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centralasian

___________________[PRO] experience co-creation :: Future of Competition



"[W]e are ... moving beyond the traditional "we produce, you consume" mindset. Customers help to create value by, for example, participating in product development, forming virtual communities, etc. Thus products and services become the foundation on which broader "experiences" are built.

[...] this is not virgin territory. Five years ago, for example, consultants Joseph Pine and James Gilmore made similar points in The Experience Economy.

But while Pine and Gilmore presumed that companies would stage-manage experiences - think of Disney theme parks - Prahalad and Ramaswamy give customers the role of co-producers.

из рецензии на их недавно вышедшую книгу The Future of Competition".

вся статья - под катом:

Book review: Consumers add value too
By Simon London
FT.com site; Feb 11, 2004

The Future of Competition: Co-creating unique value with customers
By C.K.Prahalad and Venkat Ramaswamy
Harvard Business School Press.

Management writers love nothing more than to declare that the next phase of capitalism is upon us. Not only does this help to sell books, but it also positions the author as standing apart from the hurly-burly, watching history unfold.

The Future of Competition, by corporate strategy wonk CK Prahalad and marketing professor Venkat Ramaswamy, is a prime example of the genre. Its central argument is that our established notion of how value is created - that companies create economic value, and extract a portion of it at the point of exchange with customers - is an anachronism.

The future belongs to companies that "co-create" value in partnership with customers, leading to nothing less than "a rebalancing of the relative influence of the individual and the large institution" that extends "far beyond the world of business".

This is portentous stuff. But should we take it seriously?

The authors are certainly serious people. CK Prahalad co-authored Competing for the Future (1994), one of the most influential business books of the 1990s. Both he and Prof Ramaswamy are tenured at the University of Michigan Business School, a serious institution.

Their premise is that while today's consumers are more informed, better connected and more active than ever, they are too often badly served by companies.

Prices have fallen and product choice has widened, yet customer satisfaction remains low: "The burgeoning complexity of offerings . . . confounds and frustrates most time-starved consumers. Product variety has not necessarily re- sulted in better consumer experiences."

This is hardly an original insight. In The Support Economy (2002), Shoshana Zuboff and Jim Maxmin explored similar themes. Their diagnosis was that while consumers were becoming increasingly individualistic, companies remained stuck in the era of mass production.

The husband and wife team (she from Harvard Business School, he a former CEO of Laura Ashley, the famously frilly retailer) went on to call for new forms of corporate organisation.

The next phase of capitalism? You bet.

Prahalad and Ramaswamy do not herald the imminent demise of the joint stock corporation. But they do predict its evolution - and challenge managers to think differently within the existing framework.

"Co-creation of value", their central idea, is not easily explained. No single case study points the way ahead. Instead, the authors look for clues across multiple industries: the community that formed around Lego's Mindstorms range of DIY robots; Napster, the online music file-sharing service; Harley-Davidson's efforts to build a community of enthusiasts around its motorcycles.

The common thread is that each of these companies has moved beyond the traditional "we produce, you consume" mindset. Customers help to create value by, for example, participating in product development (drug trials, testing "beta" versions of software) and forming virtual communities (Napster, Lego Mindstorms and John Deere farm equipment).

Thus products and services become the foundation on which broader "experiences" are built.

Again, this is not virgin territory. Five years ago, for example, consultants Joseph Pine and James Gilmore made similar points in The Experience Economy.

But while Pine and Gilmore presumed that companies would stage-manage experiences - think of Disney theme parks - Prahalad and Ramaswamy give customers the role of co-producers. Hence they are able to argue that the point of interaction between company and customer becomes not just the place where value is extracted, but also where it is created.

As Prahalad points out, there are echoes here of Competing for the Future, the book that introduced the idea that companies are bundles of skills or "competences" that can create competitive advantage.

Through the late 1990s, the idea was extended to include the competences of suppliers, distributors and business partners in a "value network" or "ecosystem".

Now, with The Future of Competition, Prahalad extends it again to include the competences of customers, too.

The next phase of capitalism? Well, let's just say that like all catchy ideas in strategy (think of "disruptive innovation", "demand innovation", "adjacency expansion") some managers will find it useful. Others will not.

The good news is that the grandiose tendencies do not spoil an otherwise thoughtful book. Just skip the bits that make you squirm - and think of it as co-creating value.
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