The Social Economy Has Arrived. Are You Ready?

In their 1999 book, “The Experience Economy:Work Is Theatre and Every Business a Stage,” authors James Gilmore and Joseph Pine focused on how people gravitated to experiences as opposed to just buying things. The experience, in turn, supplanted the product. They likened this new stage in the economy to the evolution of the birthday cake.

Recalling the bygone agrarian economy, a mother of a birthday boy or girl would make a cake by buying all the ingredients at a very low cost and baking the cake at home. When the industrial economy reared its head, it was not uncommon for pre-mixed ingredients to be purchased for a few dollars more saving time and effort. The arrival of the service economy saw busy moms skipping the baking step altogether and heading right for the bakery, shelling out up to $15 for a pre-made cake. In the experience economy, stressed-out moms and dads went hog-wild, spending hundreds of dollars at a kid-friendly restaurant that staged the whole birthday party. As for the birthday cake, the restaurant would graciously throw that in for free.

Today, a new economy has arisen from the ashes of the experience economy. And that is the social economy. No more is an experience enough to satisfy. In keeping with the birthday theme, it’s no longer enough to just have a party—you have to alert people to the fact that the party is happening. Plus, you have to share the event with all those who couldn’t be there in person via pictures and videos streamed to social media networks.

The question that arises is: how do companies that are still operating in the experience economy make the transition to the social economy?