Experience driven Strategy - Master thesis

Experience Driven Strategy

Placing the customer experience at the center of the organizational strategy

Patrick Zimmermann Master Thesis Master Programme Business & Design, MSc University of Gothenburg School of Business, Economics and Law & HDK - School of Design and Crafts Supervisor: Peter Zackariasson June 5, 2015

Acknowledgements I want to dedicate this first white page to say thank you to everyone who supported me throughout this thesis Thank you to my friends and classmates, sharing 20 m2 for 4 months with me. Thank you Matthieu Belohradsky, who took the time to read through the thesis.

I am especially grateful for the constant availability, support and believe of Oriana Haselwanter from day one until the end.

The outcome wouldn’t have been the same if not for the generosity of my interviewees. Here special thanks go out to my ex-colleagues from IDEO (Trent Huon, Franz Blach, Florian KÜssler and Virginia Wang) offering their precious time, to Niels KjÌrgaard-Jensen sharing a similar believe for a bright future for a more holistic experience mind-set and finally to Catherine McHenry giving me the needed educational perspective on experience.

To everyone I met during the process who expressed interest in my research topic. You motivated me to write something that I would be proud of sharing.

Biggest thanks to the remote support from my family and members physically not present.

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Preface The two graphs show how often my top 8 keywords have been used in my thesis (left) and how many search results they get on Google (right):

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11.000 10.000 9.000 8.000 6000 5000 4000 3000 2000 in million Ex p

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450 400 350 300 250 200 150 100 50

What does this ultimately tell about my topic or me?

I have a passion for connecting the dots and creating new things – knowledge or products. My strength has never been the meticulous laboratory-like investigation of one phenomenon in a test tube. Rather was I keen on using my experience from various backgrounds to connect thoughts and create something big.

For the ones who know me, it was somehow foreseeable that I would strive to build something tangible rather than content myself with only researching a single theoretical phenomenon.

I hope that you, reader, will enjoy going through this thesis and discover how the Experience driven Strategy concept is coming together. Moreover I hope to find the time until the end of 2015 to set up a digital version of this thesis under: www.experiencedrivenstrategy.com and further work on the concept as there is a growing field of interest.

With that been said, I am going to leave you with a quote from one of the interviewees:

„experience is this never-ending rainbow of dancing unicorns“

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Abstract

In this research project I investigate what the current knowledge in practically constructing experiences is, and how future organizations can make strategy a more dynamic and agile force.

My research study has revealed a strong link between the internal process of strategy development and the external customer experience. Utilizing findings of this research study I went on to develop a step-by-step model, which helps companies to build a solid ground – namely the internal alignment of the company. From here on the organization can use a more refined notion of experience to shift their actions towards being more user focused and ultimately building up a more meaningful customer experience and stronger relationship to their customers. Every additional aspect the company is taking into consideration through this model will further interlock the holistic experience and help to substantially strengthen the customer relationship.

Keywords: Experience, Company, Strategy, Design, Customer

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Index 1. Introduction 2. Background: The Experience Economy 3. Conceptual Framework

3.1. Experience

3.2. User Experience

3.3. (User) Experience Design

3.4. Experience based Design

3.5. Traditional Strategy

3.5.1. Corporate Strategy

3.5.2. Business Strategy

3.5.3. Operational Strategy

3.6. Blue Ocean Strategy

3.7. Strategy as a design process

3.8. Meaning Strategy

3.9. Strategy Research

3.10. Summary 4. Methodology

4.1. Research approach

4.2. Research method

4.2.1. Abductive reasoning

4.2.2. Creating Scientific Concepts 4.2.3. Interviews

4.3. Research analysis

4.4. Quality of the research

4.5. Ethics 5. Empirical Material 6. Empirical Analysis 9. Discussion 8. Concept Development

8.1. Organizational Structure Level

8.2. Organizational Environment Level

8.3. Experience Width Level

8.4. Experience Characteristics Level

8.5. Experience Categorise Level

8.6. Experience driven Strategy 9. Reflection 10. Conclusion 11. Further research 12. Reference 13. Appendix

5 8 10

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32 35 37 38

67 69 71 72 83

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1. Introduction What makes a good restaurant?

People would most probably answer spontaneously the food, as one could have expected. It is hard to state at this point whether this answer is right or wrong but one can agree that it makes sense, as it is what the restaurant is ultimately selling. But what about the location, the seating, the size of the menu, the prices, how far apart the tables are or the surroundings? This obviously counts too, but subconsciously, if one is not a professional food critic. Good restaurants have recognized that the food itself is one part of the equation. Not only do they actively work on these aspects, they go further and consider where the ingredients and electricity is coming from, how the waste is treated, and how the team is chosen. Why do they do so? Good restaurants have recognized that an infinite number of aspects influence the food and they are trying to work with this in order to deliver a better service (Soriano and Domingo 2002).

This thought can be further applied to manufacturing companies as well, with Apple being at the forefront of what it means to consider various aspects of, and around the product. The love for details in the design of the product, the packaging, the unboxing, the retail space, the maintenance and the initial presentation of the product have been strategically finetuned. With time passing by, the customer unveils more and more details.

The connecting tissue of these two examples is the very basic notion of customer experience and its importance for successful business (Biedenbach and Marell 2010). Concurrently, experience “is inherent to our existence as people. Experience in general covers everything personally encountered, undergone, or lived through“ (Roto et al. 2011, p. 6). In today’s global market of infinite variety, customers seek for “more sophisticated offerings, greater customization within the plethora of goods and services” (Fraser 2007, p. 66) and more integrated solutions as “category walls are breaking down” (Ibid, p. 66). Furthermore the “social values are shifting, with higher expectations on good citizenship and the corporation’s social and environmental role and responsibilities” (Ibid, p. 66). Companies that fail to address customer experience as an important part of the business offer will be outperformed quickly (Meyer and Schwager 2007). A greater consideration of a holistic customer experience has to become the driving

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force for sustainable growth of future corporations. The question ultimately becomes: What is the current knowledge in practically constructing experiences?

The rapid change of our society will shift our understanding in the future.

Mega trends such as global access, technology development, marketplace demands, and social values will challenge our traditional thinking patterns. Consequently the big question becomes how to stay competitive and grow profitability. While an innovation mind-set and assessment of the competitive positioning is important, a more fundamental problem lies within the company itself. Every company started off as a start up, founded out of the strong believe for an idea. This passion and dedication might have lead to the construction of a successful business, the development of hierarchies, and efficiency replacing agility as a core element. The strategy development was thereby split into two elements – creation and implementation, dividing the company into few decision makers and an abundance of executers. In order to cope with the ever-increasing speed of business evolution the company needs to come back to this initial agility, dedication to the idea and a dynamic way of doing strategy (Kotter 2014).

The question arises: How can you make strategy a dynamic and agile force for future organizations?

The purpose of this paper becomes to answer these research questions, besides investigating their interrelation. In other words how can an agile strategy process and a greater user focus enhance the overall customer experience.

This paper will in a first instance explore various related topics to create an extensive knowledge base both regarding experience and strategy. In a second instance the interviews will shed light on the praxis of constructing experience and help answer the research question. Finally the gathered understanding will help to further answer the research questions and lead to the creation of a step-by-step concept that helps companies to make customer experience their core agile strategy.

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This paper continues with four main chapters, whereby the next one marks the starting point from which the thesis topic derives - The Experience Economy. It will continue with the conceptual framework addressing both experience and strategy literature. In the next chapter, the methodology will be presented including research approach, method and analysis as well as the quality and ethics of the inquiry. Subsequently the empirical material is illustrated under four thematic topics, as well as analysed in the next chapter under the same topics. Hereinafter the findings are interpreted and further translated into the creation of the Experience driven Strategy Concept. Rounding up the thesis are the discussion, conclusion, further research, reference list and appendix.

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2. Background: The Experience Economy While customer experience can be seen as a vital part of the business activity, it is perceived as the future by researchers Pine and Gilmore and their phenomenon of Experience Economy (Gilmore and Pine 1999).

Gerhard Schulze first analyses in his book “The Experience Society” (translated from German “Die Erlebnis Gesellschaft”, 1992) the cultural behaviour in different social strata in Germany and introduced the idea of experience as a society phenomenon. Pine and Gilmore in 1998 contributed with their research heavily to the development of the term Experience Economy seeing experience as the next value-adding element for companies (Sundbo and Darmer 2008, p. 1). Their article appeared in the Harvard Business Review and was entiteled “Welcome to the Experience Economy” (Pine and Gilmore 1998). They have analysed the changes of the economy in previous years and noticed the development from “extracting commodities” (Ibid, p. 98) like coffee beans, to making goods, like ground coffee in the retail space, to nowadays widely spread coffee shops delivering services and to the final and most interesting step of “staging experiences” (Ibid, p.

98). This evolution draws back to the companies strive for differentiation and premium pricing. In other words the consumers willingness to pay a higher price increases, the closer a companie‘s offer gets to being an experience (Levitt 1980; Gilmore and Pine 1999). One of the pioneers in this practice according to the authors is Walt Disney with its amusement parks.

In a more modern context, Hard Rock Cafe, Nike Town or REI are applying the idea of staging an experience in an economical understanding (Pine and Gilmore 1998). As Rifkins described it in his article, consumers are increasingly interested in the access to products or services rather than owning them, in other words it plays a bigger role to experience than to own (Rifkin 2000; Boswijk, Thijssen, and Peelen 2007).

Within the definition of the term Experience Economy Pine & Gilmore and Parahalad & Ramaswamy have different understandings of what the settings for an experience are. Whereas Pine & Gilmore see a physical and/ or virtual space in which entertainment plays a vital role, Parahalad & Ramaswamy perceive the experience environment as a space that enables dialogue, access and transparency. While the first pair sees the experience as fully staged and as directed as possible, the second believes that it exists through a balanced co-creation between the company and its customers (Boswijk, Thijssen, and Peelen 2007).

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Jensen, co-founder of „Copenhagen Institute for Futures Studies“, had very similar ideas to the Experience Economy. He explained in his work “The Dream Society” from 1999 that people’s focus will shift from material to spiritual needs, in other words from technology and science (e.g.: DELL) to emotions and stories (e.g.: Apple). He saw two trends changing the world in the future that would reinforce his theory. First, the automatisation of information tasks through technology and secondly the commercialisation of emotions (Jensen 1996; Jensen 1999).

In the Experience Economy, the authors argue that experiences are staged and therefore produced such as the example of Walt Disney shows. A difference can hereby be drawn between the term experience production and experience creation. Whereby the experience creation sees experience not as another form of service, but rather perceives it as being “always more than just the product” (Sundbo and Darmer 2008, p. 1). A simple example to illustrate the difference between the creation and the production should manifest the difference. A theatre is an experience production, where the offer is to experience a theatre play. Whereas thinking about a bar in the entrance of the theatre and a special service to lead the customers to their seat would be the experience creation (Sundbo and Darmer 2008). A broad understanding of experience is necessary in order to apprehend its economical raison d’être.

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3. Conceptual Framework The conceptual framework is the attempt to build up a thorough understanding in order to respond to the research questions. Various topics will be explored, some of which can be considered as theories, especially regarding the psychological understanding of experience. Whereas others are more phenomenons, such as various experience design disciplines. For the broad understanding of the topic, both parts are equally important, especially in regards to the development of the final model.

Boswijk, Thijssen and Peelen (2007) recommend to start understanding the individuals’ personal experience in order to better understand the idea behind the Experience Economy (Boswijk, Thijssen, and Peelen 2007).

Equally in the next section a more refined understanding of experience as a psychological term will be presented.

3.1. Experience At the most fundamental level, writing in English means losing the differentiation of “Erlebnis” and “Erfahrung”, both translated as experience in English. The later one is closer to the meaning of knowledge and would be used in the context of “having experience” (Larsen 2007, p. 9) whereas the first one describes the “mentally unprocessed immediately perceived events” (Sundbo and Sørensen 2013, p. 3) and would therefore be used as “living an experience” (Larsen 2007, p. 9).

In the Experience Economy, the experience is seen as an economical offering, which, similar to products and services, is produced, priced and sold to customers. Above all products or services are lived and experienced by the customer. Therefore as Forlizzi and Ford pointed out a better understanding of the human psychology helps to reveal which parts of the experience can be actively shaped and which parts are inherent in the humans (Forlizzi and Ford 2000).

The psychologist Csikszentmihalyi (2014) has actively contributed to a better understanding of experience and developed a “general model of experience, consciousness and the self, [according to which] people are confronted with an overwhelming amount of information” (Csikszentmihalyi 2014, p. 242). This model encompasses multiple steps, whereby consciousness is the centrepiece and represents the “complex system selecting information, processing and storing it” (Ibid, p. 242). Selected

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information enters the consciousness through the attention of people.

Once the information is attended by the consciousness, it enters the awareness, which encompasses the process of thinking, willing and feeling happening in the consciousness. The last part is the memory that stores and retrieves upon request assessed information. The consciousness holds therefore all subjective experiences (Csikszentmihalyi 2014).  Adding upon this Forlizzi and Ford (2000) have created a general understanding of three different ways to talk about experience: experience, having an experience and experience as a story. Similar to Csikszentmihalyi, the authors state that experience exists simultaneously during the moments of consciousness, making it a constant stream that humans can be aware of through self-reflection and often selftalk. Secondly, the sentence having an experience has been coined by the philosopher John Dewey, arguing that it stands out from the “general stream of experience [by running] its course to fulfilment” (Dewey 1934, p. 36-37). In other words, having an experience has a defined beginning and end. Furthermore it deliberately affects and sometimes changes the user.

The last step is the experience as a story. Stories are a powerful way for users to express their lived experiences. In this process of sharing, the user remembers and condenses the experience into a story. It thereby plays a vital role for the user as being the tool to express anything that happened to him. It is at the same time the only part of a user experience that external parties can acquire (Forlizzi and Ford 2000).

In his research about experience, Csikszentmihalyi (2014) investigated the idea of intrinsic motivated or autotelic1 activity. By conducting interviews with individuals who stated enjoyment as the main reason for pursuing an activity, he was able to investigate the nature of enjoyment. He argues that flow is a state in the dynamic equilibrium between capacities and opportunities of a perceived action. He describes it as the feeling an individual gets when he/she is fully immersed in an activity. Moreover he argues that flow creates optimal experience or as he called it “autotelic experience” (Csikszentmihalyi 2014, p. 145 ; Sundbo and Sørensen 2013).

At this point the definition of experience by Boswijk, Thijssen and Peelen 2007 can be cited: “Experience in the sense of Erfahrung is a continuous interactive process of doing and undergoing, of action and reflection, from „having a purpose in and not apart from itself“ (merriam-webster.com)

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cause to consequence, that provides meaning to the individual in several contexts of his life” (Ibid, p. 2).

Building upon Csikszentmihalyi’s notion of experience and the human consciousness, Boswijk, Thijssen and Peelen (2007) emphasize the role of the individual in the experience interaction system, enumerating a set of characteristics which experiences are based upon: “There is a heightened concentration and focus, involving all one’s senses. One’s sense of time is altered. One is touched emotionally. The process is unique for the individual and has intrinsic value. There is contact with the ‘raw stuff’, the real thing. One does something and undergoes something. There is a sense of playfulness. One has a feeling of having control of the situation. There is a balance between the challenge and one’s own capacities [and] There is a clear goal” (Ibid, p. 3).

Likewise Forlizzi and Ford (2000) analysed the influences on the experience from a user-product interaction standpoint. In this construct the user represents how the individual is influencing the experience, bringing into the interaction his/her previous experiences, “as well as their emotions and feelings, values, and cognitive models for hearing, seeing, touching, and interpreting” (Ibid, p. 420). Products on the other side represent the embodiment of how artefacts influence the experience. Products can herby be defined as the “array of objects, activities, services and environments that fill the life-world“ (Ibid, p. 420).

Additionally Forlizzi and Ford (2000) complemented their understanding of user-product interaction and defined four aspects (sub-consciousness, cognition, narrative, and storytelling) of experience to help understand it from a designer‘s perspective. Sub-consciousness describes the most simple, natural experiences. They are the ones that do not require active thinking and are even executed unknowingly. Don Norman talks about products that we only need to learn to use once, as for example putting on a t-shirt. Cognition describes experiences that require thinking. In other words, it describes certain unfamiliarities with a product or service that requires the users attention, as for example learning to drive a car.

Narrative represents experiences that have been defined in one‘s head and force us to actively think about what we are doing, or rather experiencing, and express that in words. “A product’s set of features and affordances offers a narrative of use” (Ibid, p. 422). Finally storytelling describes the subjective part of experiences, since experiences are the cause of the users

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interactions with „some subset features and affordances, based on location in a context, prior experience, and current emotional state“ (Forlizzi and Ford 2000, p. 422). The experience then creates a personal story for the consumer, by that means „users bestow meaning on situations, creating life stories and stories of product use” (Ibid, p. 422).

The quality of an experience has been researched in 1994 in order to form a common ground upon which entries for a design contest could be assessed.

In this matter they defined experience as “the way [a product] feels in their hands, how well they understand how it works, how they feel about it while they’re using it, how well it serves its purpose, and how well it fits into the entire context in which they are using it” (Forlizzi and Ford 2000, p. 421).

Sundbo and Sørensen (2013) researched the subjective nature of experience and described experience as “something that happens in people’s minds, [...] determined by external stimuli and elaborated via the mental awareness that people have from earlier experiences, mental needs and personal strategies” (Sundbo and Sørensen 2013, p. 2). Similarly Hassenzahl (2010) stated that experience is “both unique but at the same time emerging from distinct elements and processes which are open to study and deliberate manipulation in an act of design” (Hassenzahl 2010, p. 6). Fulton Suri (2003) agrees and coins the paradox between the importance of customer experience for design and the despair of designers to engineer experiences. Since experiences are in itself subjective – they are affected by moods, individuals idiosyncratic associations – they can not be designed. Nevertheless factors like sound and the formal sensory qualities influence experiences and can be shaped (Suri 2003). Forlizzi and Ford (2000) argue equally and state “we can’t really design an experience, only the mechanisms for creating it, and the inter-active and expressive behaviors that modulate experience” (Forlizzi and Ford 2000 in Bate and Robert 2007, p. 45).

3.2. User Experience As suggested by Forlizzi and Battarbee (2004) “understanding experience is a critical issue for a variety of professions, especially design” (Forlizzi and Battarbee 2004, p. 261). Especially in the design of interactive systems “there has been an increased interest [...] in designing the ‘user experience’” (Redström 2006, p. 123).

User experience has always been a point of interest in science and industry but in a more limited way as it is now. Usability was the term that 13

researchers and practitioners were using when addressing this subject.

Since then the term user experience has replaced usability, extending it by considering emotional aspects of user-product interactions. Likewise, while usability was focusing on avoiding bad experiences, user experience is striving to create positive ones. The reason for the recent interest by practitioners can arguably be drawn back to a better understanding of the human psychology. Triggering the user’s emotions as been found to have positive effects, such as brand loyalty, customer loyalty and create points of difference (Gomez and von Saucken 2014; Saucken et al. 2013).

Despite a clear origin, user experience has nowadays become a synonym for various meanings “usability, user interface, interaction experience, interaction design, customer experience, web site appeal, emotion, ‘wow effect’, general experience” (Roto et al. 2011, p. 4). Yet Gomez and von Saucken (2014) argue, that the ultimate goal of user experience is the use of the human psychology and customers emotions in order to enhance the overall user experience. It can be therefore agreed upon the definition of Saucken et al. (2013) stating that user experience is about achieving “a positive emotional reaction of users on a product interaction and thereby to create a unique selling proposition” (Saucken et al.

2013, p. 1).

The main difference between user experience and experience is not only the added word user, thus a smaller focus, but inherently a new meaning that the user brings; user experience derives from encountering systems.

Hassenzahl (2010) describes it: “experience becomes user experience by focusing on a particular mediator of experiences – namely interactive products – and the according emerging experiences” (Hassenzahl 2010, p.2).

Going back to the subjective nature of experience, as described by Hassenzahl (2010), Suri (2003) and Forlizzi and Ford (2000), it raises the awareness of different factors influencing the user experience. Likewise three categorises help classify the different factors. Context can change the user experience without changing the encountered system. The context can be social, physical, technical and information related. The User adds its dynamic nature to the understanding of experience becoming therefore dynamic as well. Lastly, the system, with its designed properties, added properties by the user himself and brand or manufacturer image, influences the user experience significantly (Roto et al. 2011, p. 10).

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Within the complex nature of (user) experience Saucken et al. (2013) developed a model breaking down the user-product interaction into different parts to help analyse experiences. Saucken et al. (2013) extend the Customer Experience Interaction Model (CEIM) with the temporal aspect, the notion of a mental model – “the inner representation of the used product” – and a stronger focus on the user’s emotions and merge it with the Customer Experience Interaction Model (CEIM) (Saucken et al. 2013).

Fig. 1: User Experience Interaction Model (Saucken et al. 2013, p. 4)

3.3. (User) Experience Design User experience as a practice becomes User Experience Design (UXD). Roto et al. (2011) argues that, based on the ISO definition UXD, is rooted in the principles of Human Centered Design (HCD), hereinafter listed: “Positioning the user as a central concern in the design process; Identifying the aspects of the design that are important to the target user group; Developing the design iteratively and inviting users’ participation; Collecting evidence of user-specific factors to assess a design” (Roto et al. 2011, p. 11). Human centered design is one of the recently emerging design approaches, “that look beyond the product as a physical thing” (Sanders and Stappers 2013, p. 29). Experience Design is thereby defined by the authors as “creating meaning or affect in the user, as opposed to creating a physical artifact that fulfills a functional purpose” (Ibib, p. 29). Notwithstanding User Experience Design adds important aspects such as User, Context and System. Furthermore it differs from HCD in the methods and tools used and how the discipline is positioned within the company (Roto et al. 2011).

Hawley (2009) pointed out the trend towards dropping the User out of User Experience Design. First of all, the user has a strong connection to interactive systems and doesn’t resonate with various other business stakeholders

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such as customer, patience or member. Furthermore Experience Design “recognizes the fact that most customer interactions are multifaceted and complex and include all aspects of a customer’s interaction with a company or other organizational entity, including its people, services, and products.

[Customer interactions are] all of the social and emotional consequences of a customer’s interaction with an organization or brand, including trust, motivation, relationships, and value“ (Hawley 2009, p. 1). The complexity of experience requires new technics especially in the research and conceptual phase that extend the user-centered design approach. In Experience Design the practitioner has to look beyond users needs usually investigated in the research phase of HCD project. Experience Design „requires a broad understanding of the motivation and aspiration of the target audience“ (Hawley 2009, p. 6), but it is the designer‘s task to leverage these insights and envision creative solutions that exceeds the users expectations.

McLellan (2000) describes the purpose of experience design as orchestrating “experiences that are not only functional and purposeful, but also engaging, compelling, memorable, and enjoyable” (McLellan 2000, p. 59-60). Ever since the better understanding of the strong correlation between emotions and experiences – through “the observation that emotion, cognition, motivation and action are inextricably intertwined” (Hassenzahl 2010, p. 3), research has tried to enable a better understanding of emotions in experience design (Gomez and von Saucken 2014; Hassenzahl 2010).

3.4. Experience based Design Experience based Design (EBD) is equally build upon user-centered design, yet adds the user as an active part of the design process. It is a rapidly growing field that finds most application in research of healthcare, where the patience treatment experience is vital for recovery (Bate and Robert 2007). While Experience Design has a strong focus on understanding the user to design the experience, this approach underlines the “direct user participation in the design process [...] [while still focusing] on designing experiences as opposed to systems or processes” (Bate and Robert 2007, p. 41). The nomenclature of EBD is unclear as various researchers have worked parallel on this idea. Nevertheless two elements are persistent: the „experience element“ and the “participatory element“ (Bate and Robert 2007, p. 43). In other terms the idea of a better understanding of product or service experiences and the inclusion of the user in the design process describe Experience based Design.

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John Can (1998) has a slightly different approach to this same concept. He argues that the process of design should be demystified. Whereas intuition might lead to a good customer experience, it is only the understanding of experience, or rather the conditions that lead to great results, that will help designers to improve these results in the future. He therefore describes Experience based Design as „a process that employs a deep understanding of people’s everyday product and service use and experience and applies it to inform and shape business objectives and goals” (Cain 1998, p. 11). He continues by stating that products and services occupy a place between two distinct arenas: Business and everyday experience. It is in these two environments that EBD is embedded. The development of a product or service starts with a „business problem or goal and ends with a material form that satisfies these objectives “ (Ibid, p. 11). To get from a problem to the solution, a set of steps are usually undertook: „planning, strategy, research, analysis, exploration, refining, testing, engineering, manufacturing, and distribution“ (Ibid, p. 11). These steps are usually over the wall, which loses the overall meaning and cohesive experience for the end user. In the second environment EBD analysis what happens to a product or service once they become public and get used. Here a deeper understanding of experience as a psychological construct is required. The idea of Experience based Design according to the author “is that once you understand experience, you can change it, improve it, cast it in your own terms, own it. Frameworks are the centrepieces to design innovation for EBD because creating new experiences begins by understanding current ones” (Ibid, p. 13).

3.5. Traditional Strategy Arguably the strategy process is one of the weakest processes in most organizations in terms of culture and capability (Golsby-Smith 2007). In the early days of strategy research, Mintzberg has argued that strategy “simply emerges” (Mintzberg 1994 in Whittington 2004, p. 66). In the late 1970s, along with the research done by Harvard Professor Michael Porter, companies developed greater interest in actively creating and adapting strategies and along with it came tools to do so. The next section is inspired by the partitioning used by Stickdorn and Schneider (2011) to explain strategy.

3.5.1. Corporate Strategy Back in 1979 Porter argued that the main role of strategy is to cope with competition, he therefore presented in the Harvard Business Review (1979) Porter’s Five Forces Model. In his analysis he claimed that there are five forces

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that influence a companie‘s profitability. The three threats for competition are threats of substitutes, threats of established rivals and threats of new entrants in the market. Furthermore Porter adds the threats of increased bargaining power of the buyer and the supplier. The author points out that an industry with pure competition leads to normal profit, in other words companies are competing against each other until everybody makes the least profit feasible. This model helps to qualify the attractiveness of a market and makes strategy the result of assessing external forces and adapt the companie‘s decisions accordingly (Porter 2008; Porter 1979).

Bargaining Power of Suppliers

Threats of New Entrants

Industry Rivalry

Threats of Substitutes

Bargaining Power of Buyers Fig. 2: Porter‘s Five Forces (Porter 1979, p. 141)

3.5.2. Business Strategy Once the market has been analysed and the competitive forces ascertained, the next step for a company becomes the development of the business strategy in the given market. It is once again Porter who developed a model in this field, which he named The Generic Strategy Model. Porter introduces three generic strategies: Cost leadership, differentiation and focus as potentially successful to defend market positions and outperform competitors. Cost leadership is the strategy to outrun competitors with lower costs. The second strategy demands the company to create unique offers, that allows to set a higher than average price. And with focus a business is concentrating on one aspect, either a product, a target market or a group of customers. Porter calls the company without one of these three strategy types stuck in the middle (Dess and Davis 1984; Porter 1996).

3.5.3. Operational Strategy Building upon his previous explorations, Porter developed a tool in 1985 for decision making within the company. He analysed the activities companies

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Firm Infrastructure Human Resource Management

in rg

Ma

Technology Development Procurement

Ma

Inbound Operations Outbound Marketing Service Logistics Logistics and Sales

rg in

Support Activities

were performing along what he calls the value chain. The goal for a company and therefore of the value chain is to deliver valuable products or services to their customers. This idea can best be explained by comparing it to a production line. In each step the employee of the company would execute a defined task and increase the value of the final product. The value chain of any company works similarly. Porter divides it into primary activities such as inbound logistics, operations, outbound logistics, marketing & sales and service. Supporting activities are the following ones: Firm infrastructure, human resource management, technology development and procurement ( Porter and Millar 1985; Porter 2008).

Primary Activities Fig. 3: Porter‘s Value Chain (Porter 2008, p. 37)

3.6. Blue Ocean Strategy Porter’s approach has been highly appreciated, at the same time criticized and further developed by researchers. Two of them are Kim and Mauborgne (1999), who point out that most companies compete head to head by matching and beating their rivals, leading to competition on the same dimensions. Instead of competing on existing markets the authors argue that companies should look outside the boundaries of their competitive market in order to pursue value innovation (Kim and Mauborgne 1999).

In a later publication entiteled the Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant, they describe this concept as the Blue Ocean Strategy. Their concept is about avoiding head to head competition on existing market – Red Ocean – which are stagnating or slightly growing. Instead “making competition irrelevant by creating a new market space where there are no competitors” (Kim and Mauborgne 2005, p. 106), described as Blue Ocean. Through creating new

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benefits and services while “eliminating less valuable features and services” (Osterwalder and Pigneur 2010, p. 226) the value for the customer can be increased. With this idea the authors reject “the traditionally accepted trade-off between differentiation and lower cost“ (Ibid, p. 226). While Kim and Mauborgne reason to look beyond the boundaries, they explain that most Blue Ocean are created from within Red Oceans by expanding existing industry boundaries” (Kim and Mauborgne 2005, p. 106). Furthermore Blue Ocean can be understood as a line extension, that is targeted at creating a new market contrary to incrementally innovating products in existing markets (Kim and Mauborgne 2005 ; Osterwalder and Pigneur 2010).

3.7. Strategy as a design process Strategies cannot deal with the „escalating imperatives for speed and flexibility“ (Liedtka 2000, p. 8) in modern society. Liedtka (2000) sees the solution in interpreting „strategy as a process of design“ (Ibid, p. 8).

Herbert Simon (1969) describes designer as „everyone [...] who devises courses of action aimed at changing existing situations into preferred ones“ (Herbert Simon 1969 in Liedtka 2000, p. 8). Liedtka (2000) analyses the design process in order to understand the power of design for the strategy, in other words, whether a design thinking approach is appropriate for the strategy process. In order to understand whether or not design can be the right metaphor for strategy, the writer analyses strategy under the premise of these six characteristics: Synthetic, adductive, hypothesisdriven, opportunistic, dialectical and inquiring (Liedtka 2000). Strategy is the synthesizing process of internal alignment, understanding interdependencies, which „creates value not only in aligning the components, but also in creatively re-arranging them“ (Ibid, p. 22). Next to being synthetic, strategic thinking is also adductive as it “allows individuals within an organization to marshal and leverage their energy, to focus attention, to resist distraction, and to concentrate for as long as it takes to achieve a goal“ (Ibid, p. 22). The capability to develop and test good hypotheses is crucial, “in an environment of ever-increasing information availability and decreasing time to think” (Ibid, p. 22). Within the alternating sequence of creativity and critic there is room for opportunism to leverage new possible strategies. While seeking to understand the future, “the strategist must mediate the tension between constraint, contingency, and possibility” (Ibid, p. 23), which can be understood as dialectical. Finally strategic thinking is inquiring and value-driven as “any particular strategy is invented, rather than discovered – chosen from among a larger set of

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plausible alternatives – it is contestable and reflective of the values of those making the choice” (Ibid, p. 23).

Mintzberg disagrees and states that:

• “Design suggests that strategy is a process of thought, decoupled

from action.

• In design, implementation must wait for formulation to be completed.

• Design gives too much emphasis to creativity and uniqueness.

• Design gives too central a role to THE designer – the CEO in the

business application of the term.

• Design is overwhelmingly concerned with fit and focus”

(Mintzberg in Liedtka 2000, p.23-28).

3.8. Meaning Strategy Design has undergone a shift from only being about function and form to being more user-focused and meaning lead (Sanders and Stappers 2013).

A similar shift is happening to a rather analytical and numbers driven discipline, such as strategy making. Battistella, Biotto and Toni (2012) claim that companie‘s business model does not only transmit economical and technological values but also share a semantic point of view. The authors use Verganti’s model of Design Driven Innovation, described as “a strategy that aims at radically changing the emotional and symbolic content of products, i.e. their meanings and languages, through a profound understanding of broader changes in society, culture and technology” (Verganti 2008, p.

436). Verganti (2006) furthermore pleads that companies such as Alessi, Apple or Bang and Olufsen have acquired a greater understanding of their product semantic and use it on a strategic level (Verganti 2006). Battistella, Biotto, and Toni (2012) merge the Design Driven Innovation – a triangle of innovation, strategy and meaning of product – with a business model approach (innovation, strategy and meaning of business model), leading to what they name Meaning Strategy (Ibid 2012). They describe it as “the management of meanings to ‘make sense’ of their entire business model” (Battistella, Biotto, and Toni 2012, p. 718).

This idea ties to the theory of the Experience Economy and the trend towards an increasing focus on the sense and meaning of things. Both models rely on a strong believe of researchers and practitioners, that merging the design thinking and management with the process of strategy has a remarkable potential. As Fraser (2007) puts it “the opportunity to leverage design

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practices for both cultural transformation and strategic growth [moving towards] economics of design” (Fraser 2007, p. 67), or as Golsby-Smith (2007) describes it “design opens a door to a whole new art of thinking that has been suppressed for centuries by the Western world’s addiction to logic and science as the dominant thinking paradigm“ (Golsby-Smith 2007, p.

22; Battistella, Biotto and Toni 2012). Connecting the business model and strategy is the idea, that every company has, either articulated or not a business model for their company and the strategy is described as giving “meaning and direction to the development of the company’s business model” (Tikkanen et al. 2005, p. 793). Battistella, Biotto and Toni (2012) continue by highlighting sense making as a common process of both approaches (business modelling and design), defined as “the activity of perceiving the environment and assigning a personal meaning to an object” (Ibid 2012, p. 722) and citing Starbucks as a concrete example. The coffee company has pursued a strategy defining the term third place and the meaning of it in a stagnant commodity market such as the coffee business. The third place represents the idea that people need a place next to work and home to “meet regularly with an array of people and to have varied experiences” (Rosenbaum et al. 2007, p. 55; Sanson 1999; Battistella, Biotto and Toni 2012).

3.9. Strategy Research Strategic research has been trapped in the modernism for a long time, valuing “scientific detachment over practical engagement, the general over the contextual [and] the quantitative over the qualitative” (Whittington 2004, p. 62). There is a shift of perspective seeing strategy as a practice executed by people, leading to understanding strategy as a social practice.

Strategy allows a “much more intimate relationship with our subjects” (Ibid, p. 62) then previously accepted. The research becomes therefore about how strategists “can be helped to understand and improve their practice” (Ibid, p. 62). Typically strategy is defined “as concerned for the competitive advantage and performance of the firm” (Ibid, p. 64). Beyond that, the author argues that a sensitivity for the practice of strategy, broadens the traditional perspective above and below the firm. “From a sociological perspective, the concern moves up a level, to consider strategy as a broad field of social activity, whose practices are important to society as a whole. Here, it is not so much firm performance that matters as strategy’s performance as an entire field. From a managerial perspective, the concern shifts down a level, to get inside firm‘s overall strategy processes to the actual activities of strategy’s practitioners. Here, it is the performance of

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the strategists that matters, in the sense of how they perform their roles. In short, accepting strategy as a social practice involves a refusal to privilege firm performance over that of either the field as a whole or its practitioners individually” (Ibid, p. 64). As Whittington concludes “strategy research after modernism will increasingly look for its models beyond economics towards sociology“ (Ibid, p. 66).

3.10. Summary What started of as a research inspired by the Experience Economy, swiftly moved towards appropriating knowledge about, both experience and economical theories of this movement. A thorough understanding of experience in theoretical as well as in practical terms was undertaken, followed by a deeper understanding of the strategy process in companies.

The knowledge acquired can be summarized as follows.

Experience Economy According to researchers our society is developing towards more meaningbased economical offer. What Pine and Gilmore call the Experience Economy is arguing for a future of staging experience and more meaningful customer relationships. Jensen equally argues in The Dream Society towards a bigger future focus on spiritual rather than material customer needs.

Experience in practice The understanding of experience, as a psychological concept has been assiduously researched. Simultaneously the design practice has adopted this knowledge shifting towards a greater user focus. Human-centered design being the most prominent example is aiming at better meeting the customer‘s needs. Concepts such as Experience Design however seek to include the customer in the process, research their needs and exceed their expectations in creating meaningful experiences. Practitioners use their greater knowledge about customer experience in order to design better products and services.

Strategy Our understanding of strategy has evolved from the early days where it was understood as simply emerging. Nowadays the acclaimed research of Michael E. Porter and his Five Forces, Generic Strategies and Value Chain models have profoundly influenced the understanding of strategy.

Companies are left with tools to assess external threats, market competition and the internal value creation process. More recent concept such as the

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Blue Ocean Strategy suggests avoiding competition in the first place and rather search for new market space where there are no competitors.

Furthermore some design inspired companies suggest a greater focus on the product or service meaning, ultimately driving the business strategy.

This literature review has revealed a greater researcher and practitioner understanding of the connection between the human psychology or rather experience, and the customer-product interaction. Nevertheless the nature of experience being directly connected to the human consciousness, and therefore holistic, demands ultimately a broader approach to customer experience. Consequently, a restricted focus on the product or service when designing for customer experience seems out-dated. Furthermore the traditional approach to strategy, highly influenced by Porters’ models, lays a very strong external focus on the strategy development process. Adding upon it, the practice seems to be one of dividing the task into strategy developers and implementers along the hierarchy line, which seems to cause a loss in agility. This study therefore aims at researching these knowledge weaknesses; Paired with the empirical study it will create the theoretical contribution – a “Delta Knowledge” (Styhre 2013, p. 76).

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4. Methodology The methodology of this thesis was not set from the start, but rather evolved with the exploration of the topic. Investigating the practicality of using experience as a mental model for companie‘s strategy made it hard to foresee the outcome and therefore plan the path to reach it. Krippendorff (1989) stretches the meaning of design from being about style towards “making sense (of things)“ (Krippendorff 1989, p. 9). Therefore this research approach was heavily inspired by a design process and design as being “a way of organizing complexity or finding clarity in chaos“ (Kolko 2010, p. 15).

4.1. Research approach A design process was chosen since its biggest strength lies in “inventing things of value which do not yet exist. [...] [in other words] design is constructive” (Gregory 1966 in Cross 2006 p. 7). It further allows for the exploration of the topic rather then the defined search. Moreover it gives freedom towards adapting both the problem and the solution along the way (Cross 2006). In fact designers iteratively move between problem and solution as Cross (2006) stated, they “define, redefine and change problemas-given in the light of the solution that emerges from their minds and hands” (Ibid, p. 7). The designers’ quality to deliver “quickly a satisfactory solution“ (Ibid p. 7) validates this sequential process. While a design process can be perceived as being “rather ad-hoc and unsystematic“ (Cross 2006 p. 86) it is following a structure in which the synthesis plays a vital role.

In this phase the designer is making sense and assesses the quality and usability of the gathered data (Kolko 2007 ; Kolko 2010).

Along with a design process this study follows a qualitative research as it supports the exploration of a topic and the creation of new knowledge (Gregory 1966 in Cross 2006). Hammersley (2012) defines it as “a research strategy that usually emphasizes words rather than quantification in the collection and analysis of data (Bryman 2008 in Hammersley 2012, p. 1).

Besides Rossman and Rallis (2012) assert “qualitative research begins with questions” (Ibid, p. 3). Furthermore it is the dominant intend to answer questions in the real world. Within this endeavour the researcher aims at finding patterns in gathered data and thereby creating information.

In a next step, this information gets used and transforms into knowledge (Rossman and Rallis 2012). In addition to qualitative research being rather concerned about words than numbers, this approach has two

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unique features: “the researcher is the means through which the study is conducted, [and] the purpose is to learn about some facet of the social world” (Rossman and Rallis 2012 p. 5; Alan Bryman and Bell 2011).

The three most typical methods for data collection in qualitative research are open-ended interviews, direct observations and written documents.

Furthermore discussions with fellow students, tutors and experts from the field have been used to get a broader and more objective perspective on the topic and the result. All of which support the endeavour to create a representation of reality (Patton 1990; Hammersley 2012).

4.2. Research method A wide exploration of theory is the profound base of this study. Theory has been defined by Hatch and Cunliffe (2012) as “a set of concepts whose proposed relationships offer explanation, understanding, or appreciation of a phenomenon of interest” (Hatch and Cunliffe 2012, p. 5). Einstein’s formula E=m2c is a good example to explain the relationship between concepts - mass m and constant speed of light c - the phenomenon of interest E - for energy - and the outcome: Einstein’s mass–energy equivalence theory. The notion of concepts provides “mental categories into which you can sort, organize, and store ideas in memory“ (Ibid, p. 5). The process of concepts and of theory generally speaking is abstraction, which allows to label and talk about it in a general way. Nevertheless the purpose of this thesis is the development of a concept that is relevant in the real world.

Therefore the process was an iterative balance between abstraction and reification, ultimately leading to a relevant, applicable construct based upon extensive theory research. It is furthermore the idea of creating and applying theory respectively, whereby applying theory means adding back „important details [...] into abstract formulations“ (Ibid, p. 17). This can be referred to as abduction, an inherent element of the synthesis in the design process (Kolko 2010).  4.2.1. Abductive reasoning Abductive reasoning is distinct from the well-known inductive and deductive approach. Peirce distinguished it as “deduction proves that something must be; induction shows that something actually is operative; abduction merely suggests that something may be” (Pierce in Cross 2006, p. 19). While the inductive logic describes the reasoning from particular experience to more general theory, deduction is the opposite, moving from theory towards testing applicability (Rossman and Rallis 2012, p. 11).

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Thereby abduction is described as moving between real experiences and theoretical concept (Dubois and Gadde 2002, p. 555). Roger Martin similarly described it as the “logic of what might be” (Roger Martin in Kolko 2010, p.

20), which questions the use of it in a scientific research. Instead it can be seen as “the argument to the best explanation, [...] the hypothesis that makes the most sense given observed phenomenon or data and based on prior experience” (Kolko 2010, p. 20). The strength of this approach lies in the goal to discover new things and create new knowledge and insights and is inherent in the sense-making process of the synthesis phase (Kolko 2010, p. 19-20; Dubois and Gadde 2002, p. 55).

4.2.2. Creating Scientific Concepts The endeavour of this thesis is to create a new understanding of experience in a new domain. This undertaking is built upon cognitivescientific theories of analogy making, which consists “in applying some known facts about a source domain to a target domain” (Cheon and Machery 2010, p. 840) in order to develop a model. In the book „Creating Scientific Concepts“ by Nancy J. Nersessian, the author, examines the role of models in theoretical innovation. The objective of the author Nancy J. Nersessian is “to understand the nature of model-based reasoning as productive of conceptual innovation and in creative problem solving in general“ (Nancy 2008, p. 10 in Cheon and Machery 2010, p. 838). In other words she is sheding light on the problem-solving approach by scientists, which leads to conceptual creativity. Scientific innovation is the process „of redeploying, in a novel domain, concepts already learned elsewhere [which comprises the modification of them to apply to] the constraints of the new domain” (Churchland 2009, p. 963). She introduces three core elements to conceptual creation. The understanding, that a final concept is the result of iteration implies „multi-stage process of mapping“ (Gilbert 2009, p. 2408), whereby previous models act as the source for the following ones (Cheon and Machery 2010). This mapping process is strongly built upon diagrams as the most common imagistic representation. These visual elements have various functions: „they can act as an “external memory“; guide perception of exemplar phenomena; represent structural elements; and, perhaps most importantly, represent conceptual information such as causality“ (Gilbert 2009, p. 2408). Finally, „thought-experiments [...][are a] way of investigating the consequences – conceptual or empirical – that follow from a way of representing the world” (Gilbert 2009, p. 2408).

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4.2.3. Interviews Interviews are a common method in qualitative research and help „gaining insights into or understanding of opinions, attitudes, experiences, pricesses, behaviours, or predictions” (Rowley 2012, p. 261). The goal is to gain rich, detailed data from the interviewee’s point of view, which highly differs from interviews in quantitative research (Bryman and Bell 2011).

For this matter both the sampling and the type of interviews play a major role.

The interviews were booked in advance and held as a series of openended (from 30 to 120 minutes), semi-structured interviews in various environments (at the IDEO2 office in person and over Skype3). The semi-structure was in form of an interview guide that helped to explore the topic while having a similar structure between the interviews (Patton 1990, p. 283). The interview guide (see Appendix) was roughly structured in four bigger headings with a couple of sub-questions (Bryman and Bell 2011, p. 467). By starting off the interview with broader questions, the participants “were triggered to explore the wider scope of the topic from diverse starting points and perspectives” (Sanders and Stappers 2013, p.

157), while in the following questions they were asked to be more focused.

This structure left me with the freedom to adapt in accordance to where the interview was leading, which gave me enough confidence to go with the flow and being able to pick up any unforeseeable direction (Bryman 2001).

Judgement sampling was used as the primary sampling technique for choosing the interviewees (Marshall 1996). As the topic of experience requires an extensive knowledge about both business and design, senior designers at IDEO and expert in the field of experience were chosen.

Franz Blach - Senior Communication Designer & Brand Strategist IDEO Munich, Germany 60 min face-to-face interview in Munich, in German Referred to as: (Franz IDEO)

Trent Huon - Business and Design & Business Lead IDEO Munich, Germany 60 min face-to-face interview in Munich, in English Referred to as: (Trent IDEO)

2 3

IDEO is a leading design and innovation consultancy Skype is a software allowing to make phone and video calls from the computer

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Florian Kössler - Design Lead, Products & Environments IDEO Munich, Germany 60 min face-to-face interview in Munich, in German Referred to as: (Florian IDEO)

Virginia Wang - Design Lead IDEO San Francisco, USA 60 min face-to-face interview in Munich, in English Referred to as: (Virginia IDEO)

Niels Kjærgaard-Jensen - Partner & Chief Consultant In Good Company, Norway 120 min Skype Audio interview in Gothenburg, in English Referred to as: (Niels Experience)

Catherine McHenry - Relationship Manager Hyper Island Manchester, Enlgand 60 min Skype Video interview in Gothenburg, in English Referred to as: (Catherine Hyper Island)

Klaus-Peter Speidel - Professeur affilié ICN Business School – Nancy, France 30min face-to-face formal conversation, in German Referred to as: (Klaus Professor)

4.3. Research analysis As Sunderland (2007) describes it, interviews leave you with an abundance of information that need to be analysed and interpreted in a process of making sense. This process helps to find patterns, reduce the volume of information and turn it in to usable knowledge (Sunderland and Denny 2007; Patton 1990).

Silverman (2010) described the transcribing process as very time consuming and not necessarily most efficient and therefore suggests to assess the importance of the interviews in order to decide whether a detailed transcription is required (Silverman 2010 in Rowley 2012). As some interviews have been conducted in German, they have been translated into English later in the process. The analysis phase of the interviews was a continuous process, which sometimes is described as a spiral, a process that is custom-built, analysed and refined (Cresswell 2007 and Miles & Huberman 1984 in Rowley 2012, p. 267).

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The thematic analysis is one of the most common ways to approach qualitative data (Bryman and Bell 2011). Therefore in the sense making process of the interview data two different technics were used. The four interviews with IDEO designers were assessed in a visual way by using post-its in order to search for patterns and identifying themes. This process is usually called the synthesis, which attempts „to organize, manipulate, prune and filter gathered data into a cohesive structure for information building” (Kolko 2007, p. 1). Rowley (2012) calls this process interpretation and describes it as the important aspect of making sense of the qualitative data (Rowley 2012). For the three remaining interviews a coding system of the transcription material was used in order to highlight important information and common themes (Bryman and Bell 2011).

4.4. Quality of the research Reliability and validity are terms mostly used in quantitative research to judge the quality of the inquiry. Yet in qualitative research there is no consensus. While some researchers claim that „reliability and validity are two factors which any researcher should be concerned about“ (Golafshani, 2003, p. 601) other claim that it is a sign of bad research when using these two criterions to judge the quality of the inquiry. I therefore use independent criterias to asses the quality of my research, thereby: communicative validation, triangulation, validation of the interviewsituation and authenticity (Flick, von Kardoff and Steinke 2004).

Communicative validation In order to achieve validity for the research all interviews were tape recorded and transcribed. The interview material was further sent back for confirmation.

Triangulation In order to validate and achieve a „broader and deeper understanding of the research issue“ (Flick, von Kardoff and Steinke 2004, p. 185) complementary sources for the research such as interviews, observations and literature were used. Furthermore different methods were used for the analysis of the interview material „to compensate for any one-sidedness or distortion that may result from an individual method“ (Ibid, p. 185).

Validation of the interview-situation This aspects analyses interviews in „regard to whether the interviewees are talking ‘truthfully’ or sincerely“ (Ibid, p. 185). The IDEO interviewees were not only former colleagues, but also former team members I have 30

worked with. This increases the likeliness to get truthful and sincere informations. For the interview partners I had no previous relation to, I ensured from the start to establish a shared interest for the interview and a deep respect for the interviewees position and time restrictions.

Furthermore in order to better asses sincere conversations I assured as far as possible to always have a visual conversation, either face to face or through video Skype in order to take the body language into account as well.

Authenticity In order to compensate for my bias and reflect accurately the interviewees statements I based my empirical analysis on the meticulous transcription of the interviews. This process was done for each interview in a structured way.

4.5. Ethics Doing qualitative research demands the interaction with participants, therefore the appropriate behaviour according to the ethical code was of high priority (MRS 2014). My internship at IDEO and the masters programme gave me the required training for conducting research interviews. All interviewees were briefed from the beginning about the purpose of the interviews. The participation was voluntary and based upon a mutual interest for the subject. The length and topics addressed were adapted to the interview partners background, available time and the overall flow of the conversation. It was ensured through the type of questions and how the response was used in the thesis that the professional and personal reputation of the interviewees was respected and not harmed at any point.

This was especially important regarding the interviews with IDEO, bound by strict confidentiality rules.

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5. Empirical Material In this section the interview material is presented under four headings created through the thematic anaylsis. Various aspects and characteristics of experience will be grouped under the first heading. In the second heading the topic of strategy and business will be addressed. Thirdly the trend towards authenticity and transparency will be discussed and finally future trends in customer behaviour will be mentioned.

Experience Characteristics There are various definitions for the word experience, stretching from the German understanding of “Erfahrung” over to the sense of creating an experience, as something lived through (Virginia IDEO). Within this ambiguity Trent (IDEO) stretched out that companies usually think they are good at doing experience by simply shifting the emphasis to the online channel. There is the paradox to teach companies about the broadness of experience while at the same time avoid scaring them with the encompassing nature of experience (Trent IDEO). As Catherine (Hyper Island) describes it „it is about taking into consideration all of those things, about environment, feeling, empathy and understanding on a much bigger scale then focusing on the digital level“ (Catherine Hyper Island). Today, user experience is mostly used as a synonym, defining the experience a customer encounters with a interface, nevertheless “experience is a bigger thing than the interaction with a user interface“ (Trent IDEO). In fact Franz (IDEO) understands it as the brand plus everything consumer-facing.

The interviewee stressed out that the subjective nature of experience demands a shift of mindset. It is the elements influencing an experience that can and should be designed rather than the experience itself. In order to achieve this new perspective the interviewee emphasized on the practice of user-centeredness. First of all when creating an experience the question becomes what one is trying to provoke (Virginia IDEO). In a second instance it is crucial to build up a thorough understanding of the user and sometimes „build behaviour archetypes [...] [and use them to] design an experience for such a behaviour type“ (Trent IDEO). In this specific matter the insights, and “understanding peoples’ true needs, [and] wants; the more obvious ones [...] conscious and unconscious” becomes important (Virginia IDEO).

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Franz (IDEO) argues that experience will become the essential element for businesses in the future, with companies such as Zappos4 at the forefront of this movement. He argues that today we are facing the Third industrial Revolution and The Commodity Trap with company offers losing comparative advantages and subsequently leading to a price war (Franz IDEO). Furthermore price, product and quality are almost dying parameters as everything can do the same today (Niels Experience). Companies used to be able to create value through their brand but in an age of transparent information companies have to provide a better experience and the story around it, to compensate for higher than average margins (Franz IDEO).

Furthermore nowadays consultant designers have to “provide the company with a toolkit to build up experience and secondly teach them to see the economical offer as the props on a theatre stage, where they choose certain anchor points and let the play flow free instead of controlling every aspect” (Franz IDEO). Similarly, the company Zappos defines some corner stones leaving the employees with the freedom to act in the companie‘s best interest (Franz IDEO). Trent (IDEO) furthermore stressed out the broader meaning of experience when stating that „we need to be more concrete [...] and make sure that the business is solid and the organisation is there, and the brand is all wrapped up and aligned. I think talking about experience in isolation is disservice to what we do“ (Trent IDEO).

Strategy and Business Companies are having major issues understanding the intangible nature of strategy, the fact that it has to be lived by the company and made tangible for the employees (Trent IDEO). In general strategy does not address cultural change. These two are nevertheless connected as Peter Drucker clearly pointed out when stating the famous sentence: “Culture eats strategy for breakfast” (Trent IDEO). Doing strategy becomes increasingly difficult with the size of the company. The agility and responsiveness to trends is getting lost (Florian IDEO). There is an increasing call for a shift of power from the CEO to the staff, as every customer touch-point – customer-facing or hazard – has to be a coherent experience (Franz and Virginia IDEO).

Strategy is not giving answers to everything, it is rather about getting everybody to believe in the strategy and to highlight the first starting points (Trent IDEO). Employees have to be given the right values, so that everybody can interpret the brand. As the CEO of Netflix said: Freedom leads to responsibility not to chaos (Franz and Trent IDEO).

4

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Zappos is an online shoe and clothing store

There is a gap between management thinking and entrepreneurship.

Companies in the future will require employees who are more flexible to cope with the eco-system changes quicker (Franz IDEO). The decision making process has to be changed to achieve a greater responsiveness (Trent IDEO). There is a big need for more creative and entrepreneurial people, but currently the educational system is shaping specialists. Companies should be lead in a more responsive and purpose-driven way. CEO’s in the future have to be empathic and put themselves out of the equation – in other words no big rulers – and have to choose their employees according to their purpose, values and view on the world instead of their CV (Franz IDEO) Authenticity and Transparency The authenticity ultimately has to influence why and how a company is building a product or service as “this will be bottled and be part of the economic offering” (Niels Experience). This means reversing the attention towards the inside of the business since “if you build it from within you will be much stronger when you are out there on the touch-points, because people can feel when something is real and well meant“ (Niels Experience).

This becomes especially relevant as “in [the] future, the total transparency is normality” (Franz IDEO). In other words “the separation between official, private, brand, or rather artificial construct versus real story gets more and more blurry” (Franz IDEO). Nevertheless the alignment is also required to cope with ”ever increasing speed [...] [at which the] ecosystem is changing” (Franz IDEO), ultimately demanding, ”to [...] change the way you make decisions“ (Trent IDEO).

Customer behaviour trends Peoples’ expectations have changed (Trent IDEO). Especially regarding experience, a more holistic approach is expected (Florian IDEO). Customers are seeking greater affinity to brands reflected in a trend towards purpose lead responsive organisations. It becomes crucial to connect with the customer in an authentic way (Franz and Virginia IDEO). This authenticity becomes particularly important, as we are moving towards an age of total transparency, giving customers unprecedented access to informations (Franz IDEO). Two major trends are changing consumer behaviour: authenticity and transparency. Customers want to ascertain whether something is real or fake. Transparency allows customers to access any information and comprehend truth, false or rumour (Niels Experience).

The margin of a company can’t be hidden anymore to the customer and has therefore to be filled with brand, experience and story (Franz IDEO).

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6. Empirical Analysis In the following section the empirical findings will be compared and contrasted against the conceptual framework in order to contribute to the knowledge weakness mapped out. So as to stay consistent, the same structure, with identical headings has been used.

Experience Characteristics There is one important experience characteristic that can both be seen in the literature review and in the empirical data: the holistic nature of experience.

Csikszentmihalyi (2014) investigated the unique nature of experience and developed an understanding of the connection between experience and the human consciousness. By that means the author underlined the endless nature of experience. Researchers have predominantly investigated experience and its meaning for a product. With concepts such as the extended User Experience Interaction Model by Saucken et al. (2013) the customer-product interaction has been thoroughly analysed, giving practitioners a more detailed understanding of the product experience.

Nevertheless the human consciousness is not limited to only assessing the product experience but rather it includes everything. This aligns with Hawley’s (2009) description of customer interactions, being “multifaceted and complex and [...] [including] all aspects of a customer’s interaction with a company or other organizational entity, including its people, services, and products” (Hawley 2009, p. 1). Some researchers have addressed this issue and defined the holistic approach to experience, being about “orchestrating all the “clues” that people detect in the buying process” (Berry, Carbone and Haeckel 2002, p. 85). This problem has been similarly supported by the interviews, revealing an even narrower understanding of experience in practice. Sometimes companies mistake experience for the sole interaction with an interface such as a website. Especially the consultant interviewees stress the need for a tool, teaching companies about the holisitc nature while guiding them towards adopting a broader and deeper mindset.

Strategy and Business As described by Kottler (2014) the strategy development is in the traditional approach to business and in the hierarchical structure of modern organizations is divided into two tasks. While the creation is performed by the top management, the implementation has to be executed by the rest of the company. This process reveals a great disparity of information making the strategy process one of the weakest in most organizations in

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terms of of culture and capability (Golsby-Smith 2007). The interviewees equally stressed out the problems of the intangible nature of strategy making it hard to grasp for the employees. Paired with the fact that it has traditionally been developed by different people than the ones executing it is a big issue of corporate strategies. In that matter the interviewees claim that strategy needs to address the cultural change that works conjointly with the strategy implementation. In order to cope with the rapid changing markets and insure agility and responsiveness, a shift of power from the CEO down to the entire company needs to occur.

Authenticity and Transparency The interviews have revealed transparency as a trend and how it influences the need for a greater authenticity. The separation between what the company official claims and how it unofficial acts is getting blurry. The internet gives consumers the tool to get information not only about product features and manufacturing processes but also about margins and the company culture. Therefore if everything becomes transparent, the authenticity becomes more relevant. One interviewee even argued that the authenticity of why and how a company is building a product becomes part of the economic offering. This demands from the company a greater focus on the inside in order to act stronger on the outside.

Customer behaviour trends The internet, and technology in general have changed how costumers can access information. The age of transparent information makes consumers less foolable and meanwhile requires companies to connect with consumers in an authentic way. Additionally Fraser (2007) argues that the market globalisation provides consumers with an infinite variety of products, making consumers seek for more sophisticated offerings and a more holistic approach to experience. Furthermore the author emphasizes on the greater importance of the companies social responsibility and its role for the environment and the increasing expectations of consumers.

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7. Discussion The empirical analysis has revealed two main issues - the holistic experience mindset and the strategy development process - for companies. Paired with two trends - transparency and authenticity - that today‘s businesses and consumers are facing it forms the reasoning for the development of the Experience driven Strategy Concept.

The literature review has shown a need for, and the expert interviewees are demanding a more holistic understanding of experience. Companies do not seem to apprehend that customer experience can not be limited to the business offer, it rather expands to parts of, or the entire company. Additionally the separation of strategy into development and implementation, executed at different levels of the company creates an information disparity within the company and hinders its agility and responsiveness.

The age of transparent information is affecting how businesses should operate in the future and changes the consumption behaviour. Customers have access to all sorts of information giving them unprecedented power over the company. Furthermore in the globalisation of markets the consumers expectation towards products and also towards the company in social and environmental terms increases. As consumer become more savy companies need to build up their company and their products in a more authentic way. Which in turns means focusing also on the inside of the company and how this is reflecting towards the customer.

The Experience driven Strategy Concept is further analysing how these four elements are connected together and arguing for the understanding that everything needs to be a coherant experience. The concept is helping companies to ascertain the holistic nature of experience while giving them a step by step tool towards that goal.

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8. Concept Development There is a consensus among researchers about the holistic nature of experience and how it ultimately affects the practical perspective of customer experience. Researchers such as Hawley (2009), Berry, Cabone and Haeckel (2002), Sundbo and Darmer (2008), Boswijk, Thijssen and Peelen (2007) and Bate and Robert (2007) see experience as being broader then the traditional customer-product interaction perspective.

Furthermore arguing that the mindfulness of experience has to be applied to the product as well as to the entire organization. Similarly the interviews support the importance of experience, yet paired with the alignment of an authentic brand and organization behind.

Likewise Frog Design argue for their Experience Strategy service, that the connection between industries, brands, products, services and customers is ever increasing. It is in this complex world that the companies’ ecosystem (products and services) has to be a coherent customer experience in order to establish meaningful relationships (ForgDesign, 2015).

Ultimately there is a need for a tool that helps companies to align the entire organization for a better strategic process. Furthermore, a coherent organization, facing the client in a customer-company interaction, can create more meaningful and sustainable customer experience.

8.1. Organizational Structure Level The world is talking about an abundance of change in every strata of the society, from demographical shifts, technological progress and a general faster pace of evolution. In this plethora of changes the challenge for organizations „is staying competitive and growing profitably amid increasing turbulence and disruption“ (Kotter 2014, p. 3). The traditional management hierarchies, breaking down strategy into “two basic components – creation and implementation” (Ibid, p. 4), constitute a disincentive for agility. The “key to managing this complex situation” (Ibid, p. 3) is to balance the daily activity of running the company with creating strategic initiatives for the entire organization to contribute to the strategic development.

Academia has researched this issue and first examples of companies, that are breaking with traditional top-down approach can be cited. In the article „Doing Strategy“ (Pugh and Bourgeois 2011) the authors present a

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structure that takes into consideration various strategic frameworks and the full potential of the company. Pugh and Bourgeois (2011) argue that “strategy is not a thing“ (Pugh and Bourgeois 2011, p. 172) but rather a continuous and holistic process and “a way of thinking“ (Ibid, p. 172). This idea becomes true by analysing how strategy comes to live when executed and how often strategy, when getting to market is producing unintended outcomes. The authors go forth, presenting various common strategic frameworks and assigning them along the hierarchy line of a company stretching from the executive to the front line, while having a strategic intuition as a base on all levels (Ibid).

Effectual Thinking

Strategy as Options

Blue Ocean

RBV Prescriptive

RBV Descriptive

Front-Line

Industry Analysis

BCG/McKinsey Matrix

Executive

Strategic Intuition Fig. 4: Whole-entreprise strategic tool focus (Pugh and Bourgeois 2011, p. 176)

The authors further suggest the concept of a “whole-enterprise driven strategy“ (Ibid, p. 176), which builds on the idea of a continuum on that hierarchy line, or as the authors call it the „executive/front-line continuum“ (Ibid, p. 176). This recognizes every departments skill, whether it is high up or close to the customer. The authors summarize this idea: „What is important is that, in order for a firm to remain competitive in its industry and valuable to all its stakeholders, all members of an enterprise must be engaged in the strategy discovery and development process, playing the roles and using the tools most appropriate for their positions“ (Ibid, p. 177).

This radically breaks with the traditional theories, which Porter heavily influenced with his numerous essays. Traditionally strategy has a strong focus on assessing the attractiveness of markets, the companies positioning,

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the competitive threats, and leaves the top management with the strategy development. In fact the development of strategies today is reserved to the executive level or external consultancies (Ibid). This diminishes the “middle managers’ decision-making skills, initiative, and ownership of results” (Sull, Homkes, and Sull 2015, p. 65).

In the Crescive Model of strategic management the CEO brakes with the traditional top-down approach and rather becomes the mediator between strategic options presented by the entire company and the available resources (Bourgeois and Brodwin, 1984). It was born out of the inquiry about strategy implementation issues, found to be a struggle for two-third to three-quarters of large companies (Sull, Homkes, and Sull 2015). Therefore along with making the strategy development a shared process is the idea of getting everybody on board. The Crescive Model assigns greater significance to lower levels of the company. At this point the Crescive Model seeks inspiration from the principal-agent theory5 and therefore breaks with the traditional top-down separation between the developers and the implementers of strategy. The day-to-day activities and experiences of the entire company are relevant for the companies overall strategy. It is the employees, locally working in the markets that assess the most recent data. In this scenario the CEO becomes the “premise-setter and judge” (Bourgeois III and Brodwin 1984, p.254) and is ought to define the organizations purpose balancing the broadness to allow innovation and the focus to avoid counterproductive activities. In other terms it is the balance between “what Burgelman (1983) calls ‘autonomous strategic behavior‘ at the sub-unit (SBU) level, and what Bales (1977) has labelled the ‚president‘s paradox‘ of control at the top“ (Ibid, p. 254).

This model could be misunderstood as giving employees total freedom, rather it is the critical point of the model to allow freedom and embrace more commitment while remaining in control. Giving away control in the strategy process will be hard for CEO’s but necessary in order to harvest the full potential of the entire company. Especially in scattered modern corporations it seems impossible to apprehend the local knowledge of the

The principal-agent theory or principal-agent problem can be described in this context as the dilemma the owner (principal) encounters when running his company. He has to delegate tasks to his managers (agents). The difficulty for the principal lies in monitoring the agents actions and the fact that the agent has different motivations (Grossman and Hart 1983).

5

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companies businesses remotely from the headquarters. Ultimately the author is recommending five elements for consideration.

1. “maintain the openness of the organization to new and discrepant information, 2. use a general strategy to guide the firm‘s growth, 3. manipulate systems and structures in very general ways to encourage bottom-up strategy formulation, 4. intervene in the logical instrumentalist manner described by Quinn (1978) 5. adjust structure and staffing to minimize moral hazard problems” (Bourgeois III and Brodwin 1984, p. 259).

CEO Marketing

Engineering

Sales

Design

Finance

Legal Product

Fig. 5: Organizational Structure Level (Experience driven Strategy Concept) Adapted from (Chandler 1969, p. 10)

The Crescive Model requires from the staff to acquire the ability to develop a “strategic intuition“ (Pugh and Bourgeois 2011, p. 176). In other words, in order to achieve a greater commitment by the employees, their mind set has to be shifted towards feeling more responsible for their actions. Similarly companies need to be more agile and subsequently more re- and proactive to globally changing environment. “All of this needs entrepreneurship within the organization” (Thompson 2004, p. 244). A common definition of an entrepreneur is “a person who habitually creates and innovates to build something of recognised value around perceived opportunities“

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(Thompson 2004, p. 244). Typical characteristics are the „ability to take risks, innovativeness, knowledge of how the market functions, manufacturing know-how, marketing skills, business management skills, and the ability to co-operate“ (Littunen 2000, p. 295). More importantly an entrepreneur has a strong will to act, to be innovative, and the creativity to find solutions for new problems. It is therefore of great value to have an entrepreneurship spirit within organisations – often called intrapreneurship. Transforming the mind-set of the employees towards feeling more committed and responsible for their actions can help the company to act as one strong entity with a big emphasize on conversations on every level (Nussbaum 2013; Thompson 2004).

Fig. 6: Organizational Structure Level - development over time (Experience driven Strategy Concept)

One can argue that the Crescive Model or a corporate culture of intrapreneurs is far from reality and does not function in today‘s companies with highly disperse responsibilities. Yet research has proven that this kind of corporate behaviour does indeed exist and the next section will state the most recent and the most prominent example of a Cresice-type of strategic management (Bourgeois III and Brodwin 1984).

A recent published email by the CEO of Zappos addressed to his employees revealed his companies’ reorganisation towards a Holacracy6, with the ultimate goal of self-management and self-organisation. What he understood is that the traditional approach of having the CEO as the head of a company and the employee as the execution force is a huge waste of potential Holacracy is a term developed by the entrepreneur Brian Robertson. In its essence, the deciscion-making is distributed along the hierarchy of self-organizing teams (Rud 2009) 6

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(Greenfield 2015; Robertson 2007). This plan is far from being marketing action, as the most prominent example of Morning Star co. is showing. It is a successful company in the agroindustry that has been grown from 1990 on to become the largest processor of tomatoes in the world by being successfully self-managed and -organized (Feine and Manning 2012).

Underlining the idea of involving the entire company is a well-known phenomenon of the wisdom of crowds that can support the idea of spreading decision-making to a bigger group of people (Surowiecki 2005). Today we can already see how technological and social changes are shifting the practice of a hierarchical Taylor Model of management towards flatter hierarchies, distribution of power and greater individual initiatives and risk taking (Borja de Mozota 2003 p. 67 in Acklin 2010; Maitland 2014).

The second level - herein described with the yellow graphic - is a new way of representing the company. Thereby, the overlaps of the various disciplines in the company (dark grey circle) is transferred down to the inner circle of the yellow model while the broader shape (in lighter yellow) represents the rest of the company.

Fig. 7: Transition between level 1 and 2 (Experience driven Strategy Concept)

8.2. Organizational Environment Level While the previous section concentrated on the strategy process of the company, this level deals with the company facing its customers. The idea of a whole-enterprise driven strategy - meaning the greater engagement of all company stakeholders.

It was in the 1950s that common management theories were revolutionized with the introduction of “organizational environment as the supersystem of which organizational systems are a part” (Hatch and Cunliffe 2012, p. 57). This perspective introduced the environment “as an objective entity lying outside an organization’s boundaries” (Ibid, p. 57), both creating the demand for the organizations’ output and providing the input.

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Environment

Input

Organiztation

Output

Fig. 8: The organisation in its environment (Hatch and Cunliffe 2012, p. 58)

To further stretch the understanding of the environment around the company, the metaphor of a theatre play will be used in this section. This metaphor has been chosen by some researchers to describe a companies’ offer, specifically coined by Pine and Gilmore’s sentence “work is theatre” (Pine and Gilmore 2011, p. XXV). The two terms back-stage and frontstage, diverted from the dramaturgy field will be used as an image of the distinction between customer-facing and customer-hidden actions, further explained in the next section.  Goffman (1956) refers to performance in a theatrical context as “all the activity of an individual which occurs during a period marked by his continuous presence before a particular set of observers and which has some influence on the observers“ (Goffman 1956, p. 13). In this context, he defines front as “part of the individual’s performance which regularly functions in a general and fixed fashion to define the situation for those who observe the performance” (Ibid, p. 13). Subsequently back is the part that the audience does not perceive. As has been noted, the front-stage of the company is the part that the customer is able to assess, therefore the offer, the marketing activities, the brand etc. The back-stage respectively is foremost the activities the company performs in order to deliver the offer and the employees, the company culture etc. As for a theatre play as well as for a business offer, the back-stage is crucial in order to perform authentically on the front-stage.

Similarly Sundbo and Darmer (2008) are framing their model of the experience production system into what they call Backstage, Stage and 44

Frontstage, whereby the later one represents the customer perspective and Backstage is the strategy and management perspective (Sundbo and Darmer 2008, p. 99).

Similarly to the shift in management theories in the fifties, this thesis will hereinafter map out reasons for a mental shift of the clear distinction between back-stage and front-stage (Hatch and Cunliffe 2012).

Currently the most predominant representation of that dividing line between back-stage and front-stage is the brand. It marks the companies’ decision of how much they are willing to show from the company. This has not always been like that, the brand underwent a series of evolution steps until today’s definition of capturing: „how the organisation and its customers understand themselves and each other [...] which is meaningful and relevant to the organisation, its customers and its stakeholders” (Bont et al. 2013, p. 126). The brand started of as a sign of ownership for the company, over time different layers where added such as a functional meaning, an emotional meaning and a representation of a lifestyle. In the nineties it also functioned as a façade to hide behind. Big companies such as Nike and Apple build up a strong brand of premium products hiding their poor manufacturing conditions (Ibid).

customer hidden: back-stage

dividing line: brand

cusomter facing: front-stage

Fig. 9: Organizational Environment Level (Experience driven Strategy Concept)

“In the past, companies have profited from the disparity between what the company knows and what the consumer knows” (Boswijk, Thijssen, and Peelen 2007, p. 11). We have now entered the Age of Transparency due to once

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again the rise of technology and especially the Internet. Various researchers have thereby investigated this trend (Tapscott and Ticoll 2012; Meyer and Kirby 2010; Kerezy, APR, and Saghy 2008). While it is predominantly portrayed as a negative phenomenon and a threat for companies, it can also be used as a powerful asset (Tapscott and Ticoll 2012).

The Age of Transparency has strongly changed the customer behaviour.

Through the access to an abundance of information, consumer’s are more aware and critical about their decisions (Meyer and Kirby 2010). In the interaction with companies, they “are gaining unprecedented access to all sorts of information about corporate behavior, operations, and performance” (Tapscott and Ticoll 2012, p. Xi). In this era, “socially responsible entrepreneurship, openness and transparency are requirements of modern business“ (Boswijk, Thijssen and Peelen 2007, p. 11). Nevertheless companies are having a harder time to hide the backstage, as every false action is said to become public sooner or later (Kerezy, APR and Saghy 2008). In other words “the back office turns into the front office” (Boswijk, Thijssen and Peelen 2007, p. 11). Drawing back to the idea of the brand, as being the dividing line between front-stage and back-stage, it can be stated that companies are struggling to hide behind this curtain. Today it is about bringing out to the world what is “going on inside a company” (Bont et al. 2013, p. 126), which “implies building a healthy company that delivers what it promises through a culture of ethics and honest development work” (Ibid, p. 126), ultimately leading to „the brand being a construct that holistically and contextually represents the organisational vision, culture, values and capabilities” (Ibid, p. 126).

How the underestimation of the Age of Transparency can affect ones business and how weak the dividing line between back-stage and frontstage – namely the brand – can be, shows the two following examples.

In 2010 one of BP’s7 oil rig suffered from a severe damage. The resulting oil spill of approximately 184 million gallons into the Gulf of Mexico had big effects on the nature and the customers’ perception of the product, which lead to a decrease in sales of 10 to 40% (Weber 2010). Yet the most recent example of how a bad company strategy, deeply rooted in the companies’ culture, can influence the customers’ total experience of the product, is Abercrombie and Fitch8. The companies’ CEO has repeatedly argued that 7

British Petroleum is one of the six biggest oil and gas companies.

Abercrombie & Fitch is an American fashion retailer that focuses on casual wear for young consumers.

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Abercrombie and Fitch is a cool brand and therefore actively excludes people such as woman with sizes 11 or more. Furthermore the company was reported to predominantly hire white attractive employees and use sexual content in their ads. All of these actions resulted in boycotts, numerous lawsuits, decreases in sales and finally the redundancy of the CEO (Berfield and Rupp 2015; Hayley 2015; Lutz 2013).

Similarly, the Age of Transparency ultimately affects the customers’ perception of the companie‘s product value (Tapscott and Ticoll 2012).

Websites such as Alibaba9 are an easy source to get information about the material value of a Ralph Laurent jacket for example. Furthermore the recent example of the Apple Watch can underline this phenomenon. Within weeks after the release of the new Apple Watch, CNN Money broke the watch down into its components and printed an article stating that Apple had a profit margin of over 400% (King 2015).

Underlying is the idea that the back-stage should become a stronger focus in the customer-company interaction perspective. It is the companies’ employees, who help deliver the business offer, which are the closest to the customers and therefore can have great influence on the consumer experience. The entire stakeholder network of a company should be part of the companies strive towards becoming a “good” firm, connecting this argumentation back to the idea of a whole-enterprise driven strategy from the first level of this model.

This transparency demands from the company an alignment of their values and corporate culture in order to perform on the front-stage as one coherent entity (Tapscott and Ticoll 2012). At this point, paradoxically the Internet and the Age of Transparency previously described as a threat, can become a powerful tool. Never before has it been so easy to build up a strong, personal relationship with the customer (Ibid). The Internet gives companies a cheap tool to slowly move back the dividing line between front-stage and back-stage. Taking this step deliberately makes positive use of the Internet. Yet ignoring the Age of Transparency and the consumers endeavour to push back the protective line towards the back-stage can turn the Internet into a threat for the company.

Companies such as Everlane have understood this danger and made it

Alibaba is a e-commerce platform for costumer-to-costumer, business-to-costumer and business-to-business sales on their platform.

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an asset. Everlane – “Modern Basics. Radical Transparency.“ (Company slogan) – is a fashion and lifestyle brand that disrupts traditional retail distribution by selling directly to the consumer. The true singularity is however the companies’ shift of the dividing line between back-stage and front-stage in regards to their pricing and production. The CEO recently said in an interview with Inc.com: “Transparency is where the world is heading [...]. People are empowered by knowledge” (Ransom 2014). His brand is active about these trends and presents its customers with a meticulous breakdown of the pricing into material, labour and transportation cost; paired with the sales price, the consumer can easily calculate the companie‘s margin. Additionally Everlane presents its customers with explicit care instructions, the height of the model displaying the product and detailed information about the factories where the product comes from (Ransom 2014; Everlane 2015).

Fig. 10: Organizational Environment Level - development over time (Experience driven Strategy Concept)

Culture has been repeatedly mentioned as an important aspect of the internal coherence, the involvement of all employees and the impact on the overall strategy. Specifically important in this section is the creation of an internal coherence, before opening up the curtain and allowing customers a glimpse behind the scenes. In other words the corporate culture has to be developed in order for the company to face the consumer as one coherent entity. In the description by the American cultural anthropologist Clifford Geertz (1973) culture is created by the people living themselves in it and foremost culture is a matter of meaning: “Believing, with Max Weber, that man is an animal suspended in webs of significance he himself has spun, I take culture to be those webs, and the analysis of it to be therefore

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not an experimental science in search of law but an interpretive one in search of meaning” (Cliffor Geertz 1973 in Hatch and Cunliffe 2012, p. 36). More recently Deshpandé and Webster (1989) defined corporate culture as „the pattern of shared values and beliefs that help individuals understand organizational functioning and thus provide them with the norms for behavior in the organization” (Deshpandé and Webster 1989, p. 4 in Deshpandé, Farley and Webster 1993, p. 24). The internal coherence is therefore created through a shared understanding – respectively, values and beliefs as well as norms of behaviour – of the organization. The benefits of a strong corporate culture in regards to the economical performance of the organisation have been researched, yet another aspect of the alignment is the matter of interest at this point (Martinez et al. 2015). In the Age of Transparency the corporation, and with it the back-stage and the authenticity of the corporate culture, is being assessed by investigative customers.

This authenticity has also been the focus of Pine and Gilmore’s (2007) book called “Authenticity: What Consumers Really Want“. Their message gets clear through the statement: “People no longer accept fake offerings from slickly marketed phonies; they want real offerings from genuinely transparent sources’’ (Pine and Gilmore 2007, p. 5 in Smith 2009, p. 355).

Ultimately leading to the task to “orchestrate our companies, products, and services into providing quite authentic experiences to our customers” (Smith 2009, p. 356). The authors connect the management of an authentic representation of the company “to sustaining growth and profitability“ (Wagner 2010, p. 547). Especially in times where “people search for meaning and happiness in their own lives, authenticity is manifest [...] when all appear genuine rather than false” (Wagner 2010, p. 547).

The idea of internal alignment and authenticity was coined by Starbucks CEO Howard Schultz: “you can’t copy the heart and soul of a business” (Howard Schultz in Battistella, Biotto, and Toni 2012, p. 724), meaning that it is not what you do but how you do it that makes the business unique. Starbucks defined the term third place and the meaning of it in a stagnant commodity market such as the coffee business. The third place represents the idea that people need a place next to work and home to regularly meet friends and family. A similar thought has been expressed by Acklin (2010) explaining that: „there is [...] a correlation among strategy, structure, and culture and the way in which they shape processes. [Furthermore] intertwining strategy building, innovation, and design management allows the creation

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of new and meaningful products, services, and experiences to become the company’s core activity” (Acklin 2010, p. 58).

Summing up, the focus in this level of the Experience Driven Strategy Model lies on the comparison of the organisation to a theatre play in which two parts – the front-stage and the back-stage help to deliver an offer to the customer. Within this separation the brand forms today, the dividing line between these two parts. Yet in the Age of Transparency this line gets pushed back by an inquisitive customer. The changing consumer behaviour also alters the perspective upon which the organization is looking at the interaction with its customers. Traditionally a customer-product focus has been applied when designing for customer experience. The mentioned pheromona however suggest a customer-company perspective for the creation of meaningful customer experiences. Therefore the awareness of the internal representation of the company, paired with the deliberate use of the Age of Transparency can form a powerful tool for sustainable customer relationships, dealing with the competition in an increasing tough market environment.

The third level - herein described with the three level green graphic - is the representation of the companie‘s offer. The front-stage is thereby transferred down to the dark green circle. The back-stage is partly pictured by the two wider circles, whereby the largest, light green circle extends the boarder of the company.

Fig. 11: Transition between level 2 and 3 (Experience driven Strategy Concept)

8.3. Experience Width Level The previous level has broadened the perspective towards a customer-company interaction model influencing the customer experience. Similarly Forlizzi and Ford (2000) assert that “a singular experience is made up of an infinite amount of smaller experiences” (Ibid, p. 420). This idea paves the way for a broader look onto experience.

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Sundbo and Darmer (2008) present a model for assessing the width of the experience: Peripheral Experience Core Experience Core: theatre the story of the core catering, parking, bathroom Fig. 12: The total experience product (Sundbo and Darmer 2008, p. 98)

In their model the core represents the pure performance, for example a theatre play. By adding the story of that same performance it forms the core experience. Finally thinking about aspects around the performance such as clean bathroom, catering during the breaks and enough parking space for the theatre play are peripheral experiences (Sundbo and Darmer 2008).

Nevertheless the authors are concentrating on experience as an economical offer, similarly argued by Pine and Gilmore. However the perspective of this work is one of having experience as a holistic construct therefore the core in this model can be a product, service and/or experience. By that means, the Sundbo and Darmer’s model will be slightly adapted.

The core in this model is the companie‘s offer – be it the product, service and/or experience. In a next step, thinking about the experience within the customer-product interaction is part of understanding the core experience. For example the meticulous love of details in the opening of the iPhone packaging, using tightly fitting boxes and the negative pressure when opening the box to (re-)create the unveiling sensation, is the task of understanding the experience as an outcome of the customer-product interaction. Apple is known for conscientious thinking about every single detail of the product design but also the experience of it. When comparing Apples iPhone 6 and Samsungs’ Galaxy S 6 it becomes very clear how the company internalized this. Every element of the iPhone 6 is perfectly aligned and every element that disturbs the design and can be avoided is

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eliminated. This obviously means more work for the entire company to figure out all aspects of the product so that the entire offer including the customer experience is holistically thought about (Ritchie 2015).

Peripheral Experience Core Experience Core

Fig. 13: Experience Width Level (Experience driven Strategy)

In order to illustrate the powerful use of the core and core experience as a business offer, the prominent example of American Girl can be mentioned.

The American toy manufacturer Pleasant Company has released in 1986 nine different dolls from nine different historical periods and variety of ethnicities under the brand American Girl. Since then they developed a holistic universe around their offer, transcending “its product categories to become a brand powerhouse that adds new meaning and relevance to longestablished toys” (Diamond et al. 2009, p. 118; Borghini et al. 2009). This universe starts by added content in form of sophisticated backstories, books, doll clothing and accessories. What makes this company truly stand out is not the approach to dolls from the start, creating dolls based on historical and ethnical characteristics but how they continued differentiating themself from competitor such as Barbie. It is in their American Girl Place – the retail space - that they manage to meet multiple stakeholders needs and extend the value for everyone. In their retail space “[grand]mothers and daughters can spend the better part of a day together at The American Girl Theatre, where for $25 apiece they can take in a 70-minute staged production, [...] they go to The Café for a ‘grown-up dining experience’ paying an admission fee of $16 for lunch or tea and $18 for dinner. [...] They can even have their dolls‘ hair styled in The Hair Salon for $10“ (Gilmore and Pine 2002, p. 4).

Underlying all of this is the fact that American Girl gives their customers – (grand)parents – a “model for the comportment of young girls and a manual

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for their socialization [...] and instructions for transmuting and transmitting traditional values” (Diamond et al. 2009, p. 126).

What American Girl has achieved can be explained under different lenses.

As a service designer, it can be argued that they managed to develop a great service. From a brand and retail perspective, American Girl succeeded to create a themed retail brand environment that „offer consumers a combination of entertainment and brand experience, where the two were so closely intertwined as to be indistinguishable from one another” (Borghini et al. 2009, p. 363; Kozinets et al. 2002). Yet American Girl understood that the customers of dolls are not the kids but the (grand)parents. Unlike competitors they didn’t increase the demand through advertising the kids, but instead investigated the relationship between customer and user of the dolls. Shifting the purchase of a doll towards an historical and ethnical explanation of society and adding the layer of fostering the relationship between (grand)parents and kids by developing the American Girl Place as a shared experience for everyone was its biggest asset. Similarly the experience is created based on the dolls and actors (grandparents, parents or kids) through the artefacts provided by the American Girl Place. Yet the memorability of the experience is reached by the ability to relive these experiences at any point, makes the brand “both marketspace and mindscape“ (Diamond et al. 2009, p. 126).

The last step is what the authors have called peripheral experience (Sundbo and Darmer 2008). The distinction between peripheral experience and core experience is blurry, as it is a subjective matter to define what is peripheral to an offer and what is not. For example Apple might even consider the box in which an iPhone gets send out to a customer when ordered online as part of the experience of an iPhone or going one-step further thinking about how this box could be used after it served the purpose of transportation.

In order to create a distinct line, peripheral experience can be defined as aspects that are not directly connected to the offer from the start, but rather are connected to the company. In that same matter, this level of the Experience Driven Strategy Model can be connected back to the Age of Transparency and the trend towards shifting back the dividing line between back-stage and front-stage. Peripheral experiences are therefore the aspects that the company has traditionally been hiding behind the curtain of the back-stage and that are getting more and more relevant through the Age of Transparency and the companies’ strive to create a personal meaningful connection to their customer.

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The example of American Girl shows the successful creation of a core offering and a strong core experience. Yet the next example will show how a thoughtful peripheral experience further strengthens the holistic customer experience.

The brand Patagonia is famous for making rouged, high quality outdoors wear and gear. This is as far as some companies in the market are thinking – the pure product experience. But what differs Patagonia from any kind of other outdoor manufacturer is its approach to sustainability. Making environmental issues a big part of the design and manufacturing of their products gives Patagonia’s offer a strong core experience. With programs such as The Common Threads Recycling, The Footprint Chronicles, The Worn Wear and The 100% Traceable Down, Patagonia is giving their products a higher value and meaning. A lot of customers choose the brand because they appreciate the effort the company invests in create a meaningful customer experiences with the possibility for example to bring back products with the Common Threads label, in order to make sure that these products will be properly recycled and reused for new brand products.

The company expands their believe into how it is run and how it is approaching environmental issues as an organisation. These aspects can be considered as the peripheral experience. Before all else, they are a B-Corporation, which certifies positive social impact on the environment and the society as addition to the common strive for profit. Furthermore they dedicate 1% of their sales to invest in environmental NGO’s and fund the 1% for the planet initiative. Additionally they seek for gender and ethnical equality in the management, offer their employees to take a paid time off to take an environmental internship and most famously allow employees to surf if the waves are good. The company also demonstrates their environmental consciousness in the way they design their company buildings such as a service centre Nevada, for which they received a gold certification. Most customers might not be aware of all the additional aspects of sustainability the company is tapping in to, but as argued earlier the Age of Transparency and the shift of the boarder between front-stage and back-stage will lead to both, more awareness of consumer and better accessibility of information. What used to be hidden for the customer suddenly influences the purchase decision, becomes part of the product experience and can foster customer loyalty (References: Patagonia).

Furthermore a holistic experience mind-set fosters activities across the boarder of ones business and even enables collaborations. Once again

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Patagonia can be cited as an example. They have established new initiatives with other companies of the outdoor market as well as collaborating with companies from different markets to complement their offer. Patagonia teamed up with iFixit – known for its repair tutorials for electronic goods – to offer customers a tutorial on how to repair Patagonia products, further striving for sustainability and environmental awareness. This collaboration is part of the peripheral experience of the offer. (References: Patagonia). In Fig 14 this is represented by the area extending the boarder of the company - marked with the yellow line - yet still part of the green peripheral experience circle.

Fig. 14: Experience Width Level - Collaborations (Experience driven Strategy)

On the whole, Sundbo and Darmer (2008) state that the total experience of a product is the balance between the core, the core experience and the peripheral experience. All parts are crucial, even though the main company offer remains the core. It becomes apparent how a holistic experience mindset enlarges the perspective of the interaction with a consumer, leading to a customer-company perspective replacing the customer-product interaction idea. This so, through both, a shared authentic corporate culture (seen in the Organizational Environment Level) as well as active contribution to the core, the core experience and the peripheral experience.

The fourth level - herein described with blue overlapping ellipses - is the representation of four experience characteristics. There is no direct transfer down from level three to four, rather does the next level add a better understanding of the nature of experience. Thereby, created in the overlaps of all four circles.

Fig. 15: Transition between level 3 and 4 (Experience driven Strategy Concept)

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8.4. Experience Characteristics Level O’Dell and Billing (2005) describe in their book, that “experiences are highly personal, subjectively perceived, intangible, ever fleeting and continuously on-going” (O’Dell and Billing 2005, p. 15).

To further illustrate the nature of experience, the similarities between experience and service can be stated. Both are intangible, both have to deal with the customers’ subjectivity, and in fact experiences are the goal designers are striving for when designing a service. In this specific context experiences are described as “what customers have when they use your service, and when they recall it afterwards” (Stickdorn and Schneider 2012, p. 141). It becomes even more evident when stating how some researchers describe the task of service design, “as the design of experiences through touchpoints and over time” (Wetter-Edman 2014, p. 36). In the same way experience, when talked about it in an economical sense, as a value offered by companie‘s, gets equated to services because of its intangible nature.

The best way to describe the difference between service and experience is by explaining the difference between pixel and vector graphic10. Both can be used to describe the same thing, but one of them is just a granular representation of the later. In other terms, a service is trying to recreate the best possible experience of a consumer, while the experience itself is the best possible experience. Service design is seeking control over all aspects of a service through mapping out the customer journey in refined details (Stickdorn and Schneider 2012). But experiences happen also between those pre-set stages of a service – in the gap between two pixels trying to represent the curve of a vector.

A deeper look into the characteristics of experience will further help to fully understand its nature. In order to do so, Hassenzahl (2010) suggests four key properties, namely: subjective, holistic, situated and dynamic, which form the structure of this next section.

Vector graphic uses lines, curves to display shapes – all of which are based on mathematical expressions. Pixel graphic or raster graphic uses rectangles to display shapes.

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Holistic

Dynamic

Situaded

Subjective Fig. 16: Experience Characteristics Level (Experience driven Strategy Concept)

Subjective Modern design has started to address the subjective character of design, specifically with the trend towards Human-centered Design by consultancies such as IDEO. Van Veggel (2005) similarly argues for a deeper understanding of the user in order to develop better products. Yet while the design of a product is tangible, the nature of experience is intangible and subjective.

Experiences are directly connected to the human consciousness as described by Csikszentmihalyi (2014). They are the result of the human being conscious and assessing information he is exposed to. In other words they emerge “through situations, objects, people, their interrelationships & their relationships to the experientor, but it is created and remains in his or her head� (Hassenzahl 2010, p. 9). Consequently the experience of a product lives in the heads of the experientor. Knowing that can help to shift the focus from seeking to design the experience, towards instead designing the elements that can foster the customer experiences.

Since every activity for a certain company happens within a more or less predefined environment, the metaphor of a theatre play can be used.

The model developed by Grove, Fisk and Bitner (1992) draws the line between dramaturgy in the service economy, but can equally be used in a broader context of a customer-company interaction. By exploring similar

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elements in the service economy and drama setting they develop the following model (Ibid, p. 97-98): Setting Performance Actors

Audience

Fig. 17: The Service Design Experience as Drama (Grove, Fisk and Bitner 1992, p. 98)

This model has four distinct elements: “the actors (personnel) whose presence and actions define the service, [...] the audience (customers) to whom the service is directed, [...] the physical setting in which the experience occurs [...] and the service performance itself” (Grove, Fisk, and Bitner 1992, p. 97).

The performance is the result of the interaction of the three respective elements: the setting, the actors and the audience. While the company can design the setting and the actors, it has no control over the audience. It is the audiences’ subjective interaction with the two elements provided by the company – setting and actors – which will create the customer experience.

Nevertheless the deliberate design of these two elements can evoke certain customer interactions and therefore influence his or her experience. It becomes thereby crucial to know which elements influence the customer experience and which can be influenced.

Holistic The notion of holistic is tightly intertwined with the subjectivity of experience. It can similarly be argued with the connection between experience and consciousness.

Hassenzahl (2010) explains it with the three level goal hierarchy model, described as relating “the actor’s self to the world through activity” (Hassenzahl 2010, p. 11). In the middle are the do-goals, “they are concrete outcomes, that an actor wants to attain, such as making a phone call” (Ibid, p. 11). On a lower level are the motor-goals, which in simple terms are the decomposed do-goals “into sub-goals such as pressing buttons or reading the screen” (Ibid, p. 12). On the top level are the be-goals, “there nature is

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self referential, that is close to people’s context, like being admired. They motivate actions and provide meaning” (Ibid, p. 13). While a product only lives in the motor- and do-goals, the experience can touch the be-goals.

Why? - be goals

Experience

What? - do goals How? - motor goals

Product

Fig. 18: A three level hierarchy of goals Hassenzahl (2010), p. 12

The holistic nature of experience pairs with the argumentation of Sundbo and Darmer (2008) stating that a customer always asses the total experience.

Yet the notion of total thereby is subjective and differs from customer to customer and from what can be experienced. The holistic nature of experience further supports the idea of a customer-company interaction focus, rather than narrowing it down to a single product interaction.

Situated Experiences are subjective, holistic and yet “highly situated, idiosyncratic [and] emerging entities. Experiences are never alike, neither between nor within experientors” (Hassenzahl 2010, p. 16). The experiences’ strong dependence on a specific context explains it’s situatedness. Experience “emerges from the integration of action, perception, motivation, and emotion, however, all being in a dialog with the world at a particular place and time” (Ibid, p. 16). In every moment, we take the world in through our senses, and we change it according to our goals through our actions.

An experience goes even further, it is a story, experience interpreted, packaged, labelled, integrated with our knowledge of the world, and stored away (Hassenzahl 2010).

What does this ultimately mean for a company. While products and service can be reproduced identically, the experience of the product or service or even the staging of an experience itself is unique, due to its subjectivity and situatedness. A restaurant owner who endeavours to create a unique customer experience, through thinking of the different aspects of his offer – the core, core experience and peripheral experience – might succeed

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in surprising its customer for their first visit. During the next visit, the context and the situation will have changed and likewise the experience.

Dynamic “Experiencing is a continuous stream, emerging from perceiving, acting, thinking, and feeling [and it] is a chunk of this time, packaged, interpreted, and labelled – a story. Both concepts highlight the temporal, dynamic nature of experience” (Hassenzahl 2010, p. 19). The temporal nature of experience has been mapped out by Roto et al. (2011) into four steps.

Before usage:

During usage:

After usage:

Over usage:

Anticipated User Experience

Momentary User Experience

Episodic User Experience

Cumulative User Experience

Fig. 19: Time spans of user experience, the terms to describe the kind of user experience related to the spans, and the internal process taking place in the different time spans Roto et al. (2011), p. 8

Anticipated user experience describes the experience before the use, momentary during use, episodic after the use and cumulative user experience the experience over time. The last perspective incorporates the periods of use and non-use. The customer always assesses the total experience, which shows that the user’s perception of an experience has no time limits. Therefore sometimes a too narrow focus might lead to an “inappropriate” design (Roto et al. 2011; Sundbo and Darmer 2008).

In a research, done in 1996 by Redelmeier and Kahnemann, they investigate the dynamic experience of pain during a colonoscopy 11. In doing so they found out that the experience is perceived as less painful by the patient if the endoscope is kept stationary for three minutes in the end of the examination. Holding the endoscope steady is still unpleasant but less hurting (Hassenzahl 2010).

Chef Niki Nakayama has considered this temporal aspect, making the creation of unique experiences for returning customers in her restaurant her primary focus and biggest challenge. The restaurants’ IT-system helps her to keep track of what customers ordered previously to ensure to not repeat dishes and create a unique menu every time. Niki Nakayama : Colonoscopy is an endoscopic examination of the digestive system.

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uses technology in order to create a memorable experience and establish personal customer relationship. Sundbo and Darmer (2008) pointed out that an innovative spirit in creating experiences is as important as it is for traditional businesses (Sundbo and Darmer 2008; Gelb 2015).

While all four characteristics of experience are crucial for a better understanding, it is the “explicit reduction of experiences to their essence and not the meticulous description of ever-new experiences, which enables design” (Hassenzahl 2010, p. 19). The goal of this level is to raise the awareness of the overlaps of all four aspects and not getting lost in one.

The fifth level - herein described with purple overlapping ellipses - is the representation of four experience categories. Similar to level four, it is in the overlaps of all four purple ellipses that the best experiences are created. Therefore the blue circle - the overlaps of all four experiences characteristics is transferred to the purple circle.

Fig. 20: Transition between level 4 and 5 (Experience driven Strategy Concept)

8.5. Experience Categorise Level Experience is often tantamount with entertainment. Companies therefore think adding an entertaining aspect to their economic offer is synonym for adding experience. However, experience is more dynamic and fourdimensional as Pine & Gilmore’s (2011) Experience Realms model is suggesting: Absorption Entertainment

Educational

Passive Participation

Active Participation

Esthetic

Escapist Immersion

Fig. 21: The Four Realms of Experience (Pine and Gilmore 1998, p. 102)

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On the horizontal axis the authors define the level of participation stretching from active to passive. The second axis shows the connection or environmental relationship, being absorption or immersion.

In their understanding active participation is defined by the customers actively influencing the performance, which creates an experience.

Passivity is thereby the opposite – when the customer purely observes or listens. Absorption on the vertical axis, can be described as “occupying a person’s attention by bringing the experience into the mind from a distance” (Ibid, p. 46), whereas, in the immersion the participant becomes physically or virtually part of the experience itself. This separation generates four taxonomies of experiences: entertainment, educational, escapist and esthetic. Entertainment – rather passive participation and more likely to be absorption than immersion – can be experiences such as watching television or fireworks. Educational – rather active participation nevertheless still not immersed in the event – can be described by examples such as attending a lecture or taking guitar lessons. Escapist – rather active participation and immersion – with examples such as gambling at a casino or playing in an orchestra, can be just as well educational and similarly entertaining, nevertheless they involve the customer to a greater extend. Finally Esthetic – rather passive participation but highly immersed – are experiences such as standing at the rim of the Grand Canyon where the customer has no influence on the experience nevertheless is fully immersed (Pine and Gilmore 2011; Pine and Gilmore 1998).

The authors argue that the richest experiences are the ones that contain parts of every category. They call this the sweet spot (Ibid, p. 58), the area where the spectra meets. How this intersection can be powerful is partly explained by the authors themself and partly through McLellan (2000) describing it as the goal of Experience Design. Whereas Pine and Gilmore (2011) connect it to the psychological concept of flow experience, especially in the escapist dimension (McLellan 2000, p. 62) and draw back the line to the idea of a performance, delineated by Anthony Rooley in „Performance: Revealing the Orpheus Within“ (1990). Anthony Rooley thereby describes seven stages in a performance: “delights the senses, invites curiosity, involves the mind, encourages deeper study, encourages regular practice, expands love [and] opens up knowledge” (Anthony Rooley 1990 p. 108109 in Pine and Gilmore 2011, p. 306). This understanding underlines the richness of the experience happening in the intersection of all four realms.

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Pine and Gilmore (2011) are arguing that companies are increasingly blurring the lines between the realms with terms such as Edutainment (Pine and Gilmore 2011, p. 64) mixing up Education and Entertainment. The airline Virgin America for example, has created an esthetic experience by designing a thoughtful service journey for their customer getting from A to B. In their quest for a better customer experience they have added an entertainment element with their in-flight entertainment system, the cartoon animation demonstrating the safety instructions and finally adjusting the cabin ambience light according to times of the day (Ibid).

The authors argue that Keukenhof - the world’s largest flower park in Holland - successfully created a flow experience in the sweet spot of the Four Realms. It has been called “the garden of Europe” (Pine and Gilmore 2011, p. 58) with its floral variety and size. The experience is entertaining already through its size and beauty yet regularly concerts are held. The educational aspect has been thought about, by placing educational signs besides the flora, providing guided tours and lessons about the bulb-growing industry in Holland. The escapist experience has been enhanced by designing elements that encourage the interaction between visitors, such as tree houses or a maze made out of three-meter high shrubs. Finally the esthetic experience is enhanced by a variety of art statues and inspiring gardens.

All in all the combination of all four realms creates a truly unique and compelling experience for the visitor (Pine and Gilmore 2011).

Entertainment

Educational sweet spot

Esthetic

Escapist

Fig. 22: Experience Categorise Level (Experience driven Strategy Concept)

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8.6. Experience driven Strategy A multitude of trends and phenomena are changing todays’ society.

Companies deal with it through merging or specializing, through innovation or simplification, through design or technology. Nevertheless these trends also affect the customer and their behaviour towards companies; in fact the power balance between companies and customers is shifting. It is what Forrester Research has investigated in a study and named the Age of the Consumer, which marks the shift from the manufacturer to the consumer (Reference: Forrester). Organizations, which are not able to perfectly meet the customers needs (Ford model T only existed in one colour), produce in poor conditions (H&M, Nike...) or charge high margins (Ralph Laurent, Apple) etc. will struggle in the future and become scarcer.

The days where a company could fake certain values or attitudes and use it to create a fictitious experience are over (Berry, Carbone, and Haeckel 2002). This ultimately demands a greater user focus on the entire breadth of actions executed when doing business (Cooperstein et al. 2013).

This concept is directed towards taking more active responsibility about the customer experience and about which clues the company is sending out. Berry, Carbone and Haeckel (2002) describe the task of “managing the total customer experience” (Berry, Carbone, and Haeckel 2002, p. 85) as “orchestrating all the ‘clues’ that people detect in the buying process” (Ibid, p. 85). In the endeavour to be more user-focused the company has to develop a “comprehensive strategy of managing the customer’s experience” (Ibid, p. 85).

The idea of managing the total customer experience - of orchestrating all the clues of a company - can be connected back to the notion of flow experience. It describes the ultimate feeling of being totally immersed in a moment. In order to create such a sensation, the experience has to hit the sweet spot. In other words all the elements influencing a customers’ experience have to be considered in order for a customer to live through a meaningful and compelling experience.

The Experience driven Strategy reveals the ‘clues’, which influence the customer in the buying process and ultimately leads to the creation of flow experiences. It is a tool that helps to manage the total customer experience and shift the companies‘ strategy towards being user focused.

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The Organizational Structure level describes the various departments in a company, each represented by an ellipse. The overlaps thereby pictures the greater involvement of the entire company in the strategy development process and the alignment of the organisation.

The Organizational Environment level uses a theatre metaphor to describe the company. It separates the company into “front-stage“ - inner, dark yellow circle - and “back-stage“. The “frontstage“ represents the customer facing and “back-stage“ the customer hidden actions.

The Experience Width level describes the three levels of a companie’s offer. Thereby the centre is the “core”, next is the “core experience” and finally the “peripheral experience”. While the main offer is the “core”, it is the “core experience” and “peripheral experience”, which gives the offer a greater value.

The Experience Characteristic level describes the nature of experience: subjective, holistic, situated and dynamic. Thereby, the four ellipses overlap in the middle circle and form a deeper understanding of experience.

The Experience Categorise level describes four types of experiences: entertainment, educational, esthetic and escapist. In the overlaps of all four ellipses the richest experiences are created - the „sweet spot“.

The Experience driven Strategy encompasses all five elements of the concept. It expresses the idea of the whole-enterprise driven strategy, bringing the inside out and adopting a holistic experience mind-set.

Fig. 23: Experience driven Strategy Concept - breakdown

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Whole-enterprise driven strategy Involve the entire company in the strategy process.

Bringing the inside out The company becomes part of the experience and the value offer.

A holistic experience mind-set fosters activities across the boarder of the companies business.

Fig 24: The Experience driven Strategy Concept

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9. Reflection As I have been writing alone, this section will be a self-reflection about both my process as well as the result. Looking upon it in the finish state, I have realized how the thesis slowly became my personal understanding of what Business Design as a study and business designer as a practitioner is about.

The adoption of a broad mind-set to find solutions for economical problems is at its core. In this matter a creative head supports the endeavour to meet the customers needs, develop a compelling experience and ultimately run a company.

This thesis contributes to the field of user experience suggesting a wider consideration. In other words, expanding the traditional customer-product perspective to a customer-company interaction. Furthermore it adds knowledge to the theory of a whole-enterprise driven strategy by revealing how an inclusive corporate strategy can contribute to a better customer experience in the Age of Transparency.

While I was trying to stay objective through out the process in a scientific way, the nature of doing research put myself into the unavoidable situation of being biased and subjective. Although I had informal conversations about the various versions of the concept with my peers, another iteration of interviews with experts from the field would have helped to further refine the concept. Furthermore applying the concept in one or two cases would have strengthened its applicability in a real life scenario. Nonetheless it wouldn‘t have affected the structure of the model, as it was highly built upon the theoretical review and the opinion of experience experts.

Besides, in the limits of a master thesis the goal was clearly about setting the first steps towards a more holistic perspective of experience on a customer-company level and subsequently shifting the companie‘s approach of strategy towards involving the entire company.

Although I have uncovered various theories and trends, which support the result of this thesis and therefore helped to build the concept, only the future will tell in which direction the society is going to move. The Age of Transparency for example is said to make customers smarter in their decisions and more aware about the back-stage of a company. Nevertheless companies such as H&M report strongest profit growth in more than four years and Bangladesh with one of the lowest wages in the world steadily increased the exports of cheap clothing (Bain and Avins 2015; Gustafsson

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2014). The question becomes how long will it take for the broad mass to shift their focus on ethical production rather then cheap prices. Moreover will it be the consumers expanding the yellow circle (Experience driven Strategy Level 2) or will it be the company that expands their grey circle (Experience driven Strategy Level 1). In other words will the consumers demand from the company the radical change or will the company present the customers with that change. More importantly when big fashion retailers claim to be more ethical, how much of it is true (Siegel 2012), drawing back the line back to the argumentation about authenticity.

Ultimately this leads to the question of how companies are going to readjust their strategy development process in order to cope with the dynamic market situations. I argued about the problematic of dividing the strategy process in creators and implementers. This bears the issues shown in the principal-agent theory, slows down the process and does not harvest the full potential of the entire company. Researchers have developed concepts such as the Crescive Model and Holacracy, and companies such as Morning Star co. and Zappos have adopted this approach of self-management and -organisation. Similarly, Kotter (2014), while demanding for a more agile and dynamic strategy process, points out an important aspect: “hierarchies that good organizations use and we take for granted are one of the most amazing innovations of the twentieth century [...] they are still absolutely� (Kotter 2014, p. 6-7). So rather than completely denying hierarchies and the role of a CEO as the leader of a company, as the example of Morning Star co. has shown, the question becomes how can you use a more agile and inclusive approach to strategy within the existence of the hierarchies.

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10. Conclusion This paper was born out of a personal interest for the term experience and the various meanings it can have. Throughout the masters program and the internship the picture was built up, that experience is ultimately what design but also business should work towards. It is the idea of bringing the user to a greater extent into the focus of both design and business activites.

The theoretical research has revealed the holistic, subjective and dynamic nature of experience, in other words the tight connection of experience to the human consciousness. Nevertheless, the expert interviews showed how experiences are practically constructed. Companies are caught up in the thinking, that experiences are only created in the interaction of a customer with the product. More shockingly, sometimes organizations are limiting experience to the interaction of the customer with their webpage.

In that same instance the interviewees expressed the need for a practical tool to support companie‘s towards a broader understanding of experience.

Therefore the final part of the thesis became the process of making sense of all the gathered information: the dynamic nature of markets, the slow decision-making process in companies, the lack of a broad understanding of experience, the technology changes and the shift in consumer behaviour.

The final concept draws attention to the interrelation of these elements.

Level 1 for example reveals the correlation between the increasing speed of market changes and the static strategy development process.

The Experience driven Strategy concept became therefore a practical step by step tool, discovering how the alignment of internal processes, values and corporate culture are affecting the customer on the outside and how bringing the inside out can be a powerful step towards more compelling customer experiences. It marks the shift from a customer-product focus to a much broader and valuable customer-company interaction focus. The biggest gain of the Experience driven Strategy concept is the demonstration of the cause and effect of internal actions on the outside of the company.

Furthermore the concept shows how the company itself – with its culture and values – can become an added value for the offer. In a last instance, the model practically delineates the all-encompassing nature of experience into four characteristics and four categories.

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Summing up, the Experience driven Strategy concept is about building a solid ground – namely the internal alignment of the company – from which the organization can use a more refined notion of experience to shift their actions towards being more user focused and ultimately building up a a more meaningful customer experience.

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11. Further research There is an increase need for a broader understanding of experience in the economical as well as design field. Since business designers are placed in the intersection of these two fields, it becomes especially important for them.

The tight connection of experience to the human consciousness reveals its holistic nature. Therefore design aspects such as the brand, the product and retail design are influencing the customer experience. Likewise the companies margin, production process, corporate culture become equally important for the experience in the age of transparent information. This model provides companies with the first step towards more awareness, yet more research has to be conducted upon which elements influence the experience most and how they can be designed.

Research has demonstrated the benefits of a greater user-centerdness, for example in increase of e-commerce sales, reduction of maintenance and support costs etc. (Bias and Mayhew 2005; Bevan 2005). Nevertheless in order for companies to understand the need for a greater experience understanding, extensive research has to be done on the return on investment of a bigger user focus. One attempt has been done by Forrester – a research and advisory firm, developing an Index that measure how customers perceive their interaction with a company based upon three criteria’s: “How enjoyable are you to do business with?; How easy are you to do business with? and How effective are you at meeting your customers‘ needs?” (Reference: Forrester) They showed that leaders from this index had a cumulative (2007-2012) increase of 43% in total return, compared to only 14,5% for companies from the S&P 500 Index (Reference: Forrester).

Ultimately, as this concept was developed with the aim of helping companies, it would be interesting to run trials with organizations of different sizes – well established or start-ups – in order to ascertain its usability in a real world environment. Nevertheless, this model is highlighting the need for authenticity, internal alignment, inclusiveness in the strategy process, all of which are long-term goals and rather difficult to track.

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Forrester Websites: • http://solutions.forrester.com/Global/FileLib/Forr_Perspective_/ Forrester-perspective-CX-2.pdf • https://solutions.forrester.com/customerYexperience/landing 49RA- 3147MY.html • https://www.forrester.com/marketing/about/about-us.html Patagonia Websites: • http://www.bcorporation.net/community/patagonia-inc • http://www.patagonia.com/us/footprint • http://www.patagonia.com/us/traceable-down • http://www.supplychainnetwork.com/leed-certification-for patagonia-sc-2/ • http://www.environmentalleader.com/2009/02/05/patagonia goes-for-gold-at-reno- distribution-center/ • http://www.psfk.com/2013/11/patagonia-repair-workshops.html • http://www.patagonia.com/us/worn-wear

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13. Appendix As already indicated, the interview quide was structured in four bigger headings with a couple of sub-questions. Furthermore the questions were slightly adapted to the interviewees‘ background. The following questions formed the basic structure: Experience

• What do you think of when I say experience?

• What is part of the customer experience? Beginning and end?

• How important is the customer experience for design or for the

company in general?

• How do you treat the subjectivity of experiences?

Consumption

• How do you think consumption behaviour will change in the

past and in the future?

• Consumers are more and more interested in the company

behind. How does design or companies cope with this new

customer need?

Business Strategy

• What are the difficulties of (company) strategy?

• How important is being user focused for business; for

management decisions?

• How do you see the task of running a company shift in the next 20 years?

• What skills does the business man of the future need?

After the presentation of the thesis topic

• What is the broadest you can think of experiences (towards a company)?

• Which company creates the best customer experience?

• Do you know companies that lead with an experience thought?

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