Speech delivered by Andrew White to MCI

Today I will be talking a lot about experiences, experience design and the role of experiential marketing in building brands and improving people performance. I'll also explain how to design an experience that has a lasting consequence or impact beyond its consumption. But before I do allow me to set the context and believe it or not the context is a company's Balance Sheet not its Marketing Plan!

SPEECH MADE AT MOLSON CENTER FOR INNOVATION

(Accompanied by visual PowerPoint presentation)

Written and delivered by: Andrew White, 2003 

Today I will be talking a lot about experiences, experience design and the role of experiential marketing in building brands and improving people performance. I'll also explain how to design an experience that has a lasting consequence or impact beyond its consumption. But before I do allow me to set the context and believe it or not the context is a company's Balance Sheet not its Marketing Plan!

When I refer to the Balance Sheet I'd like to focus on the Asset side not the Liability side and more specifically a company's INTANGIBLE assets, simply put…there are two, namely:

1. Brands
2. Intellectual Capital

 Intuitively (especially this audience) we understand the importance of these two INTANGIBLE assets but according to a recent survey of food and beverage companies, 2 out of 3 businesses don't account for their brands and other intangibles on their balance sheet & believe it or not under most international accounting regimes, the value of a company's intangible assets (intellectual capital & brands) is only manifested when they are sold or transferred….and yet for many, many companies these assets (that are not recorded on the balance sheet) are, in fact, more important, more valuable and more vulnerable than those that are!

 The stock market has long recognized the value of Brands and Intellectual Capital by awarding a market value for certain companies that far exceeds their book value. The Coke brand, for e.g. is worth half the market value and ten times the book value of its parent company.

 The implications are clear! It is the combination of tangible and intangible assets that create value for a company. Lets take a look at the first INTANGIBLE ASSET….Brands!

 Companies invest millions of dollars building brands (product & corporate) and thus corporate reputations. Strong brands:

1. are rewarded with increased customer loyalty AND increased employee loyalty
2. command premium prices versus price premiums
3. are a vital ingredient in any company's sustainable competitive advantage

 A recent survey in the US and the UK of major food and beverage companies found that brand was considered the most important asset of a company's image! (see chart)

 Now… before we get to experiences with lasting impact, let's take a look at the second vital ingredient in sustainable competitive advantage….the second intangible asset…Intellectual Capital, I will speak to three components of Intellectual Capital namely:

1. Human Capital
2. Customer Capital
3. Innovation

 This talk does not address the fourth component, namely structural capital (patents, trademarks, OS, processes, etc.)

 Let's begin with the first – Human Capital or the capabilities of your employees…. it has been said that your most valuable asset goes up and down your elevator every day, Einstein said, "everyone on this plane has had or will have an idea powerful enough to change the world", Jack Welch said, "the only source of competitive advantage that any company has is in the minds of its employees", it has been said that we only use about 5% of our brain's capacity, I believe that we as individuals and employees are like a musical instrument with a thousand keys but we only ever play 10 of them – we are capable of so much more!

 Having said all this, let's not underestimate the second component – Customer Capital. Relationships with customers are a key driver of customer equity – that is the financial value of a customer to the company. Customers are assets that the company invests in through (among other things) Experiential Marketing and from which they should expect an ROI. To illustrate this, we actually create a model that shows how improving a customer and/or employee experience impacts customer equity. More on that later.

 Now let's examine the final component of Intellectual Capital – Innovation. It has been said that the single most important issue facing businesses today is how to build companies that are radically innovative. Successful companies innovate – radically successful companies innovate radically. From a brand perspective, in order to live up to any brand promise an organization must continuously innovate in order to enhance the experience so as to meet and exceed customer expectations.

 The focus on innovation has intensified, it has always been important; it's now a matter of life and death – innovative accountability doesn't simply reside in the R&D department.

 To summarize the conversation around Intangible Assets, there is clear and irrefutable factual evidence to support the fact that PROFIT and significant sustainable competitive advantages are achieved through the sound deployment of and investment in Intangibles along with other assets.

 OK…. sounds good….so where do experiences fit in you ask??

 Experiences actually bring these two intangible assets to life! We are living in an Experience Economy – I know that many of you have read the book The Experience Economy – the authors of this well known book suggest that we have evolved from a service driven economy to an experience driven economy and that ultimately we will enter a transformation economy. There is no doubt in my mind that all roads lead to experiences (see slide), whether you are in the business of igniting the potential of people or brands EXPERIENCES are the catalysts!

 There are many roles for experiences, we view everything experientially from meetings to training programs and product launches to the many faces of marketing. Today we only have time to explore two experience applications:

1. Innovation
2. Bringing the Brand Promise to life

 To understand the role experiences play in Innovation it is important to understand how we as human beings process experiences. Sociologists, Psychologists, Educators and Academics all agree that there are five experience realms, some label them slightly differently but the essence remains constant, they are:

1. Entertainment
2. Educational
3. Activity/Adventure
4. Environmental/Atmosphere
5. Sensory

 Pine & Gilmore the authors of The Experience Economy will tell you that for an experience to "have a lasting consequence beyond its consumption it must either be a tattoo or it must find the customized sweet spot across all five experience realms, it's not enough to simply have an entertaining or educational experience, the sweet spot and emotion are vital to extending the experience over time – to ensure that "it has a lasting effect beyond its consumption". 

 In fact the hallmarks of a truly experiential program are:

1. Your audience has a memorable and lasting impression of the experience even after it has ended
2. The experience transforms your audience into advocates of the brand, product or service
3. Your audience understands your brand's place in their lives
4. Appropriate strategies and dialogues are put in place to ensure that the experience is extended over time

 So back to innovation….where does innovation come from….how can we build companies where innovation is both radical and systematic…how do we generate break through ideas?

 Innovation is not the product of an individual's brilliance, you are not hard-wired or born innovative, an innovative insight typically comes from looking at a situation from a different perspective, looking at the world through a different lens! I know I'm simplifying things but if the key ingredient in innovation is perspective change then let's take a look at one of experience realms I referred to earlier – namely adventure and by adventure I'm not referring to ropes courses or Outward Bound (although that is a vehicle) I'm talking about challenging your internal limits of daring versus your physical limits. In fact the definition of adventure that most aptly describes what I'm talking about is this, "Adventure is any experience that substantially alters your perspective long enough to see familiar things in ways you've never before seen them and new things you've never before seen!"  So adventure leads to perspective change and perspective change is the key ingredient in innovation and innovation is one of the most important issues facing companies today! WOW!

 Now let's look at the second experience application that we have time for today:

• Bringing the brand promise to life!

 There are several steps involved in doing this right! Top of mind awareness is one thing but if you are failing to deliver on your brand promise in every interaction or touch point with your employees and your customers then your marketing efforts are futile. Customer acquisition is one thing customer retention is yet another.

 Step 1:

• What do you stand for?

Step 2:

• Is what you stand for what people want? Does your brand promise relate to all stakeholders and customers in a unique, consistent, relevant and meaningful way?

 Step 3:

• Are your employees able to deliver the brand promise? Are they aware of it, do they understand it and do they take ownership of it?
• If yes to the above…are they actually motivated to deliver it?

 Step 4:

• Now you must deliver on and realize the brand promise in every interaction or touch point with your employees and your customers.
• Take the brand and its promise and introduce it into your target's life in a way that engages their hearts minds and senses.

 Step  5:

• Create vehicles that ensure that ensure ongoing dialogue, stay in touch with your audience in a relevant experience reinforcing way!

 We recognize that for any program to be effective, it must be integrated at every participant touch point throughout a company's distribution channel.

So a quick re-cap….

• A company's most valuable (and vulnerable assets) are those not recorded on their balance sheet namely Intellectual Capital & Brands
• These two assets are fundamentally aligned, in fact they are symbiotic in nature
• Experience Management brings these two assets to life thereby protecting them and maximizing the value of them
• For experiences to have lasting impact beyond their consumption they must…
• Innovation is…
• Bringing the brand promise to life is…
• A seamless and integrate Internal & External audience approach is integral to ...

Thanks