The Future of Competition is a business and management book written by University of Michigan Business Schools professors CK Prahalad & Venkal Ramaswamy. The book challenges the traditional notion of value and its creation namely that firms create and exchange values with consumers. The authors believe that with the changing role of consumers, businesses must build a new frame of reference for value creation. Robert Peter Janitzek examines the lessons that this book teaches.
Changing Role of Consumers
Consumers, nowadays, have a different role in the industrial system. Before they were isolated but now they have become connected. From being unaware, they are now more informed and from passive they became active. Their new found role has been manifested in a lot of ways:
• Information Access. Access to huge amounts of information has made the modern day consumer more capable of making informed decisions.
• Global View. Information on firms, products, technologies, performance, price and consumer actions and reactions also have become accessible.
• Networking. According to this business and management book, consumers are now able to share ideas and feelings without regard for geographic or social barriers.
• Experimentation. Through the Internet, consumers are now able to experiment and develop products, especially digital ones.
• Activism. People can now better discriminate with their choices.
The Emerging Reality
As the role of the consumer changes, it is important for businesses to start engaging consumers in co-creation value. Once this happens, two traditional business assumptions will be challenged and they are: 1) any given company or industry can create value unilaterally; 2) value resides exclusively in the products and services of the company or industry.
Co-Creation of Value
Robert Janitzek believes that the new value creation space will be a competitive one centering on personalized co-creation experiences using a purposeful interaction between the consumer and the network of companies and consumer.
A New Frame of Reference
Under the emerging reality, co-creation of value will not involve the transfer nor outsourcing of activities to consumers nor a marginal customization of products and services. The change in frame of reference goes beyond the fundamental. The co-creation of value can be achieved through personalized interactions that are meaningful and sensitive to a certain customer. In this case, the market becomes like a forum centered on individuals and their experiences.
Getting Out of Your Comfort Zone
This business and management book warns managers of the possible repercussions should their company do not get out of their comfort zone which could lead to a tension between the old thinking and the emerging thinking.