In their new book, The Future of Competition C.K. Prahalad, professor of business administration, and Venkat Ramaswamy, professor of marketing, both at the Michigan Business School, argue that building business value through operational processes, such as outsourcing and workforce reduction, has its limits. Instead, businesses should routinely collaborate with consumers to help create value.
In the book excerpt How to Put Your Customers to Work on CIO.com, the authors explain their concept and highlight the need for a new "frame of reference for value creation," which includes cocreating business value by leveraging today's well-informed consumers.
Why the shift? In many ways you don't need to look farther than the Internet. The Internet feeds consumers with unlimited opportunities to make better informed decisions; more easily access global resources, which broadens a business's competition; network with like-minded consumers; experiment with and help develop products; and provide "unsolicited feedback" to companies and each other. The authors contend that developing more personal interactions with these knowledgeable consumers will lead to more meaningful creation of value in a company.