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12/08/2009 07:01:01 Daily, April 12
Transforming Your Business Model


About 400 years ago, the English metaphysical poet and noted IT strategist John Donne warned against losing touch with the times: "Ask not for whom the bell tolls. It tolls for thee." The bell is ringing frequently these days as companies in various industries stumble or fail because they can't keep up with change: changes in customer demands, in the pace of business, in the truly strategic use of technology, and in the rise of the power of the individual.

But help is on the way in the form of The New Age Of Innovation (McGraw-Hill, 2008), a seminal new book from C.K. Prahalad and M.S. Krishnan. The book is being published this month in India and will debut in the United States next month.

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The book is about the convergence of global networks and customer-focused strategies, and the profound impact that's having on modern business models. The authors explain that business value must be "co-created" with each customer individually, which they refer to with the formula N = 1. Also, companies must learn to leverage the global supply chain to access resources necessary to continuously innovate products and services, which the authors refer to as R = G. Together, those two formulas, N = 1 and R = G, are the basis and guiding principles of the New Age of Innovation.

Here are 12 powerful ideas from the book--and these are from only the introduction and first chapter. Individually, these 12 brief points are interesting but hardly game-changers. But taken together, they will help business technology leaders grasp the scope of the challenges facing their companies as they need to adapt to the demands of a consumer-driven world that spans the globe.

Visit our
New Age Of Innovation
blog site, where you'll find:
Discussion with authors C.K. Prahalad and M.S. Krishnan
An excerpt of the introduction and first chapter of the book
Video interview with the authors
Case histories of innovative business models
1. We noticed the emergence of newer business models, fragmentation of traditional organizational structures, centrality of information technology that enabled business processes, collaboration between then-unknown small, specialized Indian firms and considerably larger global firms, and increasingly complex demands on the managerial systems of established firms. ... We also recognized through our consulting and research engagements the significant gap between strategic intent and "capacity to act" in organizations. (Introduction, p. 2)

The challenge goes way beyond server upgrades, network latency, version creep, and so forth--the real issue is that, as customers demand more involvement and more customization from companies they buy from, the old models and processes described by Prahalad and Krishnan cannot support the load. Sound familiar?

2. So too is skin care personalized by the Pond's Institute at Unilever. The Pond's Institute measures your skin conditions and seeks your views about how you want to look and feel. The company allows you to suggest your personal skin-care budget, to which the company responds by developing a recipe of products for you. It is your personal portfolio. You co-created it. (Introduction, p. 3)

Is your company pulling customers into co-creation opportunities? Does your company have the mind-set to do it? Does it have the technical infrastructure to support this? Do your executives encourage this type of new thinking, or do they stifle such discussions as being outside your core?