Thanks to the rapid spread of cell phones and other mobile devices, Web sites and media channels, consumers now have access to more information at greater speed and lower cost than ever before. But the information technology explosion has not necessarily resulted in better consumer experiences.
In their upcoming book, The Future of Competition: Co-Creating Unique Value with Customers (Harvard Business School Press), University of Michigan Business School professors C.K. Prahalad (above left) and Venkat Ramaswamy (above right) say globalization and ubiquitous connectivity are forcing companies to re-examine how they deliver value to customers. 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 on-the-fly, shaped by the customer "context"—that is, the precise physical location of a customer at any given time, the exact minute he or she needs the service and the type of mobile device over which that experience must be received.
Increasingly in the 21st century, Prahalad and Ramaswamy say, delivering a superior customer experience will be the differentiator between successful companies and also-rans. "The problem with CRM," Prahalad told CIO Insight editors during an interview at the magazines Manhattan offices, "is it assumes that a company knows what to do to create value for customers. But this is not right. This decision cannot be unilateral. It has to be collaborative. You have to engage consumers, not view them as targets to be had, which is what todays CRM is all about—how to target a single consumer." What companies need to do instead, Prahalad and Ramaswamy say, is to figure out ways to engage customers as equal problem-solvers, so they can create value that is unique to the customer. "The product is no longer the basis of value," Ramaswamy says. "The experience is."
But to meet the challenge, companies will need to build more flexible, dynamic information backbones to capture and deliver the real-time insights required to deliver on-demand customer value and service thats meaningful to individuals within the context of their day and location—and without breaking the bank. An edited transcript of the interview follows.