Companies can no longer bank on episodic breakthroughs but will have to constantly interact with customers and create total experience
Bangalore: C.K. Prahalad, professor at the Ross School of Business at the University of Michigan, is known for his creative, radical ideas on corporate strategy and business transformation.
From the classic Competing for the Future in 1994, to the groundbreaking Fortune at the Bottom of the Pyramid in 2004, to the New Age of Innovation in 2008, Prahalad has impacted the way many chief executives think and act. In his latest book, co-author M.S. Krishnan, professor of business information technology from the same school, and Prahalad argue that the two new pillars of strength in an organization are the value it creates for individual customers, and the resources it garners from a global network.
In Bangalore for a seminar on innovation, Prahalad spoke to Mint, saying that, increasingly, he's finding more examples of business innovation in India. Edited excerpts:
Innovation is an overused word today. How is your idea of business innovation different from others?
We are not talking about the usual reduction of cycle time, costs...We say that technology will not be a differentiator between rich and poor consumers; personalized experience will be. Companies can no longer bank on episodic breakthroughs but will have to constantly interact with customers and create total experience. And, since no company can create the total experience alone, it'll have to access resources from a global network. Our view of innovation is philosophically different from others as we operationalize it, we tell how to do it inside a company.
You've been talking of companies that already follow the new principles of innovation. Which companies or industries do you think ought to co-create but are not doing so?
All companies ought to do it; there's no getting away from it. I cannot name those who are not doing it, but as for the industry, I think financial services ought to do this most. By definition, financial services should be N=1 (one experience at a time) and, at the same time, if you want to provide credit and asset products, liabilities and balance sheet management of the individual, you need to source products from a wide variety of sources (R=G, resources it garners from a global network). Most of them are not doing so yet; they are trying to have the same standard products. But I think they are moving towards that; it's true of ICICI Bank Ltd and ING. But, sooner than later, all industries will get here. Examples from India show that it happens among the rich and the poor. It cuts across the entire pyramid.
Give an example that you haven't included in the book.
Jaipur Rugs Co. (Pvt. Ltd). It produces carpets one at a time and resources come from all overâ€”wool comes from China, Mongolia, Australia and New Zealand, and is blended with Rajasthani wool. Some 40,000 weavers and spinners, all underprivileged women from the villages of Rajasthan, are involved in this. You talk of shifting from a product-centric view of innovation to process-enabled personalized experience. But, the former is done by a limited group of people where financial resources needed are less; processes are difficult to innovate. That's why small and medium enterprises use standard processes. How do you justify the cost?
Two years ago, you conducted a research â€œboot campâ€ here where you looked for generalizable principles in Indian industry that could be transferred to other businesses. Have you found some?
Yes, a lot of them -like how to reduce dramatically capital intensity, how to adapt and synthesize new technologies, how to use advance science, like brain studies and human cognition.
You often say Indian companies innovate but don't realize their own innovation. Any example?
There are several. For instance, the human resource practices of the information technology industry, particularly in Infosys, TCS (Tata Consultancy Services Ltd) and Wipro, involve innovations in recruitment, training, intercultural competencies, expatriate management, et al. They do it somewhat differently, but they all do it. They have scaled up four-five times in as many years but their HR personnel have not increased in the same proportion. It's not easy to process 1.5 million applications.
Seeds for this book were sown when you wrote 'The Future of Competition'. Has any big idea generated from the present book?
I don't know yet. I do know that three-four years from now I'll have something new. It takes a long time to find a big opportunity; it takes about six months before you start formulating an idea. So, next time you see me, I'll probably know.
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