I’ve just watched C.K. Prahalad being interviewed on Business Week, talking about his new book “The New Age of Innovation: Driving Cocreated Value Through Global Networks” Prahalad talks about the new needs of innovation being driven by four big changes in the competitive landscape:

1. Global connectivity, where up to 4 billion people will be on-line

2. Digital technologies becoming more available through increased convenience and lower cost

3. Convergence of industry boundaries and technologies, e.g. a cell phone is also a computer a watch and a camera

4. Evolution of social networks

In Prahalad’s view this is driving big shifts in innovation away from industrial revolution thinking, where the key considerations of innovation were the form and product as the source of value, to a situation where one consumer has a very personalised experience provided from a concentration of a very broad range of resources. An example of this is the iPod, where a user builds his or her own very personalised experience while Apple (who don’t manufacture the device or prepare the content) facilitates this by bringing together a wide range of resources from aroung the world. This Prahalad, rather snappily, describes as “N=1, R=G”. He goes on to contrast this new model with the previous view of the world, highlighting three key differences:

1. While the product may be a small part of the experience, the key thing for the consumer is the experience.

2. This experience is co-created by the consumer. For example, Apple can’t tell you which content to play on your iPod. All they can do is provide a platform for you to chose the content. You become an integral part of the value creation.

3. The experience cannot be created without the collaboration of a wide range of different institutions, creating a whole eco-system of contributors to your personalised experience.

These three points contribute to the shift away from the old innovation approach of form being the unit of analysis and product being the source of value, the old innovation approach being epitomised by the Model T Ford. Prahalad argues that this new model doesn’t just apply to systems like iPod and iTunes but will also apply to other, less glamorous products such as tyres or shoes.

Prahalad sees two fundamental challenges for management:

1. To change the way we look at the world, to see our consumers as an active parts of the experience creation process. In this new world, there are two joint problem solvers the company and the consumer. What impact might this have on future business strategy?

2. how to change information management systems to match these shifts. He see this area as a major source of competitive value.

So, to summarise, if you’ve gone with this argument so far, our job as innovators becomes one of building new platforms on which our consumers can create their own experiences. This all seems to align well with the TRIZ evolution of the technological customisation system. The next step after this from a TRIZ viewpoint is that the system itself customises the consumer’s experience with no intervention required from the consumer. �

I’ve recently come across a couple of new books which ought to be worth a read. Currently, I’m in the middle of The Game Changer by A.G. Lafley, head of P&G and Ram Charan, a top management consultant. So far the main theme I’m getting is that to make innovation stick it should come from the top, consistently and with positive reinforcement. Credit due, for P&G I reckon the whole connect and develop initiative was quite an inspired change of direction in 2000, based on the very internally focused approach to R&D which existed in P&G up until then. The book is somewhat better than the review I mentioned before led me to believe. So far the book seems reasonably light on Innovation motherhood. Still, I’ve got a fair bit of reading to do as yet so there’s time for disappointment.

Another book that is on my reading list is the latest Gary Hamel book “The future of management”. This book is interesting because it oulines something I felt for a while, how organisations are most often less human that the people who work in them, less inspiring, adaptable, innovative and less engaging. Gary Hamel thinks this is due to the control systems, budgeting, processes and reviews that take place within large organisation, leaching adaptability and innovative thinking out of the very people who are critical to the future of the organisation. Hmm.. sounds a familiar enough story, doesn’t it? The book is sure to contain lots of other good stuff, sounds like a must read.

 

Finally, a book building on the message from the Game Changer - Innovation to the core by Peter Skarzynski and Rowan Gibson, pulls together a range of examples from leading innovative companies such as Nokia, GE, P&G and IBM to create a blueprint for how to transform your business and get Innovation into the DNA of your corporation. Interestingly they cover a systematic process for generating compelling insights. I wonder if it bears any similarity to the way I do it. I’ll have to buy it and find out.