Delivering in the Experience Economy
Future economic growth lies in the value of experiences and transformations--good and services are no longer enough.
Joseph Pine of Columbia and James Gilmore of UVA argue in HBR article that businesses must orchestrate memorable events for their customers, and that memory itself becomes the product: the "experience".
There’s plenty evidence of this in the consumer-centric world where firms are unlocking new revenue potential by innovating around the user experience, as opposed to the traditional, now seemingly limited focus on product development. If you think about the latest innovations in Virtual Reality and Augmented Reality applications, they are defined by a new set of experiences and their effect on our psychology and our behavior.
Brand building: Pepsi’s effort in bringing Augmented Reality into brand building reflects increasing corporate adoption of the value of an experience.
Pain management: Virtual Reality has been used increasingly by hospitals to aid pain management.
New business models: Airbnb Trips is a significant development to offer a differentiated experience to the community.
What does a good experience translate into relative to business? And does it transform industries?
Per 2016 Accenture research, switching from a product focus to differentiating the customer experience could unlock billions in revenue opportunity.
Up until recently, the value of an experience has been an intangible that has gained significant momentum, especially with technology improving the experience and opening up new areas of access to business. More consumers expect functionality across digital channels, which provides an opportunity to personalize and options for self-service. How long will it be before the broader audience of the consumer experience economy starts expecting the same kind of experience at an enterprise level?
Drawing on our own experiences, at the very beginning of DiligenceVault, we aspired to build a lean, mean, analytical super-machine as a product that would transform due diligence in the industry. But from speaking with prospective users at both asset managers and investors, we quickly learned that negative experiences around repetitive administrative processes, difficulty in accessing data in a timely fashion, or the use of clunky tech were an insurmountable challenge for many. The costs of these negative experiences were high, including employee turnover and poor client experiences. However, within each firm, the problem was not big enough to justify a spend.
Understanding this new opportunity set, we decided to be productive first in offering a brand-new tech-enabled experience across centralization, collaboration, automation and backed by responsive client service. The validation we continue to see is tremendous in justifying the focus on Experience. Below are a few more examples of where we see adoption within investment management:
Loss management: On a day like Oct 10th when the Dow fell 3.1% and the S&P entered its longest losing streak in two years, a lot of investors experienced anxiety. This was due to their losses, as well as the uncertainty of what lay ahead. Research shows that greater transparency into the damage may lessen anxiety. If information flows faster, the experience of financial loss can be less painful as knowledge provides a buffer to a patient long-term investor.
Employee engagement & productivity: Mindless repetition, clunky technology, and mundane tasks are all negative experiences that have an adverse impact on employee morale and retention. More and more firms are targeting ease of collaboration, automation, and UX as ways of improving employee engagement.
Client conferences: The investment management industry has evolved from the world of formal investor letters and mailing binders. In a transition from fleeting memories to building relationships and affinity, many firms have invested in blogs, video pitches, and industry podcasts. Investor days are now far more engaging with inspirational keynote speeches offering new experiences.
Investment management firms looking to capitalize on the growing importance of experience need to identify a holistic strategy that delivers superior employee engagement, investment partner loyalty, and continued product enhancement. There’s new business to be generated and value to be created in delivering a competitive and modern brand experience.