Investing in the Experience Economy: When AI Begins to Replace Humans

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Hatched by Glasp

Sep 20, 2023

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Investing in the Experience Economy: When AI Begins to Replace Humans

In today's rapidly changing world, two distinct trends have emerged that are reshaping industries and challenging businesses to adapt. On one hand, we have the rise of the experience economy, where the value lies not in the physical products themselves, but in the memories and emotions associated with them. On the other hand, the advancements in artificial intelligence (AI) are raising concerns about the potential replacement of human workers across various sectors. While these may seem like unrelated topics, there are common points that connect them and offer insights into the future of business.

The experience economy has gained significant momentum, especially among millennials. Studies have shown that this generation, in particular, prefers spending money on experiences rather than traditional goods. The memory of an experience has become the product itself. With this shift in consumer behavior, businesses are rethinking their strategies and focusing on creating meaningful and memorable experiences for their customers.

One interesting aspect of the experience economy is the role of social media, particularly Instagram, in driving consumer behavior. Consumers now discover and search for experiences on platforms like Instagram. A staggering 89% of Instagram users have purchased something they first saw on the platform, and 61% of brands consider social media as their top acquisition channel. This highlights the power of social media in shaping consumer preferences and driving demand for experiential offerings.

However, while the experience economy has flourished in some areas, there is a growing concern about the decline of in-person interactions and the impact it has on social connections. The rise of digital platforms and the decline of traditional gathering places like malls have left a void in togetherness. It is now more important than ever for businesses to create opportunities for people to come together and forge connections. Research from Cornell University suggests that attending events and participating in experiential activities can increase happiness and enhance social bonds.

As businesses navigate the landscape of the experience economy, it is crucial for them to embrace a mission-led approach. The mission of every business should be to produce an experience worth remembering, to create memories that leave a lasting impact on customers. Maya Angelou's quote, "People will never forget how you made them feel," perfectly captures the essence of the experience economy. Businesses must strive to evoke positive emotions and create meaningful connections with their customers.

While the experience economy is flourishing, the rise of AI is causing concerns among workers in various industries. The fear of AI replacing human jobs has increased significantly in recent years. A survey by Gallup found that 22% of American workers now fear being replaced by AI, up from 15% just a year ago. This fear is not limited to a specific demographic, as workers with college degrees have also expressed concerns about the impact of AI on their jobs.

The potential impact of AI on the job market is significant. Goldman Sachs Research estimates that generative AI exposes 300 million full-time jobs to automation, with two-thirds of current jobs at risk to some degree. While certain industries, such as skilled trades, may seem less threatened by AI, others, like administration and legal, face a higher risk of automation.

To address the challenges posed by AI, it is crucial to invest in worker retraining and upskilling. However, the current levels of investment in these areas are insufficient. Only 0.1% of GDP is spent on helping workers retrain, which is less than half of what was spent 30 years ago. This means that businesses and the private sector must take the lead in providing solutions and opportunities for workers to adapt to the changing landscape.

The rise of AI also presents an opportunity for innovation and reinvention across various industries. Thinking AI-first and building products and services around the possibilities offered by AI can create an Innovator's Dilemma for established companies and open doors for startups to disrupt traditional markets. Every category becomes ripe for reinvention, and those who embrace AI will have a competitive advantage in the future.

In conclusion, the experience economy and the rise of AI are two transformative forces that are reshaping industries and challenging businesses to adapt. While the experience economy emphasizes the importance of creating memorable and meaningful experiences, AI raises concerns about the potential replacement of human workers. However, there are common points that connect these trends, such as the need for businesses to embrace a mission-led approach and the importance of investing in worker retraining. By incorporating these insights and taking actionable steps, businesses can navigate the evolving landscape and thrive in the future.

Actionable Advice:

  • 1. Embrace the experience economy: Shift your focus from selling products to creating memorable experiences for your customers. Invest in creating opportunities for social connections and meaningful interactions.
  • 2. Prepare for the impact of AI: Stay informed about advancements in AI and their potential impact on your industry. Identify areas where AI can enhance your operations and explore opportunities for upskilling and retraining your workforce.
  • 3. Think AI-first: Consider how AI can revolutionize your products and services. Explore new possibilities and be open to reinventing your business model. By embracing AI, you can stay ahead of the curve and remain competitive in the future.

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