HBR IdeaCast — "What You Must Deliver to Win Customers Today"

Episode Date: February 13, 2026
Guest: B. Joseph Pine II, Co-founder of Strategic Horizons and author of The Transformation Economy
Hosts: Alison Beard and Adi Ignatius

Overview

This episode explores the idea of the "transformation economy"—a new evolution in business where companies move beyond simply providing products, services, or even experiences, to actively supporting and guiding customers in achieving transformational outcomes and aspirations. Guest Joseph Pine outlines the dynamics and business models of this economy, why it’s emerging now, how it impacts various sectors, and how leaders can strategically approach transformation offerings.

Key Discussion Points and Insights

The Progression of Economic Value

• Historical Shifts: Pine describes how economies have evolved over centuries—from commodities, to goods, to services, to experiences, and now, to transformations.

  • Quote:

    "The basic framework...is the Progression of Economic Value. And it describes how value that companies create has changed over millennia...Now what's happening is...the fifth one is coming more to the fore. And the fifth one is...transformations." (03:31, Pine)

• Current Trend: Experiences, once premium, are in danger of commoditization. To stay competitive and non-commoditized, companies must innovate upward to transformational offerings.

Commoditization and the Need for Transformation

• Commoditization as Gravity: If a company stands still, its product or service will eventually become commoditized.

• Transformation Offerings: Businesses can create higher value and differentiation by guiding customers towards transformation—helping them achieve meaningful, aspirational goals.

  • Quote:

    "Commoditization is like the law of gravity. If you do nothing, then eventually your offerings will be commoditized." (04:29, Pine)

What Sets Transformation Apart

• Experience is Not Enough: While experiences can be transformative, true transformation requires structured, sustained guidance over time to help customers fundamentally become who they wish to be.
  • Quote:

    "Transformations...take a series of experiences...that take you upwards and to the right from where you are today to achieving your aspirations." (06:01, Pine)

Cultural and Psychological Context

• Rise of Aspirations: Increased prosperity, social comparison (especially via social media), and a human drive for self-improvement fuel demand for transformations.

• Widespread, Not Elitist: Initially, transformation offerings may be costly, but they spread—as did automobiles—from the wealthy to the broader market.

  • Quote:

    "It's a fundamental need of a human being to sort of improve, to want to get better, to have aspirations." (07:04, Pine)

Industries and Examples

• Key Domains: Health/well-being, prosperity/financial services, knowledge/wisdom (education), and purpose/meaning.

  • Examples:
    • Fitness Centers: Evolving from basic memberships to personalized coaching with outcome-based offerings. (09:31)
    • Medtronic: Moving from selling medical devices to outcome-based pricing—charging only if the device leads to a positive outcome. (10:00)
    • Consulting Firms: Shifting to success/outcomes-based pricing (e.g., McKinsey adopting outcome-based models in response to AI disruption). (11:00)

• Other Industries: Even less obvious sectors can participate by asking iterative "why" questions to uncover customers’ core aspirations—for example, turning accounting from data tracking to business transformation. (12:57, Pine)

The Leader's Playbook: Moving to Transformational Offerings

• Understand Individual Aspirations: Customers in the transformation economy are "aspirants." Personalized diagnosis and a "from X to Y" statement (where are they now, where do they want to be) are key.

  • Quote:

    "What I encourage companies to do in the book is to develop from-to statements...where are they today? What do they want to become?" (13:29, Pine)

• Design Experiences: Curate a series of experiences and necessary follow-through to realize transformation.

• Continuous Support: Recognize regression happens. Sense and respond to customer progress over time.

Role of Technology and AI

• Enabler of Customization: Digital tools and AI help companies personalize offerings at scale, making individualized transformation feasible.
  • Example: BetterUp (a coaching platform) uses diagnosis, algorithmic matching, and AI-supported interactions to boost client progress. (17:00, Pine)

Types of "Jobs to Be Done"

• Four Core Jobs: Functional, emotional, social, and aspirational. Pine adds a fifth: systemic jobs, which focus on integrating change into the customer’s system/life.

  • Quote:

    "Functional, emotional, social, and aspirational jobs to be done...Dave even added a fifth job...systemic jobs." (18:28, Pine)

• Sustaining Change: The follow-through phase ensures the transformation "sticks" after formal engagement ends.

Organizational Changes and Employee Roles

• People as Guides: Employees take on guiding roles (coach, counselor, curator) instead of merely delivering services. The focus shifts from inputs/processes to outcomes/results. (20:35, Pine)

Business Models and Pricing

• Charge for Outcomes, Not Inputs: True transformation businesses charge based on achieved outcomes—a radical shift from charging for time, products, or services.

• Success and Guarantee Fees: Models include transformation guarantees (money back if the result isn’t achieved) and success fees proportional to customer results.

  • Quote:

    "You are what you charge for...With transformations, what's important is that you charge for the demonstrated outcomes your customers achieve, because inputs don't matter, only outcomes." (21:46, Pine)

  • Example:

    • Texas State Technical University: Transitioned from funding based on course hours to funding entirely on successful graduate employment outcomes—leading to significant positive institutional change and student guarantees. (23:29, Pine)

• Risk and Commitment: While transformational pricing seems risky (success may be outside company control), the structure itself motivates both company and client to succeed. Most companies offering guarantees rarely pay out, as commitment and alignment drive better results. (25:25, Pine)

Surprising Success Stories

• Healthcare Sector: Mosaic Life Care redesigned around "life care" not just health care, focusing on patients' and employees' ability to “live life well.” This led to new physical spaces, life plans for patients, and a renewed sense of purpose.

  • Quote:

    "We helped them develop their own meaningful purpose...everything they came up with to be much more consumer friendly...develop a life plan for each one of their patients." (27:21, Pine)

• Fintech Startup (Simplany): Helps financial advisors pivot from standard financial planning to "life and legacy" planning, aligning financial outcomes with customers' broader aspirations. (29:45, Pine)

Notable Quotes

• "Commoditization is like the law of gravity. If you do nothing, then eventually your offerings will be commoditized." (04:29, Pine)
• "Transformations...take a series of experiences...that take you upwards and to the right from where you are today to achieving your aspirations." (06:01, Pine)
• "It's a fundamental need of a human being to sort of improve, to want to get better, to have aspirations." (07:04, Pine)
• "What I encourage companies to do in the book is to develop from-to statements...where are they today? What do they want to become?" (13:29, Pine)
• "You are what you charge for...With transformations, what's important is that you charge for the demonstrated outcomes your customers achieve, because inputs don't matter again, only outcomes." (21:46, Pine)

Important Timestamps

• [03:31] — Economic Value Progression Explained
• [04:29] — Commoditization as the Boogeyman
• [06:01] — Experience vs. Transformation
• [09:31] — Fitness and Medtronic Examples
• [11:34] — The Four Spheres of Transformation
• [13:29] — Diagnosis: Understanding Aspirations
• [16:39] — Customization, Technology, and AI
• [18:28] — Jobs to Be Done and Systemic Change
• [20:35] — Organizational and Employee Shifts
• [21:46] — Outcome-Based Pricing
• [23:29] — Texas State Technical University Case
• [25:25] — Risk, Guarantees, and Commitment
• [27:21] — Healthcare Transformation (Mosaic Life Care)
• [29:45] — Financial Sector Example (Simplany)

Memorable Moments

• The story of Texas State Technical University’s bold move to tie 100% of its funding to employment outcomes, illustrating transformation in practice.
• The healthcare example where organizational purpose and experience reshape patient and employee engagement.

Conclusion

The transformation economy is a paradigm shift where businesses succeed not by delivering simply goods, services, or experiences, but by working alongside customers to achieve measurable, aspirational change. For leaders, this means rethinking the value they deliver, how they charge for it, and restructuring organizations around true outcomes—enabled by technology and a radical empathy for customer aspirations.

Summary prepared for those who want the insights and practical guide from the episode without listening in full.