A take on “The Future of Competition", written by C.K. Prahalad and Venkat Ramaswamy (Joep Peeters)

C2B2C. A term that might bring up a few flashes from one of the star war movies. It also catches the essence of the change in reasoning society has made, and is often still going through. Prahalad and Ramaswamy describe a-what we imagineers like to call- a paradigmatic shift in society. C2B2C: Consumers to Business to Consumers

According to Ramaswamy and Prahalad the role of the consumer is changing. C2B2C challenges the traditional role of value creation. Namely that value is created through the product offered by the supplying company. Examplified in the book, a camera used to be the vessel of value according to the logic many companies used to and still operate on. The book refers to these companies as so called A-type companies. Ramaswamy and Prahalad argue that the creation of B-type firms, new energetic “dot.com” firms, will not necesarily be the answer either. However this does not mean that although both the traditonal A type firm nor the enhanced “dot.com” B-type firm will dissapear. It will be the creation of the entirely new C-type firms, base on the logic that value is co-created through interaction between company and consumer , that will modify and change the A and B-type firms to what is required by society today.

Perhaps one could compare this change in business logic, with a more tangible and illustrative example on product level. Fundamental innovations are often created by other industries than the one creating the traditional format. An example: Take the music industry. One can see the tapedecks as a methapor for an A-type company, the cd-players as a B-type company, where the Ipod is somthing completely different and can be seen as a C-type company. As a result the I pod has forced the A and B-type companies to change and modify.

Therefore I found that this books goes one step further than “Blue Ocean Strategy”. The previous book I presented. The blue ocean is an A-type company, the Red ocean the B-type. But we need a C-type company to take us a step further. In my eyes this is the “new way of Swimming” . Not moving from one product to another, but changing logic.

This C-type in busines logic is based on the changing role of the consumer. Consumer to Business to Consumer. According to Ramaswamy and Prahalad the new role of the consumer manifests itself in the following ways.

· Information Access: With access to unprecedented amounts of information, knowledgeable consumers can make more informed decisions.

· Global View: Consumers can also access information on firms, products, technologies, performance, prices and consumer actions and reactions from around the world.

· Networking: “Thematic consumer communities,” in which individuals share ideas and feelings without regard for geographic or social barriers, are revolutionary

· Experimentation: Consumers can also use the Internet to experiment with and develop products, especially digital ones.

· Activism: As people learn, they can better discriminate when making choices; as they network, they embolden each other to act and speak out.

Perhaps another example to illustrate is the example of health care addressed in the book. Where we were used to just going to the doctors, blindly trusting whatever he described, the world has become immensely more complex. We now have so much choice between different treatments, and the possibility of researching ourselves what we prefer, that healthcare has become a deliberate choice in many cases. There are many paths to Rome, perhaps too many.

A similar development can be seen in business in general. That is, the enormous increase in the complexity of things. To relate to an example where we as Imagineers are more familiar with: If 20 years ago you would touch the first marble in a row of marbles, it would have a predictable effect on the next in line. Today that marble finds itself in a group of marbles, interconnected in so many ways that it has become nearly impossible to predict the following effects.

The complexity has caused an explosion of choices for consumers, yet yield less satisfaction. Managers have more strategic options, yet they yield less value.

One could therefore say it is not the offering of new choices(A-type), not the offering of co-creation by companies(B-type), but managing the experience of co-creation(C-type) that creates unique value to consumer and company. C2B2C.

Ramaswamy and Prahalad provide the DART-model in their book. This model consists out of four building blocks preparing companies for co-creation.

· Dialogue encourages not just knowledge sharing but even more important, qualitatively new levels of under- standing between companies and consumers. It also allows consumers to interject their views of value into the value creation process.

· Access challenges the notion that consumers can experience value only through ownership. By focusing on access to experiences at multiple points of interaction, as opposed to simply ownership of products, companies can broaden their business opportunities.

· Risk assessment assumes that if consumers become co-creators of value with companies, then they will demand more information about potential risks of goods and services — but they may also bear more responsibility for dealing with those risks.

· Transparency of information is necessary to create trust between institutions and individuals. Companies have traditionally benefited from an information advantage in the marketplace, but that asymmetry between the firm and the consumer is rapidly disappearing.

Based on the building blocks of the DART-model Ramaswamy and Prahalad have formed four dimensions of consumer wants and needs towards co-creation

· Consumers want the freedom of choice to interact with the firm through a range of experience gateways. Therefore, the firm must focus on the co-creation experience across multiple channels.

· Consumers want to define choices in a manner that reflects their view of value. Therefore, the firm must provide experience-centric options that reflect consumer desires.

· Consumers want to interact and transact in their preferred language and style. They want quick, easy, convenient and safe access to experiences. Therefore, in consummating individual choices, the firm must focus on the co-creation experience through transactions.

· Consumers want to associate choice with the experiences they are willing to pay for. They want the price of these experiences to be fair. Therefore, the firm must focus on the totality of the price-experience relationship in the co-creation.

To me personally this books deals with many of the fundamentals of Imagineering and co-creation as such. However, I would like to add one dimension. Ashraf Ramzy, guest lecturer at the Imagineering academy, summarizes the entire stream of thought to a great extend in my opinion. We want, we need, we long for a story. A story is what brings meaning to our lives, a story is what binds us to our roots, to our soccer team, to our country, to what we are. As a company and as a consumer we play our roles in many different stories. In order to participate, in order to co-create, in order to create meaning, we need to have something relevant to tell.

In a continuously increasing complex world it are the stories that create meaning. I specifically like the concept of storytelling so much because it humanizes business. I strongly belief that a business should be run like you position yourself as a human in the world. Or from a different perspective as a consumer. How do you create value to other in the social networks you live your life in. Change the scope. C2B2, a company is a consumer and a consumer is a company. Together we write the story.

A relevant read. New to Imagineering? Absolutely. It inspires and introduces you to many fundamental thoughts.

To Imagineers? Absolutely, not because it brings so many new thoughts to the table, but because it is a tool for dialogue.

Regards,

Joep Peeters

References:

-C.K. Prahalad,Venkat Ramaswamy(2004)The Future of Competition

-http://www.narrativity-group.com/