, if you look at the heavily funded companies, you will understand that they are not just staging experience, they are transforming the industry. But, how can you move up your organisation in the economic value chain?
Join me for live interaction at the CEO BottomLine's SME Growth Strategies 2019 on 16th November 2019 at Hyatt, Bengaluru. To register for the event, click on the button given below.Register Now Credit : B. Joseph Pine and James Gilmore, The Experience Economy, Harvard Business Review