Management Guru or Customer Experience Evangelist?
So, in our presentations for management types a quotation or two from sources they recognise really comes handy. More often than not these sources are either Steve Jobs or Tom Peters. Both share the rare honour of being celebrated figures in boardrooms as well as great champions of design. When a few months ago in a NY Times interview Steve said, “Design is not just what it looks like and feels like. Design is how it works.” Designers all over took notice and the quote instantly became a classic.
With so few design proponents in business circles it was quite a surprise when I came across the leading management guru CK Prahalad extolling customer experience as the new basis of value in an interview. This is a radical shift from the internally focussed idea of enterprise core competence as the defining element of strategy that Prahalad and Gary Hammel proposed and popularised in early 90s.
In 2001, Fast Company called Prahalad one of business world’s most influential professors and consultants and his new venture as a momentous personal risk. He had just founded Praja Inc. with a friend, investing personal capital to challenge his own principles. [He eventually sold off the company in 2003].
Dec 2003: C.K. Prahalad & Venkat Ramaswamy on CRM
Increasingly in the 21st century, Prahalad and Ramaswamy say, delivering a superior customer experience will be the differentiator between successful companies and also-rans. "The problem with CRM," Prahalad told CIO Insight editors during an interview at the magazine's Manhattan offices, "is it assumes that a company knows what to do to create value for customers. But this is not right. This decision cannot be unilateral. It has to be collaborative. You have to engage consumers, not view them as targets to be had, which is what today's CRM is all about—how to target a single consumer." What companies need to do instead, Prahalad and Ramaswamy say, is to figure out ways to engage customers as equal problem-solvers, so they can create value that is unique to the customer. ”The product is no longer the basis of value, the experience is."
What this means, fundamentally, is that the nature of the relationship between the company and the consumer is changing, [...] It's not happening in all the activities of the company, but it is happening at that point of company-customer interaction.
Increasingly, consumers engage in the processes of both defining and creating value. It's not simply the company telling its customers, "Here's the product, take it or leave it." Now to build customer loyalty, for example, companies are using information technology to let customers inject their view of value into the menu of what companies have to offer rather than accept the company's menu.
The challenge is, how do you get line managers focused on the customer in this new and more dynamic context? They must experience the business like the customer does, in real time.
I believe that the next big round of development is not more information-processing capabilities, but more ability to creatively combine human intuition with information.
Jan 2001: CK Prahalad Interview
If we want more people to use the power of the Internet, we have to move away from an information-oriented view of the Web into an experience-oriented view. That's a tremendous opportunity for collaboration and for connecting people across cultures. [But] if you want to provide experience, how you present information is quite critical.
How do you get people who cannot read to participate? People think beyond just keywords, yet databases, websites and search engines are structured only that way. For example, instead of typing in a keyword for location, can we use a map, which is much more universal? We need to go from just the ability to search for information to the creation of knowledge and insight that people can act on.
Second, the interface has to be extremely user-friendly. We should be able to look at complex issues in an easily visualized form so that [users] don't have be highly trained. Third, we need to get a universal, iconic interface such as the signs you see in airports so that people do not have to know any specific language. It is going to take some effort and a lot of evangelizing before the shift from an information-oriented view of the Web to an experience-oriented view is widely accepted.
Notes and Links
 Fast Company profile of C.K. Prahalad
 Dec 2003 Interview
 Jan 2001 Interview
Read more of Prahalad in his latest book The Future of Competition