Prahalad and Krishnan Bring IT Out of the Closet

Filed Under (Business Books) by Rajesh Kumar on 21-07-2008

If there is one thing I would credit Prahalad and Krishnan for achieving via their latest book, it is to boldly bring Information Technology out of the closet to mainstream corporate strategy. Their book is around innovation and ‘co-creation’ a term used quite liberally in the book. You could read co-creation to mean value generation by collaboration(The New Age of Innovation: Driving Co-Created Value through Global Networks).

The leitmotif running through the chapters is what Prahalad and Krishnan call the new paradigm of R=G a and N=1. It essentially denotes global access to resources and talents (R=G) and ability to individualize experiences for consumers of various products and services. The R=G quest is generally attributed to optimize material and service costs and N=1 is the ultimate personal buying experience. No firm would have the wherewithal to satisfy the experiences of one customer at a time.They also point out that choice or no choice, the world is gradually moving towards this new paradigm. Think the personalized Google (igoogle.com) or the IT enabled personal tutor teaching math sitting thousands of kilometers away.

The implication of this simple to appear idea appear quite profound upon reflection. This model of getting access to the best resources (Wal-Mart =10 BN USD trade with China) and selling it to buyers they way they would like to buy – mass personalization- call for constant innovation and Prahalad and Krishnan have brought ICT into the central core of this innovation space. The message is very clear – the CEO cannot leave IT backbone of the organization to the CIO, the way he cannot leave the financial health of the organization to the CFO alone. In  other words ICT is not a service, but the core of an organization’s DNA. I like this idea.

The idea that has traditionally held ground is that IT is a cost , a type of price one need to pay to get the business going. Prahalad and Krishnan challenge this notion and emphasize that for innovation that may happen now and for times to come, ICT DNA of the firm need to sing in tandem with the corporate DNA of the company. Very bold indeed. And so marvelously persuasive.

And if you have read Nicolas Carr’s thought-piece ‘Does IT Matter?‘, you have an answer in this book. In simple terms one could say that Nicolas Carr had argued that IT would cease to be the source of competitive advantage since all firms have access to the same IT resources. Prahalad and Krishnan hit back so credibly on this notion and say just the opposite – IT (or ICT) is and would remains the source of competitive advantage. What is also interesting here is that while traditional corporate strategy has thought IT has being synonymous with ERPs, Prahalad and Krishnan notice the unbundling that is happening so rapidly, as one can notice through the applications plugging into Facebook. They also note the reality of the existence of proprietary systems serving the typical needs of  firms.

I really loved this book. If there is some grouse I have with this book it is the long narration on ICICI and ITC’s E-Chaupal- these cannot be cited as example of everything everywhere(BOP, Innovation etc etc) – I am sure there are other firms that have done amazing things worth getting that kind of coverage.

On the whole, very exciting indeed. Must read recommendation from me. And trust me, I had a very conservative take on Dr. Prahalad’s book on BOP.

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    About Rajesh Kumar. Rajesh is based in Chennai, where he works for Defiance Technologies in Marketing. The views on this blog are his own. Rajesh Kumar