Chennai, Dec 25 (IANS) US-based management guru Coimbatore Krishnarao Prahalad says companies should join hands with customers to co-create products of value.”The role of the consumer has changed. Traditionally, companies create products based on their market research and exchange that for a value. But it has changed now, with customers equally involved in solving the problem,” Prahalad, 67, told IANS in an interview here. “Co-creation is not customisation, but it is personalised,” he said.
A professor at the University of Michigan and author of several books, Prahalad was in Chennai for an IIT alumni meet. He calls himself a serial entrepreneur and says his reputation is his risk capital.
“I generate ideas and sell them as books. If the ideas are of value to the customer, the book sells well or else it bombs. I risk my reputation,” said Prahalad.
Prahalad’s latest “risky” venture is “The New Age of Innovation”, co-authored with M.S. Krishnan that indicates corporates can co-create products by partnering with customers.
Increased connectivity, convergence of technologies, digitisation and creation of social networks, globalisation and ‘Googlisation’ of the world have thrown up an important challenge as well as opportunity for corporates across the globe, Prahalad said.
He said opening up borders for business increases competition but it also enables corporates to join hands with customers and co-create products of value.
But is not co-creation similar to the concept of open innovation?
“Open innovation is not necessarily co-creation as a company’s vendor may also contribute to the innovation. The concept is based on the principle that no single company has all the tools to innovate. So they will access others for innovation.”
For corporates to venture into co-creation, they have to have deep understanding of the product technology and the IT architecture. “The company’s managers should be able to anticipate and respond proactively.”
Agreeing that managers may not initially accept co-creation options, Prahalad said companies should train managers on the creation of new skills, develop suitable performance metrics to enable co-creation, and inculcate customer-centric focus.
He referred to the current global economic meltdown, saying, “Crisis is the time for nations and corporates to make fundamental change. In 1991-92, India faced the balance of payments crisis, which in turn resulted in the opening up of the economy.”
Though free market preaching countries are busy nationalising failed corporates, Prahalad said one ought not to “draw wrong conclusions” on the free market economy. “We need to strengthen the regulatory framework,” he said.
Prahalad also does not foresee foreign investors shying away from investing in Indian companies following the aborted attempt by software major Satyam to buy two companies run by sons of the promoter.
“Global investors are of the opinion that there is a reasonable level of corporate governance and one or two wrong incidents will not deter them,” said Prahalad.