When Jim Gilmore and I published the original edition of The Experience Economy a-waayyy back in 1999, one of the (few) things people harped on was our insistence that in the future retailers, restaurants, manufacturers, and other enterprises would charge admission for experiences. We had two pseudo-examples (the Minnesota Renaissance Fair – essentially an outdoor shopping mall – and Universal CityWalk in Los Angeles – also essentially an outdoor shopping mall), but we had something far more powerful, a principle: You are what you charge for.
You are what you charge for!
It was a simple point of logic that what economically puts a company in the business of staging experiences was charging for the time customers spend with it. For that’s what customers – make that guests – value, the time experience stagers designed to be well spent. After all, you would never imagine going to a sporting event, concert, play, movie, or theme park without paying admission. Why? Because you know they’re experiences. Eventually other experience stagers would figure this out, and now there are scores of examples that once would have seemed unimaginable in, yes, retail, restaurants, manufacturers, and so forth.
That same principle holds true for transformations, as I end Chapter 1 with and wrote in the post You are what you charge for. For the fifth and final economic offering that means charging for the demonstrated outcomes your customers – make that aspirants – achieve. For inputs don’t matter, only outcomes. And until you make your income dependent on your aspirants’ outcomes, then economically, you are not in the transformation business (even though you may offer them).
For transformations, that means charging for the demonstrated outcomes your aspirants achieve.
Workforce Realigned
One organization that specializes in helping colleges, social non-profits, government departments, and other such organizations charge for outcomes is Social Finance, “a national nonprofit and registered investment advisor” that works “with the public, private, and social sectors to build innovative partnerships and investments that measurably improve lives.” Now that’s a transformational mission.
Here’s a free book chock full of organizations focused on outcomes
I first came across the organization when in 2021 it published the book Workforce Realigned: How New Partnerships Are Advancing Economic Mobility, coproduced with the Federal Reserve Banks of Atlanta and Philadelphia. You can download the full book at that link for free, and if you do you will find it chock full of organizations focused on outcomes, with many innovative ways of charging for them and/or gaining funding from government or investors based on the outcomes achieved (the flip side of the same coin). I have it in hardcover, and the book is chock full of Post-It Notes (more than one every 10 pages in this 300-page book) that enable me to remember key principles and refer to many of the examples.
My favorite one is Texas State Technical College, which participated in a Social Finance project with the State of Texas on performance-based funding in higher education. Here’s what I wrote about it, in full, in the You are what you charge for section of Chapter 1 mentioned above:
When the heads of each college and university were asked by the Chairman of the Texas Senate Finance Committee how much of their funding they would be willing to put at risk based on the actual outcomes of their students, everyone responded very little or none. Except for one: Texas State Technical College. Its response: “One hundred percent.”
TSTC, based in Waco, TX, with ten campuses across the state, always received funding, like most such colleges, based on “credit-hours” – the number of credits per hour of instruction that students signed up for. Whether or not, it should be said, they actually went to class, learned anything in class, graduated, or applied what they learned in jobs after graduating. The state of Texas, however, sought not the inputs of credit-hours but the outcomes of students who graduated and went on to contribute to society. In 2014, then, TSTC’s funding has been 100% based on a “returned value formula” that measures the contributions of graduates to the state, including in taxes paid. TSTC had to transform itself to align how it operated – including what and how it taught – to make this work, and its early results saw students placed in jobs go up 65%, a 26% increase in starting wages, a 117% increase in cumulative earnings of graduates, and a 45% increase in funding through the returned value formula. Its focus on student outcomes, propelled by its new outcome-based funding, proved so successful that Texas State Technical College turned around and offered students in select programs a money-back guarantee – another form of outcomes-based charging – where those who didn’t get a job within six months of graduation could get a complete refund.
What I love in particular is how focusing on outcomes for its funding led TSTC to charge for outcomes for its students with a money-back tuition guarantee!
Texas State Technical College gets funded on outcomes, and thereby offers students a transformation guarantee
Bookending this focus on charging for outcomes in The Transformation Economy is the penultimate section in Chapter 7, “Charging for Change”. Here I give four different ways of outcome-based charging, including transformation guarantees such as TSTC offers its students, which seems to be the most common based on the hundreds of companies I researched.
Workforce Realigned, Vol II
And now, just last week, Social Finance released a follow-up volume of Workforce Realigned with the subtitle New Incentives for Improving Workforce Outcomes. You can again download the entire book for free on that link, and will find it filled with more examples and updates on many of those in the first volume. (I’m waiting for a hardcover edition to reach me to read it in full, so I can make it chock full of Post-It Notes!)
I immediately went to a new article on Texas State Technical College, and this paragraph caught my eye on pp. 190-191:
When funding is tied to student success, innovation naturally follows. We began reevaluating our offerings, identifying programs with poor placement or earnings outcomes and discontinuing them when necessary. At the same time, we worked to transform our dual enrollment efforts, grouping related technical courses into three-course sequences that offer high school students job-relevant skills rather than isolated classes. Whether students continue with us at TSTC or enter the workforce directly, they arrive armed with real-world competencies and a clear sense of how their studies connect to actual employment opportunities. We also discovered through our earnings data that completing a degree or certificate correlates with a 20%–30% higher first-year income compared to dropping out. By sharing these figures, we motivated more students to stay enrolled and earn a credential — no longer just a bureaucratic milestone but an engine for higher wages and career mobility. In line with this emphasis on outcomes, we have worked diligently to accelerate program completion whenever possible.
“When funding is tied to student success, innovation naturally follows.” #Exactly
The author Michael Bettersworth, the Senior Vice Chancellor and Chief Marketing Officer at TSTC, also shared this new data:
Since adopting the value-added funding model, our graduates — and TSTC as a whole — have experienced significant benefits (see Figure 1):
• 34% Higher Starting Wages: Adjusted for inflation, our graduates’ starting wages have risen by over a third since 2010.
• 51% Increase in Combined Earnings: The total earnings of all employed TSTC students, which feed into our funding formula, have grown by more than half in that same period.
• 136% Growth in Returned Value Appropriations: Our annual “returned value” funding jumped from $47 million in 2016 to $111 million in the upcoming 2025 legislative session, supporting everything from instructor salaries to new lab equipment.
The payoff to enterprises to move to charging for outcomes is there. It becomes a more profitable business because, one, it creates more value inside of customers, and two, it keeps more of that value by making its income dependent on aspirant outcomes.
And because it’s a catalytic mechanism, it’s only when you charge for outcomes will you truly create the transformation offerings that ensure those outcomes.
Joe
© 2025 B. Joseph Pine II