Summary: The Future of Competition

Review and Analysis of Prahalad and Ramaswamy's Book

BusinessNews Publishing

• Verlag: Must Read Summaries
• Jahr: 2016
• ISBN:
  9782511016589
• Thema: Business
• Thema: IT Industry

The must-read summary of C.K. Prahald and Venkat Ramaswamy's book: `The Future of Competition: Co-Creating Unique Value with Customers`.

This complete summary of the ideas from C.K. Prahald and Venkat Ramaswamy's book `The Future of Competition` shows how commercial advantage used to be created by manufacturing a better product. Nowadays, value comes from the experiences of customers. In their book, the authors explain the basic principles of co-creation and how businesses can implement them in order to increase the value of consumer products. This summary will teach you how to make co-creation your starting premise, making your business more efficient, your customers more loyal and your profits healthier.

Added-value of this summary:
• Save time
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• Expand your business knowledge

To learn more, read `The Future of Competition` and find out the key to becoming a forward-thinking company and staying on top in the future.

Summary of The Future of Competition (C.K. Prahalad and Venkat Ramaswamy)

1. The new view of value creation

For today’s empowered customers, commercial value does not reside in generic products or services. Instead, customers will now pay more for personalized interactions or experiences that are meaningful and specific to their needs. Customers want to participate with vendors in the co-creation of value which is unique and tailored to their own individual needs.

In the economy of the future, the ability of a firm to co-create experiences with its customers will be the basis for a sustainable competitive advantage.

There has been a basic shift in the role of the consumer in the industrial system in recent times:

• As a result of Internet access, knowledgeable consumers are now prepared to make more informed decisions for themselves rather than rely on the suggestions of “experts”.
• Consumers now take a more global viewpoint because they are able to access information on firms, products and technologies from around the world.
• Consumer communities are emerging where customers share their experiences with others who are considering buying products or services. Consumers today are far more active and better networked than a few generations ago.
• Consumers are prepared to experiment with and develop new products – especially digital products – which are suited to their specific needs.

The net result of all these changes is that companies can no longer act autonomously. The consumer’s voice is now being heard and felt in the business system. Interaction between firms and customers is now becoming the basis for the creation of value. And as a result of those interactions, a new marketspace is opening up where value is being created by the delivery of a customer experience which is personalized and customer-specific.

Or put another way, there has now been a shift in the balance of power between individuals and corporations. Consumers and the firms of their choice now work together to jointly create value which is unique to the individual consumer while also being simultaneously profitable (and therefore sustainable) to the firm. This change is challenging all the traditional notions of value and the business processes by which it has been created in the past.

How commercial value is now being created

The future of competition will be built on a new approach to the creation of value. It will be based on an individual-centered co-creation of value between consumers and companies. Since millions of consumers will each have different preferences and priorities, the value creation process must be variable enough to accommodate an infinite variety of co-creation experiences. That, in turn, has some other far-reaching implications:

• Managers will need to attend to the quality of the consumer’s co-creation experiences and not just to the quality of their firm’s products and services.
• Quality will be dependant on the delivery of variable customer experiences rather than improvements in operational efficiency, the mainstay of management attention in the past.
• Since added value will be unique to each individual, the marketplace will become more of a forum and less like a shop display.
• Competitive advantage in this kind of environment will accrue to the firms which can couple innovation with customer experiences.
• There will be many opportunities for firms to co-create value in ways that will be fundamentally different from those which worked in the past.

“The key paradox of the twenty-first-century economy: Consumers have more choices that yield less satisfaction. Top management has more strategic options that yield less value. Are we on the cusp of a new industrial system with characteristics different from those we now take for granted?”

– C.K. Prahalad and V. Ramaswamy

“In the emergent economy, competition will center on personalize...