The Hindu Business Line : `Ties with customers crucial'

Prof. C.K. Prahalad, Harvey C Fruehauf Professor of Business Administration, University of Michigan Business School, USA, with Mr V. Srinivasan, Chairman, W.S. Industries Ltd, and Mr Anand Mahindra, Managing Director, Mahindra and Mahindra, at the Partnership Summit 2004 in Hyderabad on Thursday. — A. Roy Chowdhury

Hyderabad , Jan.8

GLOBAL corporations need to adopt new practices. The design of `next practices' would be based on closer relationships with customers and the co-creation of value, wherein the experiences of customers would play an integral part in the value creation.

This was the case since product alone is no longer the basis of value.

Giving a brief insight into the Future of Competition, Dr C.K. Prahalad, Harvey C. Fruehauf Professor of Business Administration, University of Michigan, said implementation of best practices alone by companies would only result in the formation of mediocre firms and the Indian corporate sector needed to adopt strategies incorporating what he described as Next Practices.

An important pre-requisite for firms to meet the challenges of the new company-customer relationship paradigm would be to build more flexible, dynamic information backbones to capture and deliver real-time insights. Describing the five drivers that would change the process of value creation in the Indian context, Dr Prahalad said the first was the single serve revolution that had spread in the sale of products and enabled customers to shift between products and brands almost immediately and ensured that firms monitored changes in customer experiences and tastes.

The second was the evolution of the Direct-Distribution System that enabled firms to have thousands of entrepreneurs marketing their products around the country, particularly in the rural areas.

The third and an important factor was the phenomenal rate at which the rural areas were getting globally connected, via technology. This connectivity would ensure that the asymmetry that historically existed with regards to information and choice in the rural areas would diminish and thus force Indian companies to incorporate the experiences at the bottom of the consumer pyramid while designing products and market development strategies.

The fourth was the emergence of focussed chat rooms that enabled a strategist in any firm to immediately receive views and suggestions on an India from thousands of experts in the area.

And the fifth driver was the wireless revolution well under way in the Indian subcontinent. The ability to reach out and touch customers anywhere, anytime means that companies must deliver not just competitive products but also unique, real time customer experiences.

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