Customer Reviews

The Future of Competition: Co-Creating Unique Value With Customers

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The future is here. Competition is getting tougher and customers are more difficult to please. On the other hand everything is connected, objects are embedded with sensors and software and information flows instantly to all corners of the world , thanks to the communications revolution. This book essentially looks at a networked world where customers and companies are inseparable and are constantly in interaction. In this paradigm, the framework of DART - Dialogue, Access, Risk Assessment and Transparency is introduced and the book proceeds to explain each of these in detail.

The word Co-creation will get included in your daily vocabulary sooner than you expect. Lots of diagrams and case studies are thrown into every chapter. But frankly, there is no concept that is radically different from some of the pioneering works on similar topics already published. To list a few :

-Customer.Com by Particia Seybold
-How to Grow when Markets Don't by Adrian Slywotzky
-The Innovator's solution by Clayton Christensen
-Adapt or Die : Turning your Supply Chain into an Adaptive Business Network by Bob Betts , Claus Heinrich
-Experimentation Matters: Unlocking the Potential of New Technologies for Innovation by Stephen Thomke
-Priceless: Turning Ordinary Products into Extraordinary Experiences by Diana Lasalle, Terry A. Britton
-The Agenda: What Every Business must do to Dominate the Decade by Michael Hammer

Most of the case studies in this book are repetitions from these or are similar in concepts or processes in creating value for ( or along with) the customer. The authors have duly acknowledged and referred to an elaborate list of books and articles under "Aids to Exploration". But my point is that after going through some of the key works listed above, this book fails to impress on originality.

Towards the end of the book, Knowledge Management is brought in as one of the strategic tools that can be integrated into the co-creation framework.

It is certainly interesting to go through the book though it is a combination of old ideas in a new packaging. Young MBAs will find lots of new jargon that can be put to profitable use in job interviews.

I was left with the feeling that all of this has been said before in one form or another, Where it was ' new' there are other who have already explored the space ( eg The Suport Economy by Shoshana Zuboff) There are two many big words hidding little concepts. The case studies are simplistic and look to the past rather than casting light on the future. This will be another 'fad" and like all fads find its place in the dustbins of business books

The content of this "text" is rich with pointers for those who will format strategic decisions in the future. However, it would seem to challenge the reader to probe the true value of the writers. As the reviewer from Dallas infers, the message is there but the packaging leaves something to be desired. As a university professor who teaches strategic thinking, I see this book as one of the reasons that executives and MBA students resist reading academic pieces: the task is greater than the payoff!!

I bought this book with a specific goal in mind - - finding specific examples of how companies are inviting their customers into the design of their products and services in innovative ways.

There is a little bit of that in here - - but you must muddle through poorly highly academic/esoteric/jargon-laden prose to find it (For example: "Thus, a key variable in the quality of the transaction experience is consumer heterogeneity").

Beyond that, the book goes way off focus at times, spending pages, for example, to discuss how a company built an information network that let its employees worldwide find a solution together for a particular customer problem. That is neither new, nor "co-creating value WITH CUSTOMERS."

Most disappointing of all - - there is lots of discussion about what companies are doing, but virtually no ROI info attached to prove that what they are doing is really better for the companies' bottom lines or shareholders.

What the authors are saying about the future of the relationship between companies and their customers is fundamentally true. It is a shame they did not engage a stronger writer and/or editor who could help them make their case more persuasively.

The authors have created a massive text that does not add much to the earlier paper they had published. The book has mainly two messages - maximizing customer experience is the basis of value creation and firms have to be experience-driven rather than product-centric. (BTW, these are the author's buzz words not mine <g>).

They cite cases that have no hard links to their messages but a tenous connection. There is no proof or metrics to show that this is the way to go.

I am sure the academics have the luxury of writing long books to sustain their tenureship compared to us real-world practioners, where things have to work now or in the next quarter for us to go anywhere in the corporate world. Sorry, academics.

These two professors from the University of Michigan Business School have written a great business strategy book. In our World, every products and services appear to become commoditized at the speed of light shortly after their innovation.

These two authors show how a business can differentiate itself and offer a substantial value added. By delivering superior goods and services, these will not be subject to commodity pricing anymore, and will reward their respective companies with premium pricing, higher ROE, and higher shareholder value.

The value added comes from involving the customer in co-designing the product he wants, and servicing the product with the customer's ongoing online feedback. The author gives several examples of companies that are using these practices of the future today. Sumerset Houseboats, a houseboat construction company, actively engages its customers in the boat designing process. Deere, the farming equipment manufacturer, has developed a GPS system that monitors and diagnoses farming equipment usage and equipment problems by its farming customers.

There is no question that such intense customer centric practices represent substantial competitive edges. The companies that can innovate and deliver such services at a profit will become the winners of tomorrow.

Imagine if nowadays you could truly benefit of such troubleshooting services on your home PC. Offsite, the computer manufacturer would monitor that the latest virus, bugs, spyware have not infected your system. If it did, it would clean up your system automatically and restore it to health. Would not you think that such a PC would be worth a 100% mark up over the current commoditized PC that typically falls apart within months after being attacked endlessly by bugs.

The type of co-created added value the two authors talk about is the best step forward in protecting the U.S. technological lead going forward. The companies that do that well will survive and thrive. The ones who do not will see their products being taken away by lower cost competitors delivering the same commoditized products utilizing Chinese manufacturing and Indian programming. Given that the two professors are of Indian origins, no one can argue they did not give us a fair warning.

This book is well written and very innovative. If you are an entrepreneur, business strategist, business consultant, MBA student or professor, this is a must read. If you are none of those, it is still a very interesting and important book showing a good roadmap on how the U.S. can maintain its technological leadership.

C.K. Prahalad must be getting a bit long in the tooth. Or perhaps he has had difficulty in recent years finding a co-author as talented as Gary Hamel. Whatever his excuse, his latest book is a disappointing throwback to specious management bestsellers of the 80s and 90s. Prahalad's book is long on clichés and short on insight. The central thesis of the book is a rehash of Kotler's better articulted work on the prosumer. Given all of their emphasis on "value co-creation" the book seems woefully short on profitability and ROI numbers. I couldn't find any case studies that showed the value in value co-creation. At the same time, truly innovative and competitive "value co-creation" businesses - Linux, Apache and the whole open source software movement which Microsoft now finds so threatening - are barely mentioned. Are we just to take the authors' word for it that companies adopting a "C-type" structure are automatically profitable? Hmm. Maybe it depends on whether these firms adopt "X,Y, or Z-type" management. Can lucrative consulting gigs be far behind?

Prahalad and Ramaswamy's book entitled, "The Future of Competition" was a work that energetically discussed the changing interaction amongst customer, product and producer during the early 2000's. Specifically, the authors examined the customer's relationship with the product and the company and how that relationship has and will continue to change. They stressed that businesses needed to adapt to the customers behavior in order to be successful. One of the ways companies could do this was by not only creating and monitoring the product monitoring the ways the customer experiences the product and the company itself. The important part is for companies to find ways that the customer is or can be a part of the experience during the many parts of the product life cycle.
The authors do a fairly good job with their use of examples and theory to support their arguments that the marketplace is changing to a customer focused from a company focused arena. I appreciate the use of numerous companies in their examples from Palm to international and lesser known medical companies. Additionally, the DART explanation that the authors used to explain the co-creation of value was an easy to understand model that was simple to understand and comprehend throughout the book as the authors put additional levels onto it.
However, even with all of the supportive examples that were used, specific reference to specific tools and products to harness the information about the changing consumer and their experience were not sufficiently mentioned. The usage of tools such as Analytics, Data Mining or Myspace that are utilized to understand and perfect the co-value experience were not included and this was a field that was growing in popularity during 2004. If he were able to identify those trends during the writing of this book I would be more impressed. This is all not to say that the mentioning of process improvements such as Six Sigma were not strong evidence of his theories, but they could have mentioned more of the possibilities.
Furthermore, the author tended to mention a change in the in the marketplace but these were things that companies may have already been aware of then. If I ask the question of whether or not he contributed something new to the world of customer value? I would answer that maybe in 2004, but as for now, the book is slightly out of date and the information is already understood by the general business world.

At the heart of C .K. Prahalad and Venkat Ramaswamy's book, "The Future of Competition", is a thought provoking look at the evolving relationship between consumers and the companies that sell to them. While traditional business models focus on the company choosing the products that they deem the market wants, Prahalad and Ramaswamy argue that the new way to do business and create value is through creating interactive and personal experiences with each consumer. These interactive experiences between company and consumer exemplify their concept of the co-creation of value.
The idea of co-creation can be directly related to the concept of customer relationship management (CRM) from the book, "Managing Customer Relationships" by Don Peppers and Martha Rogers. Peppers and Rogers state that CRM is a set of business practices designed to put an enterprise into closer touch with its customers in order to learn more about them and deliver the best value to each of them (2007). Similarly, "The Future of Competition" states that value is co-created when companies and consumers interact (Prahalad et al, 2004). This interaction creates a mutual relationship, allowing the company to incorporate consumer insights into their products and services. The authors of both books clearly recognize the importance of building consumer relationships in order to keep up with the rapid changing marketplace.
Further analysis of the book revealed that the theory of co-creation is not unique to a specific product, but to the entire consumer experience. Specifically, Prahalad and Ramaswamy look towards experiences in innovation of products, in the personalization of products and services and through networks where companies create multiple points of interaction with their consumers throughout multiple stages of a product lifecycle. Maintaining relationships throughout multiple points of interaction, or linkage, helps create value and often yields a loyal consumer over time (Prahalad et al, 2004).
Overall this book does a nice job of comparing the traditional role of the company versus the new idea of co-creation with the consumer. While many of the examples given in the book appear to be outdated (ex. Napster, John Deere), they provide a baseline for what is happening in the industry today and help you identify some more current examples of the theories provided.
One of the best examples of co-creation and the value that it creates is the new 2-D barcode system. 2-D barcodes interact with smart phones, enabling consumers to access data about any given product wherever they are. This new technology creates value to that consumer who can easily research and gather data about any specific product in order to make an informed decision before purchasing. In addition, retailers are finding the value in these systems because allowing consumers the ability to research an item and even shop the competition while maintaining in their store creates a trusting relationship between the consumer and company, ultimately leading to a loyal customer over time.
While I found the book a bit difficult to get through due to the particular writing style of these authors, the concepts are relevant to today's evolving marketplace and provide some good baseline, especially for someone who does not have a marketing or business background. Overall the message is clear. Consumers will be heard and if the companies that sell to them want to succeed, they will listen.

Caveat - I see most things from a marketer's prospective, hence, I read this book in that context. I think the ideas of Prahalad and Ramaswamy are the future of marketing. If you take a look at a few of today's successful companies, including Amazon.com and eBay for instance, you will see that one of the reasons they have been so successful is because they worked with their customers. I think the book should be required reading for anyone going into the marketing field.