Monday, September 20, 2010

Book Review: The Future of Competition

MJ has always asked me to be a contributor to the blog and over the next couple of months I will be reviewing a few books that I have to read for my MBA class "Creating and Measuring Customer Value."  The first review is about a book entitled The Future of Competition: Co-Creating Unique Value with Customers by C.K. Prahalad and Venkat Ramaswamy.  Please comment below if you've read the book or if you have any questions about it.  Enjoy!

With the expanding use of technology consumers are finding more products and resources open to them than ever before. Consumers are no longer going to the local Ford dealership to buy the standard Model T, but consumers now have the option to shop from various outlets to customize their purchase to their specific needs. Not only are consumers able to customize their purchase, but, in just a few simple clicks, they are now able to review, discuss, and share their experiences with a wider community of consumers in the online world.

A shift in consumer behavior is taking place and in order for businesses to stay competitive in this evolving market they must adopt a consumer-centric model of value creation. In other words, with deep interactions taking place between the consumer and the firm (blogs, discussion boards, customization of the product), businesses must work closely with consumers to co-create value in their products and to keep the products relevant in a constantly changing market place.

In The Future of Competition: Co-Creating Unique Value with Customers the authors discuss the process of co-creation through four key building blocks: dialogue, access, risk assessment, and transparency. Prahalad and Ramaswamy discuss these building blocks at large in chapter two but they are briefly defined below:
  • “Dialogue encourages not just knowledge sharing, but even more important, new levels of understanding between companies and consumers” (31)
  • “Access challenges the notion that consumers can experience value only through ownership. By focusing on access to experiences at multiple points of interaction, as opposed to simply ownership of products, companies can broaden their business opportunities” (31).
  • “Risk assessment assumes that if consumers become co-creators of value with companies, then they will demand more information about potential risks of goods and services; but they may also bear more responsibility for dealing with those risks” (32). 
  • “Transparency of information is necessary to create trust between institutions and individuals” (32).

Many consumers become a part of this co-creation process by posting a review of a product on amazon.com, by watching Netflix through the Nintendo Wii, or by building their own computer on dell.com. These examples show the fruits of the co-creation process and also explain to us why the days of the standard Ford Model T are behind us. Throughout the book, the authors use insightful and relevant examples of businesses adopting this co-creation process; however, the chapters seem to be redundant and drawn out. Many of the concepts could be simplified and tend to be obvious to those who have a moderate knowledge of the technological world.

In all, many businesses could benefit from this book, especially small businesses that are looking to gain an extra step on competition, and for those business leaders who are unwilling to change with the times or those who might be nervous about diving deeper into the technological world. The future of competition is here, are you ready to follow?

CJ

4 comments:

  1. thanks for "contributing." i definitely like the co-creation process and knowing my opinion is valued by the manufacturing company. i'm a big user of online reviews from baby gear to drapes for the house, really helpful!

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  2. It does amaze me how buying items these days can both be so much more work and so much less work than it used to be depending on the situation. If I am buying something online, it is a breeze to look through many reviews. Yet, if I am looking at something in the store that is above a certain price point, I will want to look at the online reviews. So sometimes that makes at least one extra trip. i first find what the store is offering and for how much, and then see what the reviews say. ~lr

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  3. I think there is a new application available on smart phones that allows you to scan an item in a store and it will bring up reviews, comparable prices, and other information about that particular item.

    The book also mentioned that there are certain stores in which the sales associate has a scanner that will tell them if the item is in stock and what sizes they have in inventory (I think Target has something like this) and will also bring up suggested complimentary items (if I'm buying a particular dress shirt, the system would bring up ties/pants that I might also like).

    It's crazy how personalized some stores are getting!

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  4. I love you, Chris - Love, Mom

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