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

thing? 00:05:48.959 --> 00:05:58.560 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. 00:05:58.720 --> 00:06:02.720 For example, mass customization was itself uh phenomenal. 00:06:02.800 --> 00:06:12.560 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. 00:06:12.800 --> 00:06:19.680 Uh given that you're talking about transformation now, uh how does it change the business model of companies? 00:06:19.920 --> 00:06:23.199 Because uh many companies today charge for outcomes anyway. 00:06:23.360 --> 00:06:28.720 So if I am McKinsey, McKinsey is saying, you know what, hey, I'm now going to charge you for outcomes. 00:06:28.959 --> 00:06:31.120 So how does a business model change? 00:06:31.279 --> 00:06:33.519 And how do you really charge for outcomes? 00:06:33.839 --> 00:06:38.000 Yeah, so so it so all of it is part of the same universe of thought. 00:06:38.079 --> 00:06:42.480 You know, mass customization, 33 years ago, I came up with that, right? 00:06:42.800 --> 00:06:46.639 Uh is uh is the DNA of everything. 00:06:46.720 --> 00:06:56.000 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. 00:06:56.079 --> 00:06:58.240 Well, what does it turn services to experiences? 00:06:58.800 --> 00:07:00.160 And asking it one more time. 00:07:00.240 --> 00:07:01.839 What happens when you customize an experience? 00:07:02.079 --> 00:07:11.759 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. 00:07:12.000 --> 00:07:20.319 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. 00:07:20.480 --> 00:07:22.639 With with experiences, you charge for time. 00:07:22.800 --> 00:07:28.240 The time customers spend with you with an admission fee, a membership fee, or some other form of doing that. 00:07:28.480 --> 00:07:34.560 With transformations, what's what's crucial is that you charge for the demonstrated outcomes that your customers achieve. 00:07:34.720 --> 00:07:42.160 And consulting companies have have dabbled in that, have done it to some degree uh for a very long time. 00:07:42.480 --> 00:07:53.040 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. 00:07:53.120 --> 00:07:54.879 We're gonna we're gonna guarantee it in some way. 00:07:54.959 --> 00:08:03.680 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. 00:08:03.839 --> 00:08:06.240 They charge for inputs today, they charge for time and materials. 00:08:06.560 --> 00:08:14.879 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? 00:08:15.040 --> 00:08:16.800 And so you need to charge for the outcome. 00:08:17.040 --> 00:08:32.320 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. 00:08:32.639 --> 00:08:41.360 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? 00:08:41.440 --> 00:08:44.639 Which is again the way it should be, because inputs don't matter. 00:08:44.799 --> 00:08:46.320 And you see that more and more. 00:08:46.639 --> 00:08:54.399 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. 00:08:54.559 --> 00:08:55.919 Okay, well, do the work better. 00:08:56.080 --> 00:09:02.159 You know, no, but but there is a paradox that you can't actually guarantee the customers will change. 00:09:02.240 --> 00:09:03.600 Again, they change themselves. 00:09:03.759 --> 00:09:11.840 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. 00:09:12.080 --> 00:09:12.320 Right? 00:09:12.399 --> 00:09:14.080 That's the way it is with transformations. 00:09:14.240 --> 00:09:18.480 But the best way to to get that transformation to have it is to guarantee it. 00:09:18.879 --> 00:09:28.960 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. 00:09:29.200 --> 00:09:35.759 And two, uh it is a catalytic mechanism that means you will do whatever it takes to recoup your entire money. 00:09:35.840 --> 00:09:39.600 Now, you don't have to spend do all it doesn't have to be a hundred percent transformation guarantee. 00:09:39.679 --> 00:09:43.279 It can be most often I see 25% transformation guarantees. 00:09:43.360 --> 00:09:47.440 You still can get paid for some services, maybe some membership fees as well. 00:09:47.840 --> 00:09:57.679 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. 00:09:57.840 --> 00:10:05.919 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? 00:10:06.000 --> 00:10:13.919 You know, services have clients, experiences have guessed, transformations have aspirants, and so achieving those aspirations is the only thing that matters. 00:10:17.519 -->

00:10:19.840 So tell me a little bit about aspirations. 00:10:20.720 --> 00:10:23.519 Because you talk about aspirations, you talk about flourishing. 00:10:24.000 --> 00:10:44.080 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? 00:10:44.559 --> 00:10:48.320 So those those are two big things, they're related, but they're big things. 00:10:48.559 --> 00:10:50.000 She should ask two different questions about that. 00:10:50.159 --> 00:10:57.759 So I'll start with flourishing, um, which which is I I flourishing is as has undergone a renaissance. 00:10:57.840 --> 00:11:04.159 You know, it's it's been around since the Bible and and and Aristotle with his eudaimonias, as he called it in Greek. 00:11:04.320 --> 00:11:06.320 Um, and it's about living a good life. 00:11:06.480 --> 00:11:10.799 It's about having well-being and prosperity and and wisdom and meaning. 00:11:10.960 --> 00:11:20.159 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. 00:11:20.559 --> 00:11:20.879 Right. 00:11:20.960 --> 00:11:26.080 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. 00:11:26.159 --> 00:11:35.679 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? 00:11:35.840 --> 00:11:37.279 But how do you help them flourish? 00:11:37.440 --> 00:11:49.679 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. 00:11:49.840 --> 00:12:03.279 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. 00:12:03.440 --> 00:12:05.919 It's gonna be better off than the amount of money that they have. 00:12:06.000 --> 00:12:07.440 It's going to help them flourish. 00:12:07.600 --> 00:12:09.039 They don't always know what that is. 00:12:09.120 --> 00:12:14.559 They they're often wrong about whether it's gonna help them flourish or not, but but that's that's the why, right? 00:12:14.639 --> 00:12:15.440 Is that. 00:12:15.600 --> 00:12:27.600 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. 00:12:27.679 --> 00:12:32.320 And by extension, your comp your employees, your communities, and society overall. 00:12:32.480 --> 00:12:49.360 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. 00:12:49.679 --> 00:13:00.000 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? 00:13:00.159 --> 00:13:05.840 And I'm not gonna comment on the efficacy of the of the verdict, but doing so is is immoral, right? 00:13:05.919 --> 00:13:07.039 It's basically immoral. 00:13:07.200 --> 00:13:09.360 And so so what about profits, right? 00:13:09.679 --> 00:13:12.480 Are stakeholders supposed to make profits out of this? 00:13:12.639 --> 00:13:19.360 Yes, but the way to get the most profits is not to focus on profits, it's to focus on flourishing. 00:13:19.519 --> 00:13:26.159 And profits then are the measure by which you help your customers flourish and contribute to flourishing in the world. 00:13:26.399 --> 00:13:28.879 If you focus on that, then the profits will come. 00:13:28.960 --> 00:13:30.960 Yes, it's much more of a long-term view. 00:13:31.120 --> 00:13:34.240 You may you may you may hurt profits in the short term. 00:13:34.320 --> 00:13:43.679 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. 00:13:43.919 --> 00:13:44.080 Right? 00:13:44.240 --> 00:13:50.559 So they're foregoing revenue and some level of profits in order to ensure that they help their current customers flourish. 00:13:50.639 --> 00:13:54.799 And then once they get that basic job done, then they'll they'll go up. 00:13:55.039 --> 00:13:58.960 So the aspirations then is all about the why. 00:13:59.200 --> 00:13:59.360 Right? 00:13:59.519 --> 00:14:01.519 It's why are customers buying from you? 00:14:02.080 --> 00:14:04.559 Why is this product going to help me flourish? 00:14:04.720 --> 00:14:07.120 And what you need to do is you need to ask that why. 00:14:07.200 --> 00:14:10.960 In fact, you need to use the old manufacturing technique of asking five whys, right? 00:14:11.120 --> 00:14:14.799 Which is why, why, why, why until you find that core aspiration. 00:14:15.039 --> 00:14:18.000 And that's what your customers are really buying from you. 00:14:18.159 --> 00:14:25.919 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? 00:14:26.080 --> 00:14:29.200 Well, this is how to figure that out, is to ask why they're buying. 00:14:29.360 --> 00:14:36.799 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. 00:14:36.960 --> 00:14:45.440 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. 00:14:45.519 --> 00:14:55.840 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. 00:14:56.000 --> 00:14:56.159 Right? 00:14:56.399 --> 00:15:02.480 An aspiration, excuse me, is basically I want to go from X to Y, right? 00:15:02.799 --> 00:15:03.919 From two statements. 00:15:04.000 --> 00:15:20.159 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? 00:15:20.720 --> 00:15:34.080 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. 00:15:37.200 --> 00:15:48.320 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? 00:15:48.480 --> 00:15:51.679 For example, let me take a CPG company, right? 00:15:52.000 --> 00:16:03.840 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. 00:16:04.320 --> 00:16:11.039 And uh if I want to build transformation for Pepsi or for Coke, uh how do you really build transformation? 00:16:11.120 --> 00:16:20.559 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. 00:16:20.799 --> 00:16:23.919 But what how does it work for CPG companies? 00:16:24.399 --> 00:16:38.320 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. 00:16:38.559 --> 00:16:38.879 Right? 00:16:39.759 --> 00:16:41.600 Old English proverb, healthy, wealthy, and wise. 00:16:41.679 --> 00:16:45.600 But it's not just about health, it's about health and well-being, right? 00:16:45.679 --> 00:16:48.000 And and how do I people have well-being? 00:16:48.159 --> 00:16:55.519 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. 00:16:55.600 --> 00:16:58.080 But if I'm paying out of my own pocket, it's well-being. 00:16:58.240 --> 00:16:59.279 And guess what? 00:16:59.440 --> 00:17:05.599 Every food I buy, every food I eat, every drink I drink is affecting my well-being. 00:17:05.759 --> 00:17:18.880 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. 00:17:18.960 --> 00:17:27.759 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. 00:17:27.920 --> 00:17:30.960 Um so wealth and belt and health and well-being. 00:17:31.119 --> 00:17:35.599 Um wealth is about wealth and prosperity, right? 00:17:35.680 --> 00:17:39.519 Like health is the is the means to well-being is the as the end. 00:17:39.680 --> 00:17:45.039 Uh uh money is the means to which prosperity is the end, which is basically having a nice life. 00:17:45.119 --> 00:17:46.880 How do you help people have a nice life? 00:17:47.039 --> 00:17:48.480 That's what prosperity is. 00:17:48.720 --> 00:17:55.839 And uh and you can think of CBG companies also um that can do that um in terms of living well. 00:17:55.920 --> 00:18:06.480 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. 00:18:06.559 --> 00:18:06.960 I love that. 00:18:07.119 --> 00:18:10.160 You know, I discovered it at Starbucks, now I make it at home. 00:18:10.400 --> 00:18:14.079 Uh and uh and that that that helps me. 00:18:14.160 --> 00:18:18.640 It's like it's like it it's it's a joy, a little joy that I have every day. 00:18:18.880 --> 00:18:24.400 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. 00:18:24.480 --> 00:18:27.759 You know, President Trump takes Diet Coke all day long, right? 00:18:27.920 --> 00:18:33.039 And I mean, since he only gets four hours of sleep, he needs that to uh to uh keep going. 00:18:33.359 --> 00:18:41.599 Uh and um and then um wise is about knowledge and wisdom, or knowledge is the means to which wisdom is the end. 00:18:41.680 --> 00:18:54.319 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. 00:18:54.559 --> 00:18:59.279 You can you can incorporate that knowledge of your products into into what they're doing. 00:18:59.440 --> 00:19:02.000 And then finally, there's a fourth sphere of transformation. 00:19:02.079 --> 00:19:06.480 I call these, not industrial sector, but sphere amorphous, overlapping, all that. 00:19:06.559 --> 00:19:09.279 Uh, and the fourth one is purpose and meaning. 00:19:09.359 --> 00:19:11.279 Yeah, right, that isn't part of that one. 00:19:11.519 --> 00:19:16.000 And so think of this your purpose is the means to which a meaning is the end. 00:19:16.079 --> 00:19:18.720 That as human beings, we all need meaning in our lives. 00:19:18.960 --> 00:19:23.839 One of the things that that gives us meaning, of course, is our family relationships. 00:19:24.160 --> 00:19:24.400 Right? 00:19:24.559 --> 00:19:38.079 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. 00:19:38.240 --> 00:19:40.640 How as a CPG company can you affect that? 00:19:40.799 --> 00:19:41.839 You bet you can't. 00:19:42.079 --> 00:19:47.039 I I think of in particular um uh craft macaroni and cheese. 00:19:47.359 --> 00:19:47.599 Right? 00:19:47.759 --> 00:19:50.160 Kraft macaroni and cheese is what? 00:19:50.400 --> 00:20:00.960 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? 00:20:01.359 --> 00:20:01.759 Right? 00:20:01.920 --> 00:20:05.200 Is that mom finally says, okay, you can make it. 00:20:05.359 --> 00:20:06.240 What a moment that is. 00:20:06.400 --> 00:20:10.960 What a what a great mom I have that lets me cook dinner, you know, and do this, and I learned all this. 00:20:11.200 --> 00:20:19.279 There's a moment there that that craft could be celebrating uh and could help happen and help imbue with meaning, right? 00:20:19.359 --> 00:20:21.440 If they thought about it in those terms. 00:20:21.599 --> 00:20:34.720 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? 00:20:34.799 --> 00:20:37.359 It meant love, and that's part of that purpose and meaning. 00:20:37.440 --> 00:20:44.720 And CBG companies can absolutely affect that, even if they don't offer the full transformation again, it's just about being transformational. 00:20:48.480 --> 00:21:02.000 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. 00:21:02.079 --> 00:21:15.200 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. 00:21:15.279 --> 00:21:15.759 Yes. 00:21:16.640 --> 00:21:21.680 And think think about how many uh brands have opened up cafes. 00:21:22.160 --> 00:21:26.640 I always say that the the easiest way to get in the experience business is to open a cafe, right? 00:21:26.799 --> 00:21:36.480 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. 00:21:36.720 --> 00:21:42.319 So, you know, so you you know you've got all these these goods manufacturers that have have cafes. 00:21:42.640 --> 00:21:45.920 Um why not uh CPG Cafe? 00:21:46.240 --> 00:21:52.640 I mean, there's banking cafes, the uh uh uh um uh who's who who's it that bought the ing direct? 00:21:52.720 --> 00:21:54.640 Um yeah, ING Direct, correct. 00:21:54.720 --> 00:21:54.880 Yeah. 00:21:55.200 --> 00:21:55.599 Right, right. 00:21:55.680 --> 00:21:57.279 And they're Capital One bought them, right? 00:21:57.359 --> 00:21:59.599 So the Capital One Cafe, banking cafes, right? 00:22:00.000 --> 00:22:00.319 Why? 00:22:00.480 --> 00:22:01.920 Because people don't want to spend time in banks. 00:22:02.000 --> 00:22:04.160 Let's give them an excuse to do that and bring them in. 00:22:04.559 --> 00:22:06.400 Why aren't there CPG cafes? 00:22:06.640 --> 00:22:08.799 Why isn't there a craft cafe with a K? 00:22:09.039 --> 00:22:10.400 Cafe with a K, right? 00:22:11.440 --> 00:22:24.319 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. 00:22:24.400 --> 00:22:30.240 And bring all of these uh you know different meals and foods and drinks together in a way. 00:22:30.480 --> 00:22:32.960 Coca-Cola has the world of Coca-Cola. 00:22:33.119 --> 00:22:35.519 Why doesn't it have houses of Coca-Cola? 00:22:35.680 --> 00:22:38.400 You know, the the that they've got the flagship experience. 00:22:38.480 --> 00:22:42.640 Why don't they have these houses of uh of Coca-Cola around? 00:22:42.720 --> 00:22:48.559 You know, Pepsi's done a few pop-ups and things like that in Miami, I remember, and and New York, I think. 00:22:48.640 --> 00:22:54.079 Um, but it's something to consider is to create an experience where people get to experience who you are. 00:22:54.160 --> 00:22:55.680 That's an authenticity point. 00:22:55.920 --> 00:23:00.640 But also, uh, Swami, what these can become is invitational transformations. 00:23:01.279 --> 00:23:01.680 Right? 00:23:01.920 --> 00:23:08.160 So an invitational transformation is like World of Coca-Cola, where I'm gonna invite you into the brand. 00:23:08.319 --> 00:23:09.440 I'm gonna immerse you in it. 00:23:09.519 --> 00:23:12.240 You're gonna pay an emission fee, by the way, because this is gonna be a great experience. 00:23:12.319 --> 00:23:19.279 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. 00:23:19.359 --> 00:23:29.680 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. 00:23:29.839 --> 00:23:53.200 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. 00:23:53.279 --> 00:24:02.799 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. 00:24:02.880 --> 00:24:04.000 I'm a whiskey drinker, right? 00:24:04.079 --> 00:24:05.200 See that identity. 00:24:05.359 --> 00:24:08.799 I went from not a whiskey drinker to a whiskey drinker. 00:24:08.880 --> 00:24:10.319 I changed my identity. 00:24:10.480 --> 00:24:13.440 And for some people, it's like, well, who's the one to introduce me to whiskey? 00:24:13.519 --> 00:24:14.480 It's Johnny Walker. 00:24:14.880 --> 00:24:17.519 And I love this whiskey so much, that's what I'm going to drink. 00:24:17.599 --> 00:24:21.279 Now I'm a Johnny Walker branded whiskey guy, right? 00:24:21.440 --> 00:24:25.039 And so it's a way of that's a transformation you invite people in. 00:24:25.119 --> 00:24:29.920 It's not a nefarious thing where you're trying to capture them, trying to grab them. 00:24:30.000 --> 00:24:38.559 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. 00:24:38.880 --> 00:24:44.720 Contraminds is a podcast dedicated to decoding people, minds, strategy, and culture. 00:24:45.039 --> 00:24:52.640 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. 00:24:52.880 --> 00:24:56.480 The Contraminds Podcast is available on all leading podcast players. 00:24:56.559 --> 00:25:05.920 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. 00:25:06.240 --> 00:25:08.559 And now back to the show. 00:25:11.599 --> 00:25:20.000 Uh you also write in the book uh a couple of uh you know important transformational shifts that have happened, right? 00:25:20.079 --> 00:25:26.079 From uh agrarian to industrial, then it becomes industrial to service and then to experience. 00:25:26.480 --> 00:25:33.599 And there are some companies which saw it first, uh took advantage of it, and then started being leaders, right? 00:25:34.000 --> 00:25:41.599 Uh who are the companies that you believe uh, if they don't see the shift, uh, are going to get disrupted? 00:25:41.839 --> 00:25:50.880 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? 00:25:51.359 --> 00:26:00.160 Yeah, I think the I think the two most likely to get disrupted are financial services firms and and institutes of higher education. 00:26:00.799 --> 00:26:09.519 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. 00:26:09.599 --> 00:26:19.039 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. 00:26:19.200 --> 00:26:22.079 Not something I want to spend my time on, but but you can't. 00:26:22.240 --> 00:26:27.920 And so I think that's one that very much needs to understand that money is a means to an end. 00:26:28.079 --> 00:26:31.279 And with all that, they're not still focusing on their ends. 00:26:31.359 --> 00:26:35.279 And how can you provide the true ends, understand the aspirations of why? 00:26:35.440 --> 00:26:44.160 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. 00:26:44.240 --> 00:26:48.400 And I love what they do is they focus on two things, which is their life and their legacy. 00:26:48.640 --> 00:26:57.680 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? 00:26:58.160 --> 00:27:05.680 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. 00:27:05.839 --> 00:27:08.480 I said, Yeah, but I want to have a life now. 00:27:08.559 --> 00:27:11.599 Why do I want to only have a nice life when I'm old and wrinkled? 00:27:12.000 --> 00:27:15.279 I want to I want to live my life, and you need to understand that. 00:27:15.359 --> 00:27:21.519 Uh, and so I so that sort of focus on life and legacy is what uh financial advisors need to do. 00:27:21.680 --> 00:27:25.599 And and and higher education, I really think we can come to a point. 00:27:25.680 --> 00:27:30.960 It's it's it's like what uh Ernest Hemingway uh wrote about uh bankruptcy. 00:27:31.279 --> 00:27:33.039 Like, how did you go by bankrupt? 00:27:33.279 --> 00:27:36.400 Very slowly and then all at once, right? 00:27:36.720 --> 00:27:57.359 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. 00:27:57.599 --> 00:28:02.799 Uh, and and the fact that colleges so often don't do a good job, right? 00:28:02.880 --> 00:28:09.599 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? 00:28:09.839 --> 00:28:13.519 So um so I think that's one that's in a in a big danger. 00:28:13.680 --> 00:28:20.000 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. 00:28:20.160 --> 00:28:27.039 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?

00:28:27.119 --> 00:28:29.920 So it's not a four-year university, a two-year one. 00:28:30.000 --> 00:28:36.640 And the state of Texas basically said, hey, we're tired of paying for uh based off credit hours, right? 00:28:36.720 --> 00:28:48.319 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? 00:28:48.400 --> 00:28:49.599 That's a productive citizen. 00:28:49.759 --> 00:28:58.240 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. 00:28:58.559 --> 00:29:00.000 And so, and what did that do? 00:29:00.160 --> 00:29:01.759 It caused them to do things very differently. 00:29:01.839 --> 00:29:04.319 They got rid of some programs, they added some more programs. 00:29:04.480 --> 00:29:10.319 Some professor who didn't like to be measured on their outcomes left, and they said, that's fine, because what matters is outcomes. 00:29:10.480 --> 00:29:14.559 And other professors knew coming in that you're going to be measured on the outcomes that you create. 00:29:14.720 --> 00:29:19.200 They started working with employers before they graduated to bring them into the process. 00:29:19.519 --> 00:29:25.920 They um uh provided uh navigators and things for students to do better when they start failing. 00:29:26.000 --> 00:29:28.799 They would they would do things to to up them. 00:29:29.119 --> 00:29:41.519 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. 00:29:41.680 --> 00:29:42.960 That's how good they did. 00:29:43.039 --> 00:29:55.200 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. 00:29:55.680 --> 00:29:55.839 Right? 00:29:55.920 --> 00:29:58.799 And so you know you're there working to help them get a job, right? 00:29:58.880 --> 00:30:00.240 And that which they didn't do before. 00:30:00.319 --> 00:30:02.720 If they don't view that as their outcome, they say, hey, well, it's up to them. 00:30:02.880 --> 00:30:03.680 We did our job. 00:30:03.759 --> 00:30:05.920 No, you didn't do your job, right? 00:30:06.000 --> 00:30:11.200 That's not your job, is for them to graduate, it's to help them get a job and be productive citizens. 00:30:14.720 --> 00:30:17.039 No, I I really love that example, Joey. 00:30:17.200 --> 00:30:24.559 In fact, I uh you know uh it made me think about uh you know the connected parts of the business model, right? 00:30:24.799 --> 00:30:56.400 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? 00:30:56.559 --> 00:31:06.720 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? 00:31:06.799 --> 00:31:10.640 Uh, many businesses don't have this connection of the business model, right? 00:31:10.720 --> 00:31:14.079 Say, for example, I'm a I'm a car company, right? 00:31:14.240 --> 00:31:17.920 Uh, you know, and I'm really looking at it and saying, you know, so what's the aspiration? 00:31:18.079 --> 00:31:19.359 Why do people buy cars? 00:31:19.519 --> 00:31:44.000 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? 00:31:44.160 --> 00:31:49.920 And that's exactly what you're talking, which is time invested versus you know time spent. 00:31:50.079 --> 00:31:52.319 Is that the difference that you're talking about? 00:31:52.640 --> 00:31:53.440 Yeah, yeah, yeah. 00:31:53.519 --> 00:31:57.200 So, you know, so commodities, good services, they provide time well saved. 00:31:57.440 --> 00:31:59.599 Do something for me so I don't have to do it. 00:31:59.759 --> 00:32:13.839 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. 00:32:14.400 --> 00:32:18.319 And then, and then, and then transformations up that, right? 00:32:18.480 --> 00:32:19.599 Time well invested. 00:32:19.680 --> 00:32:28.559 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. 00:32:28.640 --> 00:32:34.400 Uh, and they're investing that time to pay compound interest and dividends now and into the future. 00:32:34.640 --> 00:32:38.559 I mean, that's fundamentally what economic progress is about. 00:32:39.680 --> 00:32:45.839 And I'll I'll mention too, Swami, today, the most precious resource on the planet is the time of individual human beings. 00:32:46.079 --> 00:32:46.319 Yeah. 00:32:46.480 --> 00:32:50.880 No, in fact, we got abundance and so many things, but we can't create more time. 00:32:51.359 --> 00:33:03.119 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? 00:33:03.200 --> 00:33:07.279 That's the worst thing you do is waste that most precious resource on the planet. 00:33:07.440 --> 00:33:14.960 Turn that wasted time into either time well saved or time well spent within the opportunities for time well uh invested. 00:33:18.240 --> 00:33:25.440 So, what do you think is the bottleneck or the challenge of moving to this model, right? 00:33:25.680 --> 00:33:30.160 Because I'm used to actually doing what I call as cost plus pricing, right? 00:33:30.319 --> 00:33:31.200 Hey, you know what? 00:33:31.279 --> 00:33:45.519 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. 00:33:45.759 --> 00:34:00.480 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? 00:34:00.640 --> 00:34:01.200 Yes, yes. 00:34:01.519 --> 00:34:07.039 And it's basically it's just price for value, it's price for the value create, not the cost that you incur, right? 00:34:07.119 --> 00:34:11.280 Again, costs are immaterial to the value you create. 00:34:11.440 --> 00:34:20.159 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. 00:34:20.559 --> 00:34:22.960 And so so how do you price for that value? 00:34:23.119 --> 00:34:23.920 And guess what? 00:34:24.079 --> 00:34:25.519 It's a very individual thing. 00:34:25.760 --> 00:34:26.800 It's hard to price. 00:34:26.880 --> 00:34:32.800 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. 00:34:33.039 --> 00:34:42.320 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. 00:34:42.480 --> 00:34:52.719 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? 00:34:52.800 --> 00:34:53.840 Or to the right. 00:34:54.000 --> 00:34:54.239 Right. 00:34:54.400 --> 00:35:05.119 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. 00:35:08.400 --> 00:35:21.599 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. 00:35:21.840 --> 00:35:37.519 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? 00:35:37.679 --> 00:35:52.320 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. 00:35:52.559 --> 00:35:52.880 Okay. 00:35:53.440 --> 00:36:13.280 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? 00:36:13.920 --> 00:36:15.199 Well, it's it's important. 00:36:15.519 --> 00:36:18.960 Well, one, you don't have to sell transformations to everybody, right? 00:36:19.119 --> 00:36:23.840 So it's fine to stay at some, you can sell at all these levels that we're talking about. 00:36:24.159 --> 00:36:28.559 Two, one of the keys that you want is to uncover that aspiration. 00:36:28.960 --> 00:36:31.599 Um, I talk about three phases of transformation. 00:36:31.760 --> 00:36:39.760 You've got diagnosis up front, uh series of experiences, call them encapsulated experiences, and then follow-through, which is sustaining, right? 00:36:39.840 --> 00:36:42.079 Ensure it's it's sustained through time. 00:36:42.320 --> 00:36:55.519 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. 00:36:55.599 --> 00:36:56.960 No, no, that's not often the case. 00:36:57.119 --> 00:37:01.360 You need to help them uncover, like the Johnny Walker Princess Street experience that I mentioned, right? 00:37:01.440 --> 00:37:06.239 People go in there, maybe they're interested, maybe some, you know, I've been always mean to learn more about whiskey. 00:37:06.320 --> 00:37:07.679 This is a perfect time, right? 00:37:07.760 --> 00:37:08.719 So then they come there. 00:37:08.800 --> 00:37:13.360 But most people, hey, let's go spend an afternoon at Johnny Walker Princess Street and see what's going on. 00:37:13.840 --> 00:37:19.760 And so uh, but with there, you can help uncover that aspiration to become a whiskey drinker. 00:37:19.840 --> 00:37:28.800 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? 00:37:28.960 --> 00:37:30.320 What do you want out of legacy? 00:37:30.400 --> 00:37:33.679 What do you want uh as you grow older? 00:37:33.760 --> 00:37:35.199 Uh, what

do you want to be able to do? 00:37:35.360 --> 00:37:36.400 Where do you want to be able to go? 00:37:36.559 --> 00:37:38.239 What do you want to be able to experience? 00:37:38.400 --> 00:37:47.760 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. 00:37:51.840 --> 00:38:00.559 So uh so if I'm a leader and I'm actually uh looking at how do I imbibe the skill, right? 00:38:00.880 --> 00:38:13.920 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. 00:38:14.239 --> 00:38:20.719 Uh how do I uh you know improve my skills to start thinking transformation? 00:38:20.880 --> 00:38:33.360 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. 00:38:33.519 --> 00:38:37.199 So, what are the things uh you know I should start looking at? 00:38:37.440 --> 00:38:42.880 Okay, and how do I build this, if you ask me, a new muzzle uh in me? 00:38:43.760 --> 00:38:47.760 Yeah, so I mean there are so many things uh that you can think about. 00:38:47.920 --> 00:39:02.960 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. 00:39:03.119 --> 00:39:04.480 You need to focus on the individual. 00:39:04.639 --> 00:39:06.960 It gets back to that mass customization being the core. 00:39:07.119 --> 00:39:10.079 The whole progression economic value is really about individualization. 00:39:10.239 --> 00:39:18.000 You know, commodities, good services exist outside of us, experiences happen inside of us, and transformations change us from the inside out. 00:39:18.239 --> 00:39:22.320 So that focus on individuals is really one of the core things. 00:39:22.480 --> 00:39:27.199 Um, you need to understand human connections, you need to understand empathy. 00:39:27.440 --> 00:39:35.760 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. 00:39:35.840 --> 00:39:38.400 And and in particular, the transformations, you need empathy. 00:39:38.480 --> 00:39:44.239 You need to put yourself in their shoes, help them uh realize uh who they are, what they want to become. 00:39:44.400 --> 00:39:51.280 Also, particularly because when you look at going from to, it's generally not one monotonically increasing line. 00:39:51.440 --> 00:39:53.519 There is regress as well as progress, right? 00:39:53.599 --> 00:39:54.320 It's going up and down. 00:39:54.400 --> 00:39:58.800 So you need to be attuned to those places where things are regressed. 00:39:58.880 --> 00:40:10.159 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. 00:40:10.480 --> 00:40:10.960 Beautiful. 00:40:11.199 --> 00:40:14.559 Sense and respond and uh empathy and human connections. 00:40:14.639 --> 00:40:20.800 I picked up four key uh you know tenets, uh I would think of sense and respond is one, but okay. 00:40:26.559 --> 00:40:29.360 So I want to ask my last question to you. 00:40:29.440 --> 00:40:43.760 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. 00:40:44.239 --> 00:40:48.639 So uh so how does that uh help me in my business? 00:40:49.039 --> 00:40:54.719 Well, your biggest fear is that if you don't achieve transformation for your customer, your customer no longer wants you. 00:40:56.880 --> 00:40:57.519 Right? 00:40:57.920 --> 00:41:12.480 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. 00:41:12.639 --> 00:41:15.360 That time can last forever in many cases. 00:41:15.519 --> 00:41:24.880 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? 00:41:24.960 --> 00:41:26.079 Your weight goes back. 00:41:26.239 --> 00:41:27.519 You need to change your behavior. 00:41:27.679 --> 00:41:42.400 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. 00:41:42.559 --> 00:41:52.320 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. 00:41:53.039 --> 00:42:05.280 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. 00:42:05.360 --> 00:42:07.840 And she's sustaining it, but she's going weekly, right? 00:42:07.920 --> 00:42:11.840 So she has these weekly or bi-weekly interactions to keep that sustaining going. 00:42:11.920 --> 00:42:15.119 So they are going to continue to be a relationship forever. 00:42:15.280 --> 00:42:19.760 Um, in other cases, even when that transaction may end, well, guess what? 00:42:19.920 --> 00:42:21.360 There's another aspiration. 00:42:21.519 --> 00:42:28.239 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. 00:42:28.320 --> 00:42:30.880 And

who they're gonna go to is the one who helped them before. 00:42:31.039 --> 00:42:43.760 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. 00:42:43.920 --> 00:42:53.920 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. 00:42:54.159 --> 00:42:57.920 But you know, healthcare, things happen as you get older. 00:42:58.239 --> 00:43:00.559 No, no, you're always gonna need somebody to help. 00:43:00.719 --> 00:43:08.400 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. 00:43:08.639 --> 00:43:14.159 So it's almost like uh, you know, I'm kind of interpreting and I wanted to hear your view on this. 00:43:14.320 --> 00:43:35.119 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. 00:43:35.440 --> 00:43:46.159 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. 00:43:46.480 --> 00:43:48.159 Right, and price at multiple levels. 00:43:48.239 --> 00:43:50.960 You know, even calibrate sells physical goods, right? 00:43:51.119 --> 00:43:58.960 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. 00:43:59.280 --> 00:44:04.239 They can even be Providing protein powder at the uh or at the at the commodities level. 00:44:04.320 --> 00:44:04.639 I don't know. 00:44:04.880 --> 00:44:18.480 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. 00:44:18.800 --> 00:44:19.519 Fantastic. 00:44:19.599 --> 00:44:21.599 Uh it's a great conversation. 00:44:21.679 --> 00:44:43.679 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. 00:44:43.840 --> 00:44:49.920 Uh Mask Customization, in my view, is uh one of the best books that I've ever uh read. 00:44:50.079 --> 00:44:54.000 And then uh experience economy and now transformation economy. 00:44:54.079 --> 00:44:56.079 It's been a pleasure talking to you. 00:44:56.239 --> 00:45:00.480 Thanks for taking time in the midst of your schedule and vacation and talking to me. 00:45:00.800 --> 00:45:02.079 All right, thank you, Swami. 00:45:02.239 --> 00:45:03.039 It's been a pleasure. 00:45:03.199 --> 00:45:09.679 I loved how you asked such great questions and got me very impassioned in in uh in providing the answers. 00:45:11.920 --> 00:45:14.239 Thanks for listening to this episode. 00:45:14.480 --> 00:45:21.199 For selected links and detailed show notes, visit www.contramines.com. 00:45:21.360 --> 00:45:26.960 Follow Contramines on social media and let us know who you would like to see next on the podcast. 00:45:27.199 --> 00:45:32.559 If you're listening to Contramines on Apple Podcasts, do share your comments and give us a rating. 00:45:32.719 --> 00:45:34.719 We are keen to know what you're thinking. 00:45:35.039 --> 00:45:37.519 Contramines is also on YouTube. 00:45:38.000 --> 00:45:44.719 If you are listening to the podcast on YouTube, hit the subscribe button and stay up to date on all our releases. 00:45:44.960 --> 00:45:47.519 Thanks for listening and stay safe.