Joseph Pine on the Transformation Economy: Don’t Just Serve Customers—Transform Them (#067)

In this conversation with Swami, B. Joseph Pine II explains the shift from the Experience Economy to the Transformation Economy, where the real value lies in helping customers become who they aspire to be. From “time well spent” to “time well invested,” he unpacks why outcomes matter more than effort, why customers themselves become the product, and how companies must rethink pricing, purpose, and value creation.

If the future of business is about enabling change—not just delivering services—this episode will fundamentally change how you think about customers, growth, and what it truly means to create value.

⭐5 Key Takeaways
1.The Customer Is the Product: Real value is created not in what you deliver, but in who your customer becomes.
2.From Experience to Transformation: Experiences create memories, but transformations create lasting identity change.
3.Aspiration Drives Value: Customers buy to move from their current state to a desired future version of themselves.
4.Charge for Outcomes, Not Effort: The future of pricing lies in what results customers achieve—not the time or inputs you invest.
5.Time Well Invested Is the Highest Value: The best businesses don’t just save or spend time—they help customers invest it in becoming better.

⏱️ Timestamps
00:02:08 The Customer Becomes the Product
00:04:24 Transformation = Identity Change
00:05:40 Why Outcomes Beat Effort
00:10:05 Business Should Help You Flourish
00:15:21 What Are You Really Selling?
00:20:29 Add Meaning, Not Just Products
00:24:20 Industries That Will Get Disrupted Next
00:29:20 Time Well Invested > Time Well Spent
00:32:19 Stop Pricing Effort. Price Value.
00:34:06 What If Customers Don’t Know What They Want?
00:36:47 The New Skill: Transform Thinking
00:39:18 Transform Once. Win Forever

🔻 Bottomline
The future of business isn’t about delivering better products or experiences—it’s about helping people become better versions of themselves. The companies that win will be those that move beyond serving customers to guiding their transformation.

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#TransformationEconomy, #CustomerExperience, #BusinessStrategy, #ValueCreation, #LeadershipThinking, #DigitalTransformation, #FutureOfWork, #Innovation, #CustomerCentricity, #GrowthMindset

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Transcript

SPEAKER_00 0:00

So I'll start with flourishing, which is flourishing has has undergone a renaissance. It's been around since the Bible and Aristotle with his eudaimonias, as he called it in Greek. And it's about living a good life. It's about having well-being and prosperity and wisdom and meaning. And it um you know it basically I define it as flourishing is the extent to which you are who you're meant to be. Flourishing is the raison debt of business, of capitalism, of the free market economy. The way to get the most profits is not to focus on profits, it's to focus on flourishing. And profits then are the measure by which you help your customers flourish and contribute to flourish in the world. If you focus on that, then the profits will come. Yes, it's much more of a long-term view. You may, you may, you may hurt profits in the short term. Uh in October, the CEO of Humana in the US, insurance healthcare company, announced that they're going to stop taking on new customers because they're not doing a good enough job with their current customers. Right? So they're foregoing revenue and some level of profits in order to ensure that they help their current customers flourish. And then once they get that basic job done, then they'll they'll go up.

SPEAKER_03 1:18

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SPEAKER_00 3:06

Well, the the one of the biggest things it takes is a mindset change that whether you're coming from an experienced stager or even a service provider, even a goods manufacturer, it's a mindset change to think about uh transformations as a distinct economic offering, which they are as distinct from experiences, experiences are from services, services are from goods. Uh and uh and that it requires this different mindset to focus on the customer, on what you do for them with transformations. You know, it's it is about helping customers achieve their aspirations, helping guiding them to become who they want to become. And uh and it's and it's very different, it's very tightly intertwined with experiences because we only ever change through the experiences that we have, as the old saying goes, are all the product of our experiences. And so you do still have to stage experiences, but you have to do them in a way that yields that transformative outcome. You know, with transformations, the customer is the product, that it's their outcome, their achievement of their aspirations, uh, becoming who they want to become. And so inputs don't matter. All the experiences that you stage don't matter unless they get their outcome. The services that you deliver, the goods you make, don't matter unless the customer gets the outcome that they're that they're looking for. So that's the the key thing that that needs to change.

SPEAKER_03 4:29

You make a very interesting point in the book, uh, and I'm going to quote that uh Joe. Uh you talk about uh experience experiences being memories, and uh transformation is about changing identity. Uh can you explain that a bit? Because uh it's got a lot of uh deep uh meaning in uh you know that one statement. So can you tell me a little bit about that?

SPEAKER_00 4:54

Well, all transformation is identity change. You're either enhancing a current level of identity or expanding it, or you are uh adding an element of identity. Again, the customer is is doing that. You're just guiding them to do it, they have to change themselves. And and so it's a very uh lasting thing. And it has to be sustained through time, whereas uh memories, which are the hallmark of experiences, they tend to dissipate through time. And so you have to ensure that you you keep it going, that you integrate this transformation, help customers integrate into their lives, uh, and uh and to make it something that lasts. You know, if I if I go on a diet and I lose 20 pounds, but then you know six months later I get it back. I wasn't really transformed. So, how do you sustain it through time so that it lasts is the key thing?

SPEAKER_03 5:48

So, one of the things that was coming back to me, Joe, was uh uh some of your past books uh have left such an impression on me. For example, mass customization was itself uh phenomenal. And then you have experience economy, which is really what I think uh you wrote about it far, far ahead before customer experience uh was a trend. Uh given that you're talking about transformation now, uh how does it change the business model of companies? Because uh many companies today charge for outcomes anyway. So if I am McKinsey, McKinsey is saying, you know what, hey, I'm now going to charge you for outcomes. So how does a business model change? And how do you really charge for outcomes?

SPEAKER_00 6:33

Yeah, so so it so all of it is part of the same universe of thought. You know, mass customization, 33 years ago, I came up with that, right? Uh is uh is the DNA of everything. Uh it's you know the progression of economic values, how he discovered experiences and transformations as a distinct economic offering by recognizing that customizing goods turns them into services. Well, what does it turn services to experiences? And asking it one more time. What happens when you customize an experience? You design an experience that's so important and appropriate for this individual person or company right now, then you can't help but change it into a life-changing experience. And so, as I talked about, the big distinction between uh between memories and then lasting outcomes means that you need to charge for outcomes. With with experiences, you charge for time. The time customers spend with you with an admission fee, a membership fee, or some other form of doing that. With transformations, what's what's crucial is that you charge for the demonstrated outcomes that your customers achieve. And consulting companies have have dabbled in that, have done it to some degree uh for a very long time. But in January, remember McKinsey, to your point, uh, in January, McKinsey said that particularly with AI projects, because people are so unsure of the outcomes, says we're gonna charge for that. We're gonna we're gonna guarantee it in some way. If you don't get the outcomes, then you're not gonna have to pay that full amount, which is exactly the way it should be done for all consulting projects, because inputs don't matter. They charge for inputs today, they charge for time and materials. What is how much time some junior consultant spends on the project is immaterial to the value of that project, but it's immaterial, right? And so you need to charge for the outcome. Interestingly, uh, that same month in January, I sort of I remember uh noticing this, uh, the uh CFO of OpenAI also said in a blog post that we're going to uh charge, increasingly charge for the outcomes customer gets from the AI. The uh president of Dartmouth College, one of the Ivy League colleges, says that we're gonna start charging students for the outcomes that they get, right? Which is again the way it should be, because inputs don't matter. And you see that more and more. I know hundreds of companies that do it, but for many, it's a very strange thing to think about well, well, I do all this work and maybe it won't get paid. Okay, well, do the work better. You know, no, but but there is a paradox that you can't actually guarantee the customers will change. Again, they change themselves. You do you may have the old uh saying like we do in in English, that you can lead a horse to water, but you can't make it drink. Right? That's the way it is with transformations. But the best way to to get that transformation to have it is to guarantee it. Because what that is, is it's it's one, it it it it it as McKinsey was was talking about, it gets rid of the excuse not to buy uh that you have. And two, uh it is a catalytic mechanism that means you will do whatever it takes to recoup your entire money. Now, you don't have to spend do all it doesn't have to be a hundred percent transformation guarantee. It can be most often I see 25% transformation guarantees. You still can get paid for some services, maybe some membership fees as well. But but where the profit is, is that last 25% of the of the of the of the fees, which is uh which is what you want to guarantee. Because then you will figure out what it takes to be able to truly transform this individual uh client, or rather, I should say aspirant, right? You know, services have clients, experiences have guessed, transformations have aspirants, and so achieving those aspirations is the only thing that matters.

SPEAKER_03 10:17

So tell me a little bit about aspirations. Because you talk about aspirations, you talk about flourishing. So I want you to kind of explain uh that as a concept because if I am a CEO or if I'm a head of customer experience, or if I'm actually a board member listening to this conversation, uh what's aspiration and why is flourishing and understanding that concept so important for me as a company?

SPEAKER_00 10:44

So those those are two big things, they're related, but they're big things. She should ask two different questions about that. So I'll start with flourishing, um, which which is I I flourishing is as has undergone a renaissance. You know, it's it's been around since the Bible and and and Aristotle with his eudaimonias, as he called it in Greek. Um, and it's about living a good life. It's about having well-being and prosperity and and wisdom and meaning. Uh, and it um you know, it it basically I define it as flourishing your is the extent to which you are who you're meant to be. Right. And and so a lot of people try and do these measures and that sort of thing, and it just doesn't seem to work for me. So so think of the measure or the extent to which your customers are who they're meant to be, even if they don't know who that is, and and usually they don't, right? But how do you help them flourish? Flourishing is the raison debt of business, of capitalism, of the free market economy, the why and why it has given us so much a superabundance, as one book is titled. Uh, superabundance in our in our world today is because of the free market economy, where nobody ever gives money out of their wallet or their purse or their account to you as a company unless they think your offering is going to provide more value to them. It's gonna be better off than the amount of money that they have. It's going to help them flourish. They don't always know what that is. They they're often wrong about whether it's gonna help them flourish or not, but but that's that's the why, right? Is that. And so so you're as a business, you know, as a board member uh in particular, or the as an executive in a company, you need to think about how your purpose is to help your customers flourish. And by extension, your comp your employees, your communities, and society overall. You need to be a net positive contributor to the world, not extractive like so many companies are, that extract from the world, try and addict people to their products, demean them, denigrate them, uh, be deleterious to them instead of edifying them and lifting them up and helping them uh flourish. You can see a couple of recent uh court cases in the US that uh that accuse some folks of and found them guilty of basically of addicting uh people to their products, right? And I'm not gonna comment on the efficacy of the of the verdict, but doing so is is immoral, right? It's basically immoral. And so so what about profits, right? Are stakeholders supposed to make profits out of this? Yes, but the way to get the most profits is not to focus on profits, it's to focus on flourishing. And profits then are the measure by which you help your customers flourish and contribute to flourishing in the world. If you focus on that, then the profits will come. Yes, it's much more of a long-term view. You may you may you may hurt profits in the short term. Uh, in October, the CEO of Humana in the US, insurance healthcare company, announced that they're going to stop taking on new customers because they're not doing a good enough job with their current customers.

SPEAKER_01 13:43

Right?

SPEAKER_00 13:44

So they're foregoing revenue and some level of profits in order to ensure that they help their current customers flourish. And then once they get that basic job done, then they'll they'll go up. So the aspirations then is all about the why. Right? It's why are customers buying from you? Why is this product going to help me flourish? And what you need to do is you need to ask that why. In fact, you need to use the old manufacturing technique of asking five whys, right? Which is why, why, why, why until you find that core aspiration. And that's what your customers are really buying from you. You know, it's it's it's Peter Drucker said this, and and and others have have said that you know you're never selling what your customers are buying, right? Well, this is how to figure that out, is to ask why they're buying. Uh, and and and even if you don't get all the way to that core aspiration, you become more transformational the closer you get. If you just take one or two steps beyond what you're selling today and provide what your customers want, then you'll you'll create more value and you'll be able to charge more for that. Even if you don't get into the full transformation, a full guarantee uh outcome guarantee, you can charge a premium for what you're doing by focusing on why people are buying from you. Right? An aspiration, excuse me, is basically I want to go from X to Y, right? From two statements. I want to go from flabby to fit, I want to go from um high weight to low weight, I want to go from smoker to non-smoker, I want to go from a um um uh failing business to a successful business, right? Whatever it might be, and obviously that's a very those are very generic, so then you need to get down to each individual aspiration about why this particular person or this particular company uh is buying for me and how can I help them achieve that.

SPEAKER_03 15:37

As you as I read the book and as I hear you speak, uh Joe, uh is it applicable to only specific categories or industries of companies? For example, let me take a CPG company, right? Uh, you know, I I'm buying soap, I'm buying uh, you know, uh processed foods, I'm buying uh, you know, uh products which are fairly generic. And uh if I want to build transformation for Pepsi or for Coke, uh how do you really build transformation? You know, I understand that, say, for uh healthcare or insurance, there is a need for transformation, and therefore I'm buying into a certain aspiration. But what how does it work for CPG companies?

SPEAKER_00 16:24

Well, so so um let me preface it by doing a big picture thing first, which is if you think about who are in the transformation business, are it's basically those companies that are in the business of being helping people be healthy, wealthy, and wise. Right? Old English proverb, healthy, wealthy, and wise. But it's not just about health, it's about health and well-being, right? And and how do I people have well-being? And and and and basic distinction is that if a government, if a third-party insurance or government is paying for it, it's healthcare. But if I'm paying out of my own pocket, it's well-being. And guess what? Every food I buy, every food I eat, every drink I drink is affecting my well-being. Now, it may be not just physically, you know, maybe I want to I want a uh a glass of wine in the evening, which helps slow me down and and and uh and has some uh you know heart benefits and and so forth. Um, but maybe I need a snack right now in order to have enough energy to get the work that I get I need to do to get done, which pays all the bills and et cetera. Um so wealth and belt and health and well-being. Um wealth is about wealth and prosperity, right? Like health is the is the means to well-being is the as the end. Uh uh money is the means to which prosperity is the end, which is basically having a nice life. How do you help people have a nice life? That's what prosperity is. And uh and you can think of CBG companies also um that can do that um in terms of living well. You know, I my my you know, I drink tea basically all day long, uh, but I switch in the afternoons to uh to a chai, you know, a latte, milk, spice tea. I love that. You know, I discovered it at Starbucks, now I make it at home. Uh and uh and that that that helps me. It's like it's like it it's it's a joy, a little joy that I have every day. And for somebody else, it's it's it's coffee, it's it's uh uh Pepsi or Coke, you know, and so forth. You know, President Trump takes Diet Coke all day long, right? And I mean, since he only gets four hours of sleep, he needs that to uh to uh keep going. Uh and um and then um wise is about knowledge and wisdom, or knowledge is the means to which wisdom is the end. So you can think about how do you help people uh in CPG uh understand how what they eat is affecting them, what things are good, what what how much is enough versus how much is too much, for example. You can you can incorporate that knowledge of your products into into what they're doing. And then finally, there's a fourth sphere of transformation. I call these, not industrial sector, but sphere amorphous, overlapping, all that. Uh, and the fourth one is purpose and meaning. Yeah, right, that isn't part of that one. And so think of this your purpose is the means to which a meaning is the end. That as human beings, we all need meaning in our lives. One of the things that that gives us meaning, of course, is our family relationships. Right? Think about a parent, a mom, or a dad, and how often they imbue what they what they cook for their uh family, what they serve to their family as part of that old relationship gives them life meaning. How as a CPG company can you affect that? You bet you can't. I I think of in particular um uh craft macaroni and cheese.

SPEAKER_01 19:47

Right?

SPEAKER_00 19:47

Kraft macaroni and cheese is what? Is it is it, I mean, it's sort of a staple in many families in that, but what it almost always is, is the first meal a kid makes by himself, right? Right? Is that mom finally says, okay, you can make it. What a moment that is. What a what a great mom I have that lets me cook dinner, you know, and do this, and I learned all this. There's a moment there that that craft could be celebrating uh and could help happen and help imbue with meaning, right? If they thought about it in those terms. And then that's and that's why I'm convinced that's why people drink macaroni and cheese as adults, it's because that that they may not even not realize the connection to when they were a kid and their mom served it to them, and and it meant love, right? It meant love, and that's part of that purpose and meaning. And CBG companies can absolutely affect that, even if they don't offer the full transformation again, it's just about being transformational.

SPEAKER_03 20:48

Yeah, so it's almost like saying that if you add uh an envelope of a service to a product, uh then you then start actually looking at it as an experience. Uh, but then when you add uh uh an envelope of say uh why you're doing what you're doing, and therefore does it help you achieve your aspiration, then that becomes transformation.

SPEAKER_00 21:15

Yes. And think think about how many uh brands have opened up cafes. I always say that the the easiest way to get in the experience business is to open a cafe, right? Engages all five senses as well as gets people to come in, slow down, right, partake in that experience, and then buy more offerings of whatever they are. So, you know, so you you know you've got all these these goods manufacturers that have have cafes. Um why not uh CPG Cafe? I mean, there's banking cafes, the uh uh uh um uh who's who who's it that bought the ing direct?

SPEAKER_03 21:52

Um yeah, ING Direct, correct. Yeah.

SPEAKER_00 21:55

Right, right. And they're Capital One bought them, right? So the Capital One Cafe, banking cafes, right? Why? Because people don't want to spend time in banks. Let's give them an excuse to do that and bring them in. Why aren't there CPG cafes? Why isn't there a craft cafe with a K? Cafe with a K, right? That uh that people can spend time with their kids and get them off their phones and get them to have macaroni and cheese made just the way that they did when they were a kid and so forth. And bring all of these uh you know different meals and foods and drinks together in a way. Coca-Cola has the world of Coca-Cola. Why doesn't it have houses of Coca-Cola? You know, the the that they've got the flagship experience. Why don't they have these houses of uh of Coca-Cola around? You know, Pepsi's done a few pop-ups and things like that in Miami, I remember, and and New York, I think. Um, but it's something to consider is to create an experience where people get to experience who you are. That's an authenticity point. But also, uh, Swami, what these can become is invitational transformations. Right? So an invitational transformation is like World of Coca-Cola, where I'm gonna invite you into the brand. I'm gonna immerse you in it. You're gonna pay an emission fee, by the way, because this is gonna be a great experience. You're gonna pay me to sell to you, but uh uh, but I want to you I want you to become a Coca-Cola aficionado. And other categories, it may be obviously almost everybody's had had Coke, but you know, there's the Guinness Storehouse in Dublin and the Johnny Walker experience in Edinburgh and the Heineken experience in Amsterdam. They invite people in, pay an admission fee, give them a great experience, but then also expose them to a category like maybe you've never had whiskey before, uh, or you've only dabbled in it, but now, well, at the Johnny Walker Princess Street experience, they they they draw you into the the world of whiskey making, the the art of blending into the particular uh heritage of Johnny Walker. And now you've been exposed to it, and you finally you get three or four drinks as part of your experience, customize your flavor profile, and you may say, Wow, I'm I I love this whiskey. I'm a whiskey drinker, right? See that identity. I went from not a whiskey drinker to a whiskey drinker. I changed my identity. And for some people, it's like, well, who's the one to introduce me to whiskey? It's Johnny Walker. And I love this whiskey so much, that's what I'm going to drink. Now I'm a Johnny Walker branded whiskey guy, right? And so it's a way of that's a transformation you invite people in. It's not a nefarious thing where you're trying to capture them, trying to grab them. Uh, but you provide the great experience, you provide the value for the admission fee, and then they they they may very often turn to say, Hey, you know, I love this brand.

SPEAKER_02 24:38

Contraminds is a podcast dedicated to decoding people, minds, strategy, and culture. We interview and learn from high performers so that you can apply these lessons on your journey to becoming the knowledge worker athlete you were meant to be. The Contraminds Podcast is available on all leading podcast players. And if you are interested in revisiting past episodes or taking a look at our show notes from this episode, please visit us at www.contraminds.com. And now back to the show.

SPEAKER_03 25:11

Uh you also write in the book uh a couple of uh you know important transformational shifts that have happened, right? From uh agrarian to industrial, then it becomes industrial to service and then to experience. And there are some companies which saw it first, uh took advantage of it, and then started being leaders, right? Uh who are the companies that you believe uh, if they don't see the shift, uh, are going to get disrupted? What kind of industries and what kind of companies are for sure going to get disrupted if they don't see this transformation uh concept happening?

SPEAKER_00 25:51

Yeah, I think the I think the two most likely to get disrupted are financial services firms and and institutes of higher education. And financial services are facing commoditization with robo uh uh advisors, with AI coming in with the ability to say, hey, I can do all this myself. You know, there's a lot of day traders and things that do that, but now you bring AI into it and you just increase by an order or three of magnitude of how many people can take over their own finances. Not something I want to spend my time on, but but you can't. And so I think that's one that very much needs to understand that money is a means to an end. And with all that, they're not still focusing on their ends. And how can you provide the true ends, understand the aspirations of why? One company I highlight in the book, uh Simplany, is a B2B to C company that provides a transformation platform to advisors that allows them to work with customers. And I love what they do is they focus on two things, which is their life and their legacy. Like, how do you have a nice life, prosperity and well-being, uh, and what's the legacy that you want to leave on to your kids, to your church, your charities, your causes? And um, you know, there's a lot of advisors out there say, hey, if you just cut out your Starbucks bill, you'll have you'll have a million more dollars when you retire. I said, Yeah, but I want to have a life now. Why do I want to only have a nice life when I'm old and wrinkled? I want to I want to live my life, and you need to understand that. Uh, and so I so that sort of focus on life and legacy is what uh financial advisors need to do. And and and higher education, I really think we can come to a point. It's it's it's like what uh Ernest Hemingway uh wrote about uh bankruptcy. Like, how did you go by bankrupt? Very slowly and then all at once, right? Because we can learn so much in it, because there's so many companies out there that are providing certificates and information, because you really don't have to go to college to do well uh uh and uh to create businesses, the ability to create a business today with things like AWS to be able to access everything, the cost of it is so much lower than it is in the past. Uh, and and the fact that colleges so often don't do a good job, right? They don't they don't do what they need to do to make sure people have successful lives and thrive in their lives and flourish, right? So um so I think that's one that's in a in a big danger. And that's why I was very pleased that Dartmouth's president said, hey, we're gonna start charging for outcomes because then okay, Dartmouth's gonna do things differently. One of the books, uh one of the companies I highlight in both the first chapter and the last chapter uh is Texas State Technical College, right? So it's not a four-year university, a two-year one. And the state of Texas basically said, hey, we're tired of paying for uh based off credit hours, right? That a student goes to, he signs up for a class, and we pay you whether they ever go to the class, whether they ever learn anything from it, whatever grade they get, whether they graduate or not, and whether they pay taxes, right? That's a productive citizen. So Texas State Technical College said, okay, we'll put 100% of our funding, imagine that, 100% of our funding at risk based on how well we teach. And so, and what did that do? It caused them to do things very differently. They got rid of some programs, they added some more programs. Some professor who didn't like to be measured on their outcomes left, and they said, that's fine, because what matters is outcomes. And other professors knew coming in that you're going to be measured on the outcomes that you create. They started working with employers before they graduated to bring them into the process. They um uh provided uh navigators and things for students to do better when they start failing. They would they would do things to to up them. And uh and in the it's been this has been like 15 years now, but in the first six years where I had data, um, their their their increase, their their income from the state went up by 35% per year on average. That's how good they did. And they're so good now, they offered their students a graduate a tuition guarantee that if you graduate from here and you don't get a job in your major within six months, we're giving you in your entire tuition back.

SPEAKER_01 29:55

Right?

SPEAKER_00 29:55

And so you know you're there working to help them get a job, right? And that which they didn't do before. If they don't view that as their outcome, they say, hey, well, it's up to them. We did our job. No, you didn't do your job, right? That's not your job, is for them to graduate, it's to help them get a job and be productive citizens.

SPEAKER_03 30:14

No, I I really love that example, Joey. In fact, I uh you know uh it made me think about uh you know the connected parts of the business model, right? Because uh Texas State uh you know university actually got funding from the government, but the government earns money because of taxes, and therefore, if I'm able to really measure the outcome of the number of people who are graduating from my uh university who are actually paying more taxes, then give me more funding for my college, is an extremely beautifully threaded uh you know argument of actually looking at outcomes and then saying, How do I then charge on outcomes? But how do you really connect the if you really ask me the thread of money which uh you can earn back because the government is actually funding you? Uh, many businesses don't have this connection of the business model, right? Say, for example, I'm a I'm a car company, right? Uh, you know, and I'm really looking at it and saying, you know, so what's the aspiration? Why do people buy cars? Okay, and today, uh, if you then start looking at aspirations of why people buy cars, say an SCUV, and then go back and then say what's the amount of uh time that you actually are investing, okay, right uh in in uh in enjoying or in actually helping your aspirations become real, and then you charge for it, that's a very different model, right? And that's exactly what you're talking, which is time invested versus you know time spent. Is that the difference that you're talking about?

SPEAKER_00 31:52

Yeah, yeah, yeah. So, you know, so commodities, good services, they provide time well saved. Do something for me so I don't have to do it. And people, in fact, want goods and services to be commoditized, to be bought at the lowest possible price and the greatest possible convenience, in order to spend their hard-earned money and their harder-earned time on the experiences that they value, which provide time well spent. And then, and then, and then transformations up that, right? Time well invested. That I'm investing my time in each one of these experiences, generally not one life-changing experience, generally it's a series of experiences that take me from where I was to what I want to become. Uh, and they're investing that time to pay compound interest and dividends now and into the future. I mean, that's fundamentally what economic progress is about. And I'll I'll mention too, Swami, today, the most precious resource on the planet is the time of individual human beings. Yeah. No, in fact, we got abundance and so many things, but we can't create more time. Uh, and uh, and so it's it's it's how do you how do you uh invest in that resource, in the most precious resource, rather than waste customer times, which is what so many companies do, right? That's the worst thing you do is waste that most precious resource on the planet. Turn that wasted time into either time well saved or time well spent within the opportunities for time well uh invested.

SPEAKER_03 33:18

So, what do you think is the bottleneck or the challenge of moving to this model, right? Because I'm used to actually doing what I call as cost plus pricing, right? Hey, you know what? Uh you know, this is really what it uh you know it costs me to manufacture, and here is my overhead, and this is really my price, and therefore, here is my you know uh price or MRP as you call it, and this is really what you give to the customer. Suddenly, the way you need to price has to be very different, and therefore it requires a new pricing mental model that me as a professional or as an executive or as a CEO, I have to start looking at it very differently, right?

SPEAKER_00 34:00

Yes, yes. And it's basically it's just price for value, it's price for the value create, not the cost that you incur, right? Again, costs are immaterial to the value you create. And and what uh economics are about is is value, that people view the value of your offering more than the money in their accounts. And so so how do you price for that value? And guess what? It's a very individual thing. It's hard to price. I mean, you you you could maybe able you can create a bell curve of how much people are willing to pay, particularly if you have a standard product. Uh, but uh it's very difficult to understand that the economic discrimination uh of when people are willing to pay less, when they're willing to pay more. And and and but here's what you do with that bell curve just recognize the more you shift from goods and services to experiences of transformation, you're shifting that bell curve to the to the right, right? Or to the right. Right. And that means that the average price you're gonna be able to pay, and and irrespective of cost, it's off the value that you create inside of each individual customer.

SPEAKER_03 35:08

Uh see, one of the challenges of this whole uh concept of transformation economy, I'm going to be a little uh, you know, uh I'm going to have a contrarian view on this, and I would like to listen to your viewpoint on this. Is uh, you know, if you look at athletes, if you look at apprentices, if you look at surgeons, and you know, and really the way uh you know transformations happen, uh the there is a certain way in which it's it doesn't come from formal training, right? So therefore, you know, I I I tend to learn it myself and then I then start getting better, and then uh I get a I become a better athlete with some training, but then I start to you know I have an aspiration to be the best athlete in the world. Okay. But when I'm working for a company, okay, the challenge is if I don't have that aspiration, or if I'm actually buying goods, if I don't have that aspiration, how will you apply this to uh uh you know to a consumer or to a customer who has uh who's not able to define what the aspiration is?

SPEAKER_00 36:13

Well, it's it's important. Well, one, you don't have to sell transformations to everybody, right? So it's fine to stay at some, you can sell at all these levels that we're talking about. Two, one of the keys that you want is to uncover that aspiration. Um, I talk about three phases of transformation. You've got diagnosis up front, uh series of experiences, call them encapsulated experiences, and then follow-through, which is sustaining, right? Ensure it's it's sustained through time. With and so diagnosis is in part not just, you know, I you I used to think that when we first talk about transformations, I used to think that you would just, you know, the bluebird of happiness would alight on your shoulder and you say, Oh, I got an aspiration. No, no, that's not often the case. You need to help them uncover, like the Johnny Walker Princess Street experience that I mentioned, right? People go in there, maybe they're interested, maybe some, you know, I've been always mean to learn more about whiskey. This is a perfect time, right? So then they come there. But most people, hey, let's go spend an afternoon at Johnny Walker Princess Street and see what's going on. And so uh, but with there, you can help uncover that aspiration to become a whiskey drinker. Uh, and and whatever in financial services again, you can you can work with your individual client to uncover what do you want out of life? What do you want out of legacy? What do you want uh as you grow older? Uh, what do you want to be able to do? Where do you want to be able to go? What do you want to be able to experience? And so it's a matter of that discovery and and uncovery, if that's a word, of what those aspirations are that enable you then to go on and full fulfill them.

SPEAKER_03 37:51

So uh so if I'm a leader and I'm actually uh looking at how do I imbibe the skill, right? Uh, which is very, very different from how I probably used to operate uh uh in the uh you know in the if I were to call it in the pre-transformation uh uh you know era, if I were to call it. Uh how do I uh you know improve my skills to start thinking transformation? And what do you think are the key tenets of how should I start building those skills in the way I start thinking about my product, about my process, about my pricing, about my distribution. So, what are the things uh you know I should start looking at? Okay, and how do I build this, if you ask me, a new muzzle uh in me?

SPEAKER_00 38:43

Yeah, so I mean there are so many things uh that you can think about. So, you know, one is uh as you move up the cression, you need more and more of a focus on individual customers, whether individual living, breathing human beings or individual active corporeal uh enterprises. You need to focus on the individual. It gets back to that mass customization being the core. The whole progression economic value is really about individualization. You know, commodities, good services exist outside of us, experiences happen inside of us, and transformations change us from the inside out. So that focus on individuals is really one of the core things. Um, you need to understand human connections, you need to understand empathy. I'm working with uh Dan Hill, who wrote the great book, Emotionomics, about how important emotions are as you move up this progression of economic value. And and in particular, the transformations, you need empathy. You need to put yourself in their shoes, help them uh realize uh who they are, what they want to become. Also, particularly because when you look at going from to, it's generally not one monotonically increasing line. There is regress as well as progress, right? It's going up and down. So you need to be attuned to those places where things are regressed. You need that empathy there to be able to do that, to be able to respond, sense and respond differently than you would if things were going well, to be able to get them back on track uh to be able to achieve their aspiration.

SPEAKER_03 40:10

Beautiful. Sense and respond and uh empathy and human connections. I picked up four key uh you know tenets, uh I would think of sense and respond is one, but okay. So I want to ask my last question to you. Uh so if I were uh a business executive uh listening to this conversation, uh the biggest fear that I have is if I achieve transformation for a customer, then the customer no longer needs me. So uh so how does that uh help me in my business?

SPEAKER_00 40:49

Well, your biggest fear is that if you don't achieve transformation for your customer, your customer no longer wants you. Right? So uh so yes, there's that possibility, but recognize that um it is that once they achieve that aspiration, you have this follow-through, you have this sustenance, you you need to sustain it through time. That time can last forever in many cases. You think about uh GLP1s, and you take a GOP1, uh, but if that's all you do is take that, you may lose some weight, you stop taking it, guess what? Your weight goes back. You need to change your behavior. I hire in the in the book one company called Calibrate that subsumes the GLP ones in a transformation program with diagnosis upfront, medical as well as emotional, as well as looking at not just eating, but your your sleeping habits and so forth. Um and uh and then they're able to keep that weight off because you've changed your behavior and how you uh and your relationship uh to food, really. So that's something where you know one person, the person I highlight in there, um uh Frances Turner, a friend of mine, one of our certified experience accounting experts, experts, lost you know, over 150 pounds with this. And she's sustaining it, but she's going weekly, right? So she has these weekly or bi-weekly interactions to keep that sustaining going. So they are going to continue to be a relationship forever. Um, in other cases, even when that transaction may end, well, guess what? There's another aspiration. They may want to go deeper on that, they may want to have some other aspiration in your category, in your bailiwick of what you can do. And who they're gonna go to is the one who helped them before. So you can think about that that it's you can repeat this cycle of helping people flourish over and over and over again, depending on what you are, particularly in things like financial services and healthcare, where the needs never go away. You know, I may, I may, you know, become a a uh want to become a great golfer and get down to single-digit handicaps is okay, I can sustain that myself, that's fine. But you know, healthcare, things happen as you get older. No, no, you're always gonna need somebody to help. Finances, you're always gonna need somebody uh to help you with your with your finances to be able to live the prosperous life that you want.

SPEAKER_03 43:08

So it's almost like uh, you know, I'm kind of interpreting and I wanted to hear your view on this. I noted this down, and so I said if I if I'm thinking about pricing, uh I don't think about pricing in one uh you know one shot, but I would say uh I would actually get you an entry pricing, I would actually create an experience pricing, and then I'll create something called a trail pricing in terms of how you can sustain the change. So therefore, maybe I need to have a new pricing model in the way I need to think of transformation, and therefore don't think of pricing as one chunk, but think of it in parts or in bundles.

SPEAKER_00 43:46

Right, and price at multiple levels. You know, even calibrate sells physical goods, right? That the to to the uh to their aspirants who want to lose weight, you can price at all of the levels that you provide. They can even be Providing protein powder at the uh or at the at the commodities level. I don't know. But you can sell at all of those those uh levels, uh and and it just ups the amount of value you can create and therefore the money you can make by helping people achieve their aspirations and flourish as human beings.

SPEAKER_03 44:18

Fantastic. Uh it's a great conversation. And uh uh Joe, it was uh something that I really enjoyed reading and listening to you gave me a lot more clarity, and I'm sure uh audiences who are listening to this are going to be extremely enlightened with the concept, and I'm sure they're going to go out and check out because you are somebody who's uh written some seminal books in my view. Uh Mask Customization, in my view, is uh one of the best books that I've ever uh read. And then uh experience economy and now transformation economy. It's been a pleasure talking to you. Thanks for taking time in the midst of your schedule and vacation and talking to me.

SPEAKER_00 45:00

All right, thank you, Swami. It's been a pleasure. I loved how you asked such great questions and got me very impassioned in in uh in providing the answers.

SPEAKER_03 45:11

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