Ep. 1382: Joe Pine Interview with Michael Covel on Trend Following Radio

My guest today is Joe Pine. He is an author, speaker, and management advisor to Fortune 500 companies and entrepreneurial start-ups alike. He is cofounder of Strategic Horizons LLP. He consults with numerous companies around the world, helping them embrace the ideas and frameworks he writes about, develop concepts for creating more economic value, and see those concepts become reality. The topic is his book The Transformation Economy: Guiding Customers to Achieve Their Aspirations. In this episode of Trend Following Radio we discuss: Evolution from experience economy to transformation economy Businesses guiding customers to achieve aspirations Charging based on outcomes instead of time Spheres of transformation health wealth wisdom purpose and meaning Role of AI and personalization in enabling transformation platforms Jump in! --- I'm MICHAEL COVEL, the host of TREND FOLLOWING RADIO, and I'm proud to have delivered 10+ million podcast listens since 2012. Investments, economics, psychology, politics, decision-making, human behavior, entrepreneurship and trend following are all passionately explored and debated on my show. To start? I'd like to give you a great piece of advice you can use in your life and trading journey… cut your losses! You will find much more about that philosophy here: https://www.trendfollowing.com/trend/ You can watch a free video here: https://www.trendfollowing.com/video/ Can't get enough of this episode? You can choose from my thousand plus episodes here: https://www.trendfollowing.com/podcast My social media platforms: Twitter: @covel https://twitter.com/covel Facebook: @trendfollowing https://www.facebook.com/trendfollowing/ LinkedIn: @covel https://linkedin.com/in/covel/ Instagram: @mikecovel https://www.instagram.com/mikecovel/ Hope you enjoy my never-ending podcast conversation!

• 0:00Speaker 00

  My guest today is Joseph Pine. This is a return visit for him. He's the author of a book that I really enjoy from the late 90s called The Experience Economy, a must read. He has a new workout, a new book called The Transformation Economy, Guiding Customers to Achieve Their Aspirations. Right in my wheelhouse. Instantly knew I wanted to talk to Joseph. Instantly knew I would like this conversation and I hope you enjoy it as well.

• 0:45Speaker 00

  We first spoke in 2019. My podcast had been on for a while, but your first book, The Experience Economy, had stuck with me. Was it a 90s book?

• 0:54Speaker 01

  Yeah, it was actually, it came out in 99 and then we updated 2011 and again in 2020 or late 2019. I don't know if we talked before or after that.

• 1:04Speaker 00

  We spoke in 2019, I believe. I looked it up, but I think the thing about that book, and it just stuck with me. And it was something where it was like this great idea, this great thought, this great truism. I guess, yes, businesses were doing it, but it wasn't something that was talked about unless you were talking about it. I always thought to myself, gosh, that's where I want to be as a business owner, working with clients. I want to be there because that's what people want. And I'm going to give you this little bit of a setup here. And so when I saw you had this new book, and again, I like to just have conversations. It's not necessarily a book promotion or anything, but when I saw this new book that you had, I was like, oh, wow. It's so self-evident.

• 1:50Speaker 01

  That's one of my favorite comments, by the way.

• 1:53Speaker 00

  And some of my setup here also is that I've done hundreds of interviews. And up until COVID, I found that authors, particularly business authors, were often coming up with a novel perspective or something interesting. We got inside COVID and almost every book title went to, I wrote a book on leadership. Here's how you lead. I wrote a book on teamwork. Here's teamwork. And I started to lose my mind. I started to think to myself, is anybody out there? There's a lot of smart people out there. Is anybody going to write something that's, you know, really taking an edge, going out there and doing something innovative? And you're doing this through Harvard, I believe. I've worked with them many times on finding interesting folks to talk to.

• 2:37Speaker 00

  And so when they reached out to me and we'd already spoke before years back. And I was like, wow, I wrapped my arms around it really quick. And I was like, oh my gosh, it's the next obvious evolution.

• 2:46Speaker 01

  It's obvious when you know it, when you see it. But if you don't, you still like wonder what the heck?

• 2:52Speaker 00

  I mean, here's the thing, just the idea of, if I was to read it back to you in a condensed form and we can expand out, but essentially we have the experience economy. People will pay much more than for a commodity or a service and they'll pay way more for an experience and you're taking it to the next level, which is, hey, hold on, the experience is one thing, but I want to be transformed. And I must share with you an interesting nugget out of my past. My second book was about a group of students, trading students that were taught by a famous trader out of Chicago. And that book has sold exceptionally well for a very long time. If you think about it, I was thinking about it today. It's all about the transformation.

• 3:35Speaker 00

  That's the reason people love the book is because it's a story of the guy, the big guy, taking small fries, making small fries into big guys. He transformed them. And that's why that book is so popular after all these years is exactly what you're writing about right now is that people love the transformation. That's what they really want. I'm just summing up, you're going to come back at me, but I'm just summing up my perspective on where you've gone.

• 4:00Speaker 01

  Yep, exactly.

• 4:01Speaker 00

  You do the Experience Economy book and people can listen to our first episode, but you do that book. Was this type of thinking in your mind already? Or was it percolating? Or were you thinking it's too early to talk about that?

• 4:15Speaker 01

  In fact, Michael, it's in the first book. The last two chapters of the Experience Economy talk about what's next, talk about the transformation economy. Because I knew it from the very beginning that we have life-changing experiences, that we only ever change through our experiences. As this old saying goes, we're all the product of our experiences. And so that the natural next evolution would be to have companies help us achieve our aspirations through transformative experiences. And so I've been asked actually for 25 years, more than 25 years, when are we going to write a full book on the transformation economy? And to which my answer is always twofold is one, I don't know enough about it. And two, the world's not ready for it. And those two things have changed that finally I, through a lot of research, but just sort of natural progression of thinking about experiences and so forth,

• 4:59Speaker 01

  began to study it more and more, learn more about it. And it became clear that the world is increasingly ready for it. It was a big scary word back then, and to some degrees it is. It's not actually a word I recommend you use with your customers to tell, hey, we're going to transform you. It's more better to talk about their aspirations and what they want and how you can help them achieve those.

• 5:19Speaker 00

  But obviously the word aspirations is on your front cover, but it's in the subtitle. It's not the main word. So clearly you're going for the more aggressive, like, yes, we can talk amongst friends and I want to help you aspire to get to where you want to be. But where you really want to be is transformed. So let's cut to the chase.

• 5:38Speaker 01

  Yeah. So that's partly because I'm writing the book for business people, not for consumers, although I'll also say that I really wanted to hit people on a personal level. I use the word you all the time. I don't talk about they customers, you know? Sometimes they even switch between you as a customer and you as a business in the same paragraph to get people to visually understand that people do desire transformations and that they can see that in their own lives. And therefore they can better help think about what their customers aspire to become and help them guide those.

• 6:07Speaker 00

  I hear you that you can draw the line and say, well, you've got business readers and let's say retailer readers, so to speak. But I think from my perspective and just me saw it and I thought about my business, but I thought about myself too.

• 6:18Speaker 01

  That's exactly what I wanted.

• 6:19Speaker 00

  Right. So it's just obvious. And you said, we weren't ready for it. And I want you to tell me why you think that's true. I'm going to throw out the thought that one of the reasons we might be more ready for it now is because with AI, and I don't really think it's artificial intelligence, it's just a very interesting reassembling of human knowledge.

• 6:41Speaker 01

  Human information, actually.

• 6:42Speaker 00

  Right. It's put everything at our fingertips. And I think what it's done is it's, we know all the backstories to how everybody that's successful got to be there in a way, but we're not there. Obviously, we've got to be honest with ourselves and say, well, there's only going to be so many billionaires. Not everyone's going to be a billionaire. That's not going to happen.

• 7:02Speaker 01

  Oh, it depends on inflation.

• 7:04Speaker 00

  Well, there you go. Right. But I think what AI has done is it's opened people's eyes to the landscape. And then, once they see the landscape, I think the word transformation makes perfect sense. Because you're like, okay, I see the landscape now. I can know anything within seconds. And but here I am in my life, in my situation. How do I transform?

• 7:26Speaker 01

  And people increasingly recognize that desire within themselves. Experiences and transformations have always been around, right? They're not a new economic offering. But for the most part, in ages past, we were responsible for our own experiences and transformation. In fact, go back far enough, we're responsible for our own commodities, right? We'd have our own gardens, and 90% of us worked on farms. And we used to, with goods, make the tools of our trade, make our own clothes. And in fact, when I went to high school, there's this thing called home ec. I don't know if they have that still, home economics, where people learned how to make clothes and things that they needed. And now we pay other people for that. Same thing with services. We used to cut our own hair and clean our own clothes, make our own dinners, change our own oil in our cars. And increasingly, we don't do

• 8:10Speaker 01

  much of that. As with experiences and transformations too. And with transformations, it's basically where we've always been our own general contractors, right? That we know we want to change. We may have, for example, a fitness aspiration. They go from flabby to fit. And so, we hire some commodities, like organic produce and protein powder and so forth.

• 8:30Speaker 01

  To help us do that, we hire books by our goods by physical books. Maybe we get some barbells or some other equipment. We get a Fitbit or an Apple Watch and then we hire services like the apps that go on that Fitbit or Apple Watch or a Ring and use that to track how we are doing. And then we hire experiences like paying a membership fee at a fitness center and to go there once or twice a week. But when we get really serious, we may say, I need a personal trainer. I need somebody who's not just there and available when I want to do it, that they want to like force me to do it. They'll come and sit on me to make sure I do what I told them I wanted to do. And increasingly, I mean, all of that is very difficult. We do it piecemeal as a general contractor.

• 9:11Speaker 01

  But if we can go to somebody who understands what it takes to be able to do that and can bring together all of the commodities, goods, services and experiences it takes to truly transform, then the chances we achieve our aspiration is so much higher. The time it takes is going to be lower in doing it that way and its effectiveness will be so much greater.

• 9:32Speaker 00

  I have multiple personal trainers. That might sound odd to people, but I don't really care. I mean, I work out seven days a week. So I'm in my 50s. I have multiple personal trainers and they do great stuff. Is that a good example for the transformation economy, a personal trainer? Is that a clear example?

• 9:48Speaker 01

  Yeah, that's a very clear example and it's one of the things that's changed more so over the last 20 years is people increasingly use them and go to the fitness centers more. One way to think about it, Michael, is that any business that's in the business of helping people be healthy, wealthy and wise is in the transformation business. So in terms of being healthy, fitness centers, personal trainers are all about that. Think about healthcare, of course, but also wellbeing, right? All the things that we do to have wellbeing in our lives, including going to spas and going on retreats and so forth are all around health. And in fact, one of the things I talk about is don't think about it health so much as health and wellbeing, right? That these two go together. And with wealth, it's about wealth and prosperity,

• 10:31Speaker 01

  that wealth is the means by which we have prosperity, meaning have a good life as the end result of that. And so. All the financial firms, wealth management and so forth are really there to help us achieve our aspirations for being prosperous as well as for helping our kids become prosperous, like having college education funds and so forth, as well as leaving a legacy after we're gone of what we want, you know, mark we left in the world with our kids, with our grandkids, sometimes our great grandkids, with the charities that we support and so forth. And then wise is about knowledge and wisdom, the knowledge that we have as human beings that we learn from experience. And then the outcomes of that knowledge, how we apply it in the real world is the wisdom.

• 11:14Speaker 01

  So you think about all education from primary education to colleges, universities to postgraduate, MBAs and so forth, as well as all the things we learn, street smarts, as well as all the certificates now that increasingly common as we recognize that college always doesn't do what we need and we can get it via other means. And then there's one other one that that wasn't captured in that old proverb about being healthy, wealthy and wise, and that's purpose and meaning, that we need a meaning in our life and having a personal purpose, working on that purpose, acting it out in the world, working for a company that has a purpose that aligns with who we are as an individual and our own purpose, gives our lives meaning. And at the core of human beings

• 11:56Speaker 01

  is that need for meaning in our lives. It's the most important of all of those. And all of these are what I call spheres of transformation. They overlap, they're amorphous and that, but they're spheres of transformation. And most any business can find themselves in there in one way, shape or form, although for many it's more direct than it is for others.

• 12:15Speaker 00

  Let me keep it at the personal trainer as an example, something that I've seen. So since I work out with personal trainers, I see other personal trainers training other people at the same time. And it's pretty clear to me by now, and I'm going to guess that this is probably a universal thing across gyms. I'm seeing it where I am in Asia right now. But I'll see people that have hired a trainer, they are there, but literally are spending 30 minutes of their 60 minute class, taking a break, sitting down and playing with their Their freaking phone and watching the trainers faces, the trainers faces are just, I'm getting paid.

• 12:55Speaker 00

  Okay, whatever. But trainers are excited. If you're excited, if you want to be pushed, they will push you. If you don't give a blank, they won't give a blank. I wonder also is one negative aspect to this is we talk about the idea of transformation and then people say, I want the transformation and they will pay somebody for the transformation. But there will not be a transformation unless the individual does something too. You and I can't walk into the gym, lay down and the trainers are not going to move our arms and legs for us.

• 13:28Speaker 01

  Although I bet there are some devices I'd have to do that, but yeah.

• 13:31Speaker 00

  You know what? People would pay for that. Okay. We should talk about different populations. There is going to be a population out there that immediately see where you're going and they're like, yes, I want that. I will pay for that. There's going to be another population that's, yes, I want that and I pay, I will pay for that. But I'm not going to really do anything myself. I can see that.

• 13:49Speaker 01

  As a company, and I call them transformation guiders, right? The economic function is you guide transformations, like you stage experiences and deliver services and so forth. But you cannot change the customer, right? You only can guide them. They have to change themselves. And so that group that doesn't want to do anything is not going to make progress. Fitness centers think their best customers are those that make a new year's resolution, pay for a year's membership in January, and then don't show up after that month. And these are the people that aren't getting their aspirations achieved, even though they may be spurious aspirations, but they have to change themselves. As the old saying goes, we're all the product of our experiences. And so you have to guide them through the set of experiences it takes to change, but you can't do it for them.

• 14:29Speaker 00

  How much money will be made by well-intentioned companies that are offering transformation? And whatever sphere we're talking about, and the client will literally pay the money. Because maybe they think this is the right thing to do. They want the transformation, but they will not do the effort. I wonder when we get into this, and I think it will happen for sure, because it's the natural evolution. Everyone's talking amongst friends like, oh yeah, I'm paying for a transformation. And then how many people will pay for the transformation, but not do anything? Have you thought about that?

• 15:00Speaker 01

  Not to the degree of what you're talking about, particularly if people pay up front. I mean, fitness centers is the obvious answer to that. There are other things around that. You may be paying a wealth manager to managing your funds and pay no attention to them. Let them just do whatever they want and not be involved in it. So maybe that's a similar sort of thing. But for the most part, I think that people will want to have their aspirations achieved. Right? Otherwise, why are they paying in the first place? There are people with more money and time, and so they don't put the effort to it. That's absolutely true. But I'm hoping that over time, they recognize the value in having somebody really guide them to achieve what they want to achieve, to become who they want to become.

• 15:43Speaker 01

  And therefore emotionally involved in it themselves.

• 15:46Speaker 00

  From your perspective, though, you're putting it out there and you're saying, this is the natural evolution as to where we're going. Whether or not I can dream up a group of people that are willing to pay for the transformation, but not do anything themselves, whether I can dream that up or not is a side tangent. But like I said, it's a side tangent. But ultimately, what we're talking about here, the customer is the product.

• 16:06Speaker 01

  Exactly. It's the change customer that's a result of it. And back to your point about paying for it also, to a company, you are what you charge for. That really defines what business you're in. So for services, you charge for the activities you perform. For experiences, you charge for time, which is what they value, the time they spend with you. I mean, it's an admission fee or a membership fee, including a membership fee at a fitness center, which is really selling themselves at that experience level. But with transformations, what you need to charge for is to demonstrate outcome your customers achieve. And ideally, right? So the customer isn't paying upfront. They may be paying part of it upfront, they may be part of it month by month with a membership fee. But the full amount comes when they actually achieve their aspiration.

• 16:49Speaker 01

  And what that does is completely change the relationship. It means that like a fitness center example, that they actually do have to get you to come in. They actually do have to get you off your phone. They actually do have to get you to do the reps that you need in order to achieve your aspiration. And if you're not willing to do that, then they should fire you and say, sorry, go someplace else. We got valuable people that want to use this space and you're just taking up the space rather than actually using it. And that happens when they get paid on the actual outcomes that the customers achieve.

• 17:20Speaker 00

  Side thought there too, because yeah, I'm giving you the story where I see people sitting around playing on their phones while they're paying a trainer. And ultimately, yeah, I get it in the short term that the business will collect those fees and say, they want to pay us for this. But ultimately, you don't want to have those kinds of people sitting around doing that because it distracts from everyone else. It creates a bad atmosphere.

• 17:39Speaker 01

  Exactly. And other people start chirping off and looking at their phones as well. I mean, you see that in fitness centers, but you had meetings all the time, right? One person looks at their phone, or even a group of families, a group of people, friends in a bar. One person looks at their phone and pretty soon, everybody's looking at their phone. It's just a social effect.

• 17:55Speaker 00

  I always think about something also too. I've got a situation in my life where there's a trading firm, hedge fund, and they've long had a policy of no management fee, only an incentive fee. And it's 25% of the profits. But if they have a downspill where they start to lose money, let's say they go 20% underwater, they don't get paid anything until they get above back to break even and beyond, which I think is getting at where you're going in terms of the outcome.

• 18:22Speaker 01

  Exactly. That's the outcomes that people want. And they get paid based on how well they achieve those outcomes. If they even go farther, that is just the wealth part of it. It's not the prosperity part of it. It's only the means, but they're putting their money where their mouth is and saying, we get paid when we do what you hired us to do, which is to make money.

• 18:43Speaker 00

  Exactly. Let me take it back to something you brought up earlier, which is the purpose and meaning, working for a company, family. And I think the interesting thing about those thoughts, and we have something in common where we both have written books. In terms of legacy, there's a very good chance that after we're both gone, people will see our work, at least for some period of time, maybe not 100 years from now. You never know.

• 19:06Speaker 01

  You never know. I'm hoping.

• 19:08Speaker 00

  When it comes to purpose and meaning, it's an interesting thing that we can talk about the idea of your company, somebody's working in a company and purpose and meaning from their company, or family. But deep down, I think people have something far more personal inside of them that goes beyond those things. Because those are things that essentially anybody can do. Essentially, anybody can start a family, anybody can.

• 19:34Speaker 00

  Go work for a company. But when you do something that is really personal and really life-changing, you've done, is your second book or more?

• 19:43Speaker 01

  Oh, it's my fifth or eighth book, depending how you count it.

• 19:47Speaker 00

  But these are big ideas. This took a lot of thinking and I relate to it because I've had to do it in my own existence. That's a transformation in of itself, right? That's a lot of purpose and meaning. And again, I feel like I've done this myself so I can relate. But when you put out a book that has a title that kind of tells you the subject matter and the conclusion all in the title, that's not easy. And what's fun about it, the meaning from that becomes really deep. And perhaps why, depending on how many readers you have, and I know with the experience economy, you sold a lot of books. So, you know, I don't think you're the kind of guy that wakes up and says, let me just write a book and just fill a niche about something. Let me write the latest HR book or the latest leadership book. I know you don't work like that.

• 20:30Speaker 00

  So I think the fact that you do have that in you, pushing for the purpose and meaning, and I'm going to bring this back to the transformation part, is you get it, I get it, we lived it. There's other people, I mean, you could look at the most famous entrepreneur in the world right now. Obviously, someone like Elon gets it and Mark Zuckerberg gets it and Steve Jobs got it. These guys got it on scales that far legendary scale. But put the health and wellness aside, put the making money aside, the wealth, the transformation of somebody at the highest level to get to purpose and meaning on something that they've done, that's really, could be writing a piece of software, anything, music, I don't know. That's big stuff. That's heavy stuff.

• 21:15Speaker 01

  Like you said, I don't sit around and think about what's a subject and let's write a book on it. I'll tell you, my personal purpose in life is to figure out what's going on in the world of business and then develop frameworks to first describe what's happening and then prescribe what companies can do about it. The short version being frameworks are us, right? So that's what I'm about. I'm not like, you got some authors that are coming out with a book seemingly every six months on something. My ratio is every five years because it's A matter of coming up with those ideas, figuring out what's going on, and then it takes time to investigate them. And you're right, every book I write transforms me. Absolutely. I have such a higher degree of knowledge of depth on a subject. I always say you don't

• 21:59Speaker 01

  truly understand a subject until you have to write a book on it, because then you have to develop all the things around the edges that you haven't thought about to help figure out what companies really can do about it. And it's definitely a transformative process. And it's something I just get so much joy out of doing it. I get into flow and I'm writing and love it.

• 22:17Speaker 00

  Mahaly chicks them a high. I never got him on the podcast.

• 22:21Speaker 01

  No, man, he would be a great one.

• 22:23Speaker 00

  He passed, unfortunately.

• 22:25Speaker 01

  Yes, the guy who coined the term flow.

• 22:27Speaker 00

  Exactly. I've not had to say his name for a very long time, so I'm proud of myself for just saying it correctly.

• 22:33Speaker 01

  Yes, it's a very difficult name to say.

• 22:35Speaker 00

  Back to my big picture idea of your purpose and meaning. And here we are, me and you, two authors talking. And again, there's all kinds of disciplines that could find purpose and meaning. I guess it's back to my fitness example. There's almost a part of me where it's like, yes, I see this title of your book. I see what's in your book. And I'm like, yes, this is 100% to me. And then you raised the idea of, okay, bigger picture, purpose and meaning, helping people to get to their own outcome of purpose and meaning. But then there's a side of me that also says, if they're not really going down that path to some degree already, if they're not primed to some degree already, I wonder how many people would be

• 23:16Speaker 00

  open to, for example, if they wanted to be a bestselling business author like you, how many people would really be open to if you sat them down and said, you know what, I'm going to transform you into a bestselling business author. How many people would really be willing to listen and act and follow everything you're saying?

• 23:34Speaker 01

  There are companies in that business, often very small or even individual people companies that will do that. I was going to say do it for you, but to do it with you to help transform you into a business author. But it's not something everybody is capable of. One of the things you need to do if you're a transformation guy, you need to have like a triage process, right?

• 23:54Speaker 01

  Somebody can come to you and say, I want to become a business author and they just don't have the experience. They don't have the background, they don't have the temperament, they don't have the writing skills to be able to do that. Or the last thing you can overcome even without AI. And so you need to think, is this how I want to spend my time with somebody who probably isn't going to make it. But if you do decide, yes, they can do this, then you need a diagnosis, right? To really understand who they are and what they want to become and how you're going to take them down that path. You may have a standard process, but every person is unique. You can't possibly do the same things for everybody and expect to get the same results because they just come in it with too much different background and knowledge and emotions and so forth. So it's a really a process that you have to go through in order to then to even start the process.

• 24:39Speaker 01

  Sometimes you got to send them someplace else to get ready. One of the examples I put in the book, which I love, is actually the US Army has a lot of people that want to be in the army, but they can't meet the physical requirements, perhaps pass the intellectual tests as well. And so they actually have this preparatory school that they take them to. And it's like a 12 week program and they keep exercising and putting them through. It's a pre boot camp and every three weeks they can, and maybe it's every week, they can test. And if they pass the test, they immediately go into the army. And over 90% of the people that go through this do eventually make it, but they're not ready when they come to the army. You have to get them ready to even pass the minimum requirements to be in the army. And then they can join and they wouldn't meet their numbers without this.

• 25:23Speaker 01

  So you think about that in other industries, other places, like what do they need to do before they can think about this particular transformation that they say that they want?

• 25:31Speaker 00

  One of my favorite expressions, process versus outcome. Have a good process, you can't necessarily control the entire output. In my trading world, for sure, you can't promise a return. You can put people in the right structure, the right system, the right process, and they can take the right steps, but it doesn't mean you're going to make money every day or every month or every year. But I do, on many spheres that I can think about and imagine in your work, I don't run from the idea in my own mind of the outcome as a product. What are some good examples where you could see that would work right now, today? You know, someone want the transformation, they're essentially paying for the outcome.

• 26:14Speaker 00

  Again, that gets back to like, okay, if I'm going to give you the outcome, then you have to commit to me to do what I tell you to do. That's part of the trick here too, right?

• 26:23Speaker 01

  I'll mention a quick story then give you a bigger example. When I was first thinking about transformations, even before the experience economy book came out, I was a very bad golfer and wanted to get better. And I was working on it and I went to a number of times to a, you know, golf pro at the local Muni golf course that I went to. And I was paying him, it was way back when, let's say 30 bucks for a half hour lesson. So it's basically, he's giving me an experience because I'm paying for the time that I spend with him. One time he asked me what I did for a living. I talked about the new book and how the experience guy was coming out and about transformations. And I had this brilliant idea and then pop up ahead. I said, you make your money off of me whether I ever actually improve or not, right? As long as I pay this fee, right? You're doing it. You're getting your money. But what I really want to do is become a single digit handicap golfer.

• 27:09Speaker 01

  And at this time I was in, I don't feel golfing, but I was in the twenties, which is just mediocre golfer. And I said, tell you what, let's cut your fees down from $30 to $15. But if you get me down to single digit handicap, I'll pay you, I don't know, let's say $4,000. Just some amount off the top of my head. And he stepped back and looked at me and I'm sure what was going on in his head is what we just talked about. Is this person capable of becoming a single digit handicap golfer? Then he said, okay, then here's what we gotta do, right? You've got to come in and we've got to have a lesson, right? Every single week, I'm going to give you a practicing regimen. You need to practice at least three times a week. I don't care how often you play, but we're going to practice three times a week. I'm going to tell you exactly what to do. We're going to go on the course and I'm going to be on the course with you, teach you course management and these sorts of things.

• 27:53Speaker 01

  And these were things that he never suggested when he was fat, dumb and happy to get his 30 bucks for a half hour lesson every week. And so it really changed how he thought about it and how he approached me. Because his income was going to be dependent on my outcome. And that's what it is. It's really a catalytic mechanism. So another great example that I love, it's B to B to C, so you can see it from both sides, is the state of Texas in the U.S. Went to its technical colleges, like two-year degree colleges, and said they wanted them to put some of their funding at risk. Because what would happen is that students would pay a tuition, but it doesn't cover all the costs. And so the state funded the schools. And Texas State Technical College said, okay, we'll do a Hundred percent, which wasn't what they're expecting.

• 28:35Speaker 01

  We'll put a hundred percent of our funding from the state at risk based on how well we actually teach students. Cause the state paid off of what was called a student credit hour. You sign up for a course, it's got so many credits, takes so many hours to do that. And they would pay for that whether the student ever actually showed up in class, whether they learned anything in class, whether they made a difference to them, whether they ever got a job or not. And what Texas wanted was people with jobs, productive citizens. They had to then completely change everything that they did in order to make this work. They got rid of some majors that weren't very efficacious in terms of getting jobs. They added in some that were more hot. Some of the professors didn't like being measured on how well they actually taught, so they left. Other professors said, yeah, I'm fine with that. And they came in and they started working with students during them, had student advocates.

• 29:20Speaker 01

  So they'd work with them while they were there and even pass while they're there. They started talking with employers before they graduated, started leaving it to the students themselves. And it worked wonderfully. They did so well that their average return from the state, they got 35% increases annually. And how much they got from the state because of this, which allowed them to expand. And they made so much money in doing it that way, that they began to offer student tuition guarantees. That if they graduated and didn't get a job in their major, within six months, they got their entire tuition back. That's what paying for outcomes does. It's a catalytic mechanism to ensure the paradox. You can't actually guarantee anybody will change because they have to change themselves.

• 30:01Speaker 01

  But the paradox is, but if we charge for guaranteeing it, then the chances it happens goes way up.

• 30:06Speaker 00

  That is right where the rubber meets the road. Cause ultimately, if you start putting down more of your bucks, it gets a lot more serious fast. More of your bucks and your time commitment. It's not just money, it's time commitment as well.

• 30:18Speaker 01

  It's really all about the money and the time that you spend and invest. So I always say commodities, goods and services provide time well saved. Do something for me that better than I can do it myself and save my time. Why? So I can spend the money that I save on and the time that I save and spend it on the experiences and transformations that I more highly value. Where experiences provide time well spent, right? That I'm paying you to spend my time in that experience. That's what charging for time does. And then transformations offer time well invested. I'm now investing my time and I expect that time to pay dividends now in the future and becoming a better me.

• 30:54Speaker 00

  Can you imagine if this way of thinking, this framework that you're putting on the table, if this was foundational to, for example, something like American public schools? It would quickly expose what American public schools are, which is they're not schools. I don't know what they are. They're ways to slosh around money because there is no outcome coming out of a lot of American public schools.

• 31:19Speaker 01

  They're so often just babysitters.

• 31:21Speaker 00

  Exactly right. So the accountability issue here is tremendous. I would imagine in the future, if this type of incentive outcome-driven thinking, if this could work its way into the hands of more politicians, they would like it. Now, of course, there's going to be, a lot of politicians aren't going to like it because they're going to know exactly what it means. It's going to mean less free gravy train money running around and whatever. And like you said, a lot of these institutions aren't even about school anymore or any transformation. They're just about babysitting and there are jobs programmed for teachers, honestly, in many ways. I love the accountability of going down the transformation path. Because you know, the experience path is kind of interesting in the sense that you're like,

• 32:04Speaker 00

  okay, I'm a consumer, I've got disposable cash and I want to pay for the experience. And I know this isn't necessarily what you mean, but in a way it feels more of something like entertaining or fun or something. But when you take it over the mountain, so to speak, you go to transformation, it's Pandora's box, man. It's like game on. The box is open and it's like, it forces everybody into a different conversation.

• 32:27Speaker 01

  It changes everything about what you're talking about. And it really brings a new mindset to things, particularly that inputs don't matter, only outcomes. And you need a level of accountability to be able to make sure you're doing the right things for your customers, whether they're students or consumers or businesses or other organizations or even communities in society overall. And it's one of the changes that I really hope that this book makes is to get people to understand that. And education is a perfect one to think about. That's in that knowledge and wisdom sphere, but so often people Aren't learning and because teachers, instructors, even professors aren't being held accountable for that learning.

• 33:10Speaker 01

  And because the organizations aren't being paid based off of outcomes. And it just changes everything when that happens.

• 33:18Speaker 00

  How do you see these large language models that currently exist today? What we're calling AI. How do you see this fitting into the transformation economy?

• 33:28Speaker 01

  In a number of ways, and like you say, what we're calling AI. If anything, I like better the term IA, intelligent augmentation. We say artificial intelligence, we think it's about automating people and get rid of jobs. No, it's about augmenting what they can do, taking away some of the lower level. Things so that they can spend their time on higher level thought activities. And provide more value for the companies. It's going to be one of the biggest boons for employment. Just like all the big technologies have been over time. Because it enables so much more productivity out of people. One of the things it does particularly well hearkens back to my first book, the one before the experience economy, which was called mass customization. Which is about efficiently serving customers uniquely, giving them exactly what they wanted, a price willing to pay.

• 34:13Speaker 01

  And AI turbocharges that AI can understand all of the signals coming out from customers, all the things, remember everything they've bought in the past. Things that they do, particularly if we use it not as a large language model, but as a personal language model. In terms of people having their own AIs that really know who they are and what they want. Their desires, their needs and their aspirations. And then it makes it much easier to be able to put together and design a set of experiences. It's the basis of what I call transformation platforms. That do put together everything needed to help people achieve their outcomes. So that's a huge factor of it is that it efficiently allows us to efficiently customize. And then another big factor, surprisingly, maybe it's not surprisingly, I don't know if you ever heard of Eliza?

• 34:58Speaker 01

  Computer counselor program. It's from like the 1960s that it didn't understand a thing, well, no AI understands anything. But you would say something and they would say, well, how does that make you feel? And you mentioned this and they've just repeated a noun that was in it and. What might you do with that? And these sort of just very basic, generic questions and people got value out of it. They thought like, maybe they, hey, there's a real counselor here. But AI is today is so much far beyond that. And it actually makes good counselors. It does good at coaching.

• 35:29Speaker 00

  For a quick health information check, I don't think I've shared this on the podcast before. Last summer, I'm living in Asia and there was this, you know, I probably had like a soda every couple of days or something, but there was this Japanese grape soda that I tried just randomly. And the Japanese are so good with their sweets. I was like, oh, shit. I got addicted to it. And here I am working out every damn day, probably wasting a lot of time burning off the calories from this stupid grape soda. But all of a sudden, I started to realize I was like, my big toes were aching.

• 35:59Speaker 01

  Did they turn purple?

• 36:01Speaker 00

  They didn't turn purple, but I tend to think that it might have been some mild case of the gout. And so I went cold turkey on soda. I have not touched a soda for 150 days and I've got no issue at all. The interesting thing was though, was I asked AI, I said, hey, I described my situation. I added this Japanese grape soda. And they're like, yes, that actually could be far worse than just having a Coke per day. And I figure the sugar was probably the same. Anyway, it's just fascinating that there really are some great little advantages to being able to ask a simple question and not run off to the doctor or something and self diagnosis, you know?

• 36:39Speaker 01

  And in particular, if it remembers longitudinally, right, all the past interactions is the key. It can then help you move towards a particular direction, ideally with human coaches as well, right? You don't want to become your personal trainer, right? But to be able to between sessions, be able to remind you that you have to do these reps of this stretching or whatever, and to answer questions exactly like you asked it and to help further your progress along encouragement, inspiration and to do's, I think it's very good at.

• 37:10Speaker 00

  Just as a side tangent, something amongst two authors I'll share, and maybe you've seen this as well, but I wasn't really paying attention to AI until a couple of years ago, and now I do. And my team and I, there's some very interesting tools that can be used. I thought to myself as an author, you know, I'd love to have some of my books analyzed, and maybe they can be improved or whatever, or even starting from scratch on new stuff, like having this kind of like side brain on your side. There's no persistent memory to these things. There could be persistent memory if we're talking about some understanding the basic health of a particular individual. If you think about how many words that is, it's really not a lot. However, if you start bouncing around with 100,000 words, like

• 37:51Speaker 00

  a book, all of a sudden, the AI just craps out. Like, it's the most annoying thing in the world, because I realize now that what I want to use AI for does not exist, doesn't exist. And it's all a persistent memory issue. So I think you're making an interesting point where it's like the persistent memory for us having basic or even complicated interactions with AI, that memory will probably be okay. Throw 100,000 words and forget big companies throwing millions of words at it. I don't care what the processing power is. We're not there yet. We're not even close.

• 38:25Speaker 01

  I know authors who have done this, and I want to do this, which is really to create an AI of myself. You and I both have books that have lasted for decades. And 100 years from now, yeah, I expect people to continue citing the experience economy and the transformation economy. And so I want an AI around that does take everything I've ever written, although there's some things I'd say, I ignore this, that I got wrong, and video, the presentations that I've done, the podcasts that I've done, and be able to suck it all up so that you can basically ask it, like, what would Joe say about this? Here's a particular company situation I have. Am I able to go into the transformation business from here? And if so, what would I have to do and have it be able to respond cogently about that and give people advice?

• 39:09Speaker 00

  It might very well be responding cogently 1,000 years from now, because that might be the only thing that survives is the Joe Pine AI or the Mike Covel AI. Those will encompass- Anything that we've done, I'll dump a podcast into it, a bunch of books into it. Like you said, speeches and stuff like that. The biggest one that I would love to dump in, it's such a mess. My emails, my emails going back to the nineties. That's some of the gold in there that it's just such a buried mess of stuff. And it's like across different platforms, we're talking hundreds of thousands of emails. There's probably some stuff in there. I would not want the AI to see either, which scares me a little. You know, assorted girlfriends at various times, there's probably stuff in there that I didn't get deleted.

• 39:50Speaker 00

  The next thing I know, AI sucks that in and a thousand years from now, someone's laughing about some trading book author. Who's talking about some girl that he knew from Macau.

• 40:00Speaker 01

  You want to have at least six degrees of freedom from Jeffrey Epstein in your emails.

• 40:05Speaker 00

  I think I've got more than that. I've never heard anybody, I've got a lot of Wall Street people, but no one's ever mentioned the name to me. Of all the Wall Street people that I've talked to in a lot, I've never heard his name. I don't think he was actually a Wall Street player. I think he was just a money launderer or something. I don't really think that he had a real skill at anything. I think he was just a front man for nefarious activities. At least that's my read on it. But yeah, I never heard his name mentioned and I've talked to a hell of a lot of hedge fund people. So never heard his name mentioned.

• 40:33Speaker 01

  One of the top execs, I think the chief lawyer of Goldman Sachs is embroiled in this right now and some others. So there are some, but.

• 40:40Speaker 00

  Well, with three million files, you got to figure there's going to be a lot of people and bless Mr. Gates, but he's got some stuff coming out there. I wouldn't want that stuff out there about me and his wife, his ex-wife thrown under the bus. It's a wild world. And you know what? This is actually to bring it full circle as we wind down. Right now, we don't have life extension. Everybody wants, not everybody, but I think where you're going is going to be something that a lot of people want. They're going to want the transformation. At the end of the day, you don't want the transformation. And then one day you wake up and you're in some kind of database with nefarious stuff going on around the world. So I think that's another issue here too, which is like, how do you navigate a life and aspire to certain transformations? But then also, you know, keep yourself going on the straight and arrow because you don't want to end up

• 41:26Speaker 00

  all of a sudden spending 30 or 40 or 50 years doing something. And the next thing you know, someone drops much emails out about you and everything's gone.

• 41:34Speaker 01

  Gets back to the meaning, right? It's how do you get meaning in your lives? And it's people that do that sort of stuff that lack that meaning. And so they go after their latest hedonistic impulse.

• 41:44Speaker 00

  You would think people that have got the $100 billion fortune would stay motivated, but maybe some of them don't. Elon does, apparently. Elon's apparently a very motivated man. I don't know how many businesses he's involved in, but I guess I can't put myself in those shoes. You know, if you all of a sudden feel like you're the master of the universe and you have nothing left to achieve, that's a very narrow case of study. There's only so many people in that situation.

• 42:07Speaker 01

  Right. You think you're untouchable and people always are so obsequious. They just give you everything that you think you can get away with anything.

• 42:13Speaker 00

  Well, listen, I love the idea of the transformation. I think it's a fantastic framework. Even if you didn't write this, I think it's the natural direction that where we would go. Because I think it's like one of these things, if you think about how ideas spread today, it's like, once it successfully enters the understanding of people, other people are going to want it. It's kind of like the iPhone. Once people saw the iPhone, they were like, I want that. And I think there's a lot of that to this. I don't know how it's going to play out exactly, but I think a lot of people will be like, I want that.

• 42:47Speaker 01

  And now the capabilities are there that companies are going to be around to help you get that, whatever your own personal that is. And so on the personal side, think about what your aspirations are. Think about who you want to become and how you might achieve that. And on the business side, recognize the opportunities that exist and helping people achieve their aspirations and becoming who they want to become. And therefore, you need to transform your company to become one that can supply that opportunity because there's no greater economic value you can create than to help somebody achieve his aspirations.

• 43:20Speaker 00

  Well said. The book, The Transformation Economy: Guiding Customers to Achieve Their Aspirations. Good stuff, Joseph. Where can people find you? If they can't find the book, then they don't deserve to buy it. Honestly, these days, if you've got to tell people where to buy a book, that they probably shouldn't be reading books. They should be doing something else. I don't know. Do you have a website or anywhere you want to send people to?

• 43:40Speaker 01

  Yes. The website is Strategic Horizons, with an S, strategichorizons.com. And you can always also link in with me if you want as well. Just Joe Pine.

• 43:50Speaker 00

  So you're a LinkedIn guy?

• 43:51Speaker 01

  Yeah, I am a LinkedIn guy.

• 43:52Speaker 00

  Okay. Well, great stuff. Hey, please keep me posted in the future for any future work. I always enjoy talking to you.

• 43:58Speaker 01

  All right, Mike. I appreciate it. Thank you.

• 44:05Speaker 02

  I see a time when those awake will understand how to make money in up, down, and surprise markets. Whether a new trader or experienced, college student or financial advisor, protecting against a crash or just trying to make a lot of money, trend following offers everyone an answer in uncertain times. To get started immediately, send me an email, [email protected]. I will send you the right trend following steps to take, along with my free video. But if you want to buy and hold, trust the government and trust Wall Street, this is absolutely not for you.