Why the customer drives innovation in the experience economy

The term “the experience economy” was coined in the 1990s to describe how customer experiences would become the main competitive battleground for companies. Today, we find ourselves in the middle of this new economy. In order to survive, companies now need to focus on “experience innovation” and increase their customers’ involvement in their innovation process.

What Joseph Pine envisioned when he coined the term “the Experience Economy” was a future where companies would compete through personalised experiences rather than products. As digitalisation has transformed our world, this prediction has now become reality.

Customer Service Satisfaction Indicator Experience Economy Servitization - image courtesy of Depositphotos

According to a 2015 Gartner study, a staggering 89% of companies said that they expected customer experiences to be their primary basis for competition. At the same time, we’ve seen how companies like Uber and Amazon have disrupted entire industries by offering a simpler, easier and more personalised experience for their customers.

Customers at the heart of the innovation process

One effect of this experience economy is that we now expect our digital services to adapt to our needs and preferences. Social media uses algorithms to analyse our behavior and tailor what content we consume. Similarly, streaming services like Netflix offer us personalised content suggestions and e-commerce sites suggest products based on our previous purchases.

This development has also given rise to a new way of creating innovations. In the past, companies would carry out market research in order to see what “most people” wanted and would then develop products and services accordingly.

The innovation process is now increasingly focused on continuously adapting the experience for each individual customer. This means that the innovation process continues even after the product has been sold and throughout its entire lifecycle – Product Lifecycle Management has given way to Experience Lifecycle Management.

In this type of innovation, the customer plays an extremely important role since the ideas come directly from their behavior and interactions. According to an analysis that McKinsey published last year, companies today need to constantly analyse how their products and services are used in order to create incremental and individual improvements of the experience.

This new way of thinking about innovation has been shown to improve both customer experience and customer satisfaction significantly. At the same time, many of the bigger, more established companies find it hard to compete with smaller startups in this area.

In order to introduce this new way of thinking to their organisations, many of these companies have gone the route of either buying up innovative startups or creating various ”innovation hubs”. In this way, even the more traditional companies are able to absorb the new way of thinking needed to succeed with customer driven innovation.

3DEXPERIENCE Platform Dassault Systèmes

Innovation platforms make it possible

At Dassault Systèmes we have long seen experiences as the core of the innovation process of the future (see Thriving in the Experience Economy from 2014). We therefore developed our 3DEXPERIENCE platform to enable experience innovation instead of just product innovation, both for small start-ups and large companies.

The platform makes it possible to create a better understanding of market trends and customer insights throughout the innovation process, as well as involving the customer directly in this process. By using our platform, companies can create digital consumer clinics, where customers with the help of VR-technology, can test and evaluate products as part of product development.

Our platform therefore shortens the distance between the company and their customers and puts the customer at the centre of the experience life cycle.

Our platform also helps everyone collaborate in creating these experience innovations. This means that the platform makes it easier to not only understand what the customer wants, but also how to get there and how to evaluate the customer’s experience in real-time.


Michael Egan, EuroNorth Business Consulting Partner Expert at Dassault Systèmes.