?It?s Now the Era of Micro-Innovators?

Monday, May 5, 2008

For more than a decade now, Coimbatore Krishnarao Prahalad, or C. K. Prahalad, has been the best-known management guru from India. Professor of Strategy at the Ross School of Business, University of Michigan, Prahalad shot to fame with his book Competing for the Future, which he co-authored with Gary Hamel. Since then, Prahalad, who studied and taught at IIM Ahmedabad before moving (back) to the US to join the University of Michigan as Assistant Professor, has written four more books, including the latest The New Age of Innovation, whose global release took place on April 17 in Delhi. In the book, co-authored with colleague M. S. Krishnan (he’s Professor of Business Information and Technology), Prahalad, 57, argues that “we have finally reached the point where the confluence of connectivity, digitization, and the convergence of industry and technology boundaries are creating a new dynamic between consumers and the firm”. “Traditionally,” Prahalad and Krishnan write, “we have assumed that the firm creates value and exchanges it with its consumers. This firm- and product-centric view is being rapidly replaced by a personalised experience and a cocreation view of value.” The authors use a shorthand (“it’s not an equation,” Krishnan clarifies) N=1 and R=G to drive home what they call the two pillars of the next generation of innovations, where N=1 stands for one consumer experience at a time, and R=G for all the resources that need to be tapped from multiple vendors and around the world to satisfy the experiences of one consumer at a time.

A day before the book was launched in Delhi, Prahalad spoke to BT’s R. Sridharan on innovation and his own intellectual journey over the years.

Q. What is C. K. Prahalad really about? If one looks at, say, Michael Porter, one knows that he’s about strategy. Philip Kotler is about marketing, Noel Tichy is about leadership, and Clayton Christensen is about innovation. What is C. K. Prahalad about?

A. In 1987, I co-authored (with Yves L. Doz) a book called The Multinational Mission: Balancing Local Demands and Global Vision, arguing that global and local are essential parts of being a multinational. That has endured. That sparked a whole line of research. My sense is it’s an attitude of mind that you want to focus on the next practice and not the best practice. You never know fully whether what you are saying will happen or not because you’re amplifying weak signals and connecting the dots and trying to see a pattern, when the pattern is not fully evolved. So, whether it is the Multinational Mission book or Competing for the Future or Future of Competition or The Bottom of the Pyramid or this book, I’ve taken the same attitude.

Q. But each of your books also builds on the previous one. To that extent innovation, in a broad sense, emerges as the connecting theme.

From Day One, my work has been about strategy, so it’s not that I’ve strayed too much. And the work has been about innovation, it’s been about value creation or wealth creation, if you want to talk about it that way. But I’ve always strived to look at perspective that is somewhat different. So (in this book), the starting point for me is, if cocreation is taking root, if bottom of the pyramid is becoming a reality, on top of it you have connectivity, which eliminates asymmetry of information, digitization, which reduces dramatically the costs so that hi-tech is no longer the privilege of only the rich, if industry boundaries are cracking up, and then social networks are emerging, it must have something to do with value creation. And it must change the very locus and the sources of innovation because, today, instead of a small group of people sitting and thinking about innovation, you can have three billion people not only being micro-producers and micro-consumers, but micro-innovators. Will it happen overnight? Of course not. But everybody has an opportunity to contribute to innovation.

Q. Not every consumer may want to be a co-creator…

Co-creation by definition is voluntary. You can’t force a person to co-create with you. And co-creation is about experience and experience is always contextual and personal. You have this experience and you have your own reference group to give meaning to that experience.

Q. If co-creation is voluntary, then a company may or may not tap its potential value fully. Is there some way in which companies can engage this important consumer segment in co-creation?

A. There are ways in which you can engage them. One is, put the beta version out there. That’s what all the software companies do. The other one is active blogging, when people start talking about what are and what are the things that they want to see and bother them. That is another way of mining that information. Third is to pose a question and move it out.

Q. If you look at it, co-creation has been happening after a fashion ever since modern management has been around. For example, market research and capturing customer voice, it’s all an attempt at co-creation. What’s different about co-creation this time around?

A. Market research is about asking your questions and getting responses from, say, focus groups. But co-creation is not about asking your questions. It’s trying to understand their questions. That’s very different. Even CRM, which is supposed to be customer-focussed, is a very firm-centric view of the consumer. I am trying to understand you better so that I can take more money out of your wallet. It is not creating something together.

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Source: Business Today (link opens in a new window)