Prahalad on customers as co-creators

It seems that the idea of viewing customers as co-creators of value is about to become one of the hot innovation concepts for 2004. This is simply because CK Prahalad (of "COmpeting for the Future" fame with Gary Hamel) and VK Ramaswamy are publishing a new book this Spring on this important and compelling subject - The Future of Competition: Co-creating Unique Value with Customers. I am mightily encouraged by this as it underlines that my PhD research into the development of firm capabilities for these more advanced "partnership-based" forms of value-creation and customer knowledge management will have real practical relevance and application in the years to come.

This is the precis of the book on Amazon:

In this visionary book, C. K. Prahalad and Venkat Ramaswamy explore why, despite unbounded opportunities for innovation, companies still can't satisfy customers and sustain profitable growth. The explanation for this apparent paradox lies in recognizing the structural changes brought about by the convergence of industries and technologies; ubiquitous connectivity and globalization; and, as a consequence, the evolving role of the consumer from passive recipient to active co-creator of value. Managers need a new framework for value creation. This book is about the emerging "next practices" in value creation.

Increasingly, individual customers interact with a network of firms and consumer communities to co-create value. No longer can firms autonomously create value. Neither is value embedded in products and services per se. Products are but an artifact around which compelling individual experiences are created. As a result, the focus of innovation will shift from products and services to experience environments that individuals can interact with to co-construct their own experiences. These personalized co-creation experiences are the source of unique value for consumers and companies alike.

In this emerging opportunity space, companies must build new strategic capital—a new theory on how to compete. This book presents a detailed view of the new functional, organizational, infrastructure, and governance capabilities that will be required for competing on experiences and co-creating unique value. This is the future of competition.

From this, we can see how the concept of "co-creative customer value" is part of the family of buyer-centric perspectives as traditional firm and industry sectors dissolve and begin to organise around individual value. I hope that with this book and the impetus and interest it will no doubt create, commercial organisations will not only recognise but also take action to acquire and manage new forms of customer knowledge. But to do this, they must first engage in a more open and humanistic dialogue with customers by adopting a common language and shared perspective on mutual goals.. Only then will they be able to develop the necessary co-creative value generating capabilities and knowledge assets to better sense emerging market opportunities and to more effectively “unlearn” established assumptions and practices for creating customer value in the future.

You can read more about my research programme into CKM competencies by downloading a recent publication of mine "Developing customer knowledge management competencies for superior market experimentation and organisational learning" from the Knowledgeboard website.
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Comments

[david foster]

The thesis (that customers are a key element in innovation) is a sound one; what's amazing to me is that there are still people around who don't understand this. Most real innovations involve a salesman, a customer, and a technical person--and a manager with the courage and vision to back what they come up with. (If Xerox had assigned a talented salesperson or two to Xerox PARC, history might have been very different).

This should all be obvious to any practicing businessperson; also, Tom Peters wrote about it in some of his earliest work.