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A New Business Model


Ashish Bhattacharyya


By C.K. Prahalad and Venkat Ramaswamy
Viking/Penguin and Harvard Business School Press, New Delhi, 2004, pp. 256, Rs. 495.00

VOLUME XXVIII NUMBER 8 August 2004

This is another excellent book by C. K. Prahalad, who coauthored the international best sellers Competing for the Future. His coauthor this time is Venkat Ramaswamy, who has been described in the preface of the book as ‘an eclectic marketing scholar’. The book presents a new business model that considers consumers as equal partner in creating value. At the very outset, authors have described the context in which traditional business modes fail to create value. They observe : Thus, the paradox of the twenty-first century economy : Consumers have more choices that yield less satisfaction. Top management has more strategic options that yield less value.   In this context, there is a need to reexamine the traditional system of company-centric value creation that has served us so well over the past hundred years. The book presents a different premise centered on co-creation of value. In the business model presented by the authors, firms and active, connected, and informed customers jointly create value. They believe that value no longer lies in products and services created by firms and delivered to customers. According to them value lies in the co-creation experience, at a specific point in time, in a specific location, in the context of a specific event. The future competition lies in an altogether new approach to value creation, based on an individual-centered co-creation of value between consumers and companies.   The models suggested by the authors are totally different from the traditional model. The new model is evolving. Many successful firms have already adopted this new model. The book is the first to provide a complete guide on how customers and firms co-create value. The authors have drawn various examples, mostly from US firms, to prop up thinking, illustrate the new model, and to provide a blueprint for the same.   The key building blocks of co-creation of experience are : dialogue, access, risk assessment, and transparency, for which the authors have used the acronym DART. Dialogue implies shared learning and communication between two equal problem solvers. The authors observe that increasingly, the goal of consumers is access to desirable experiences – not necessarily the ownership of the product. Firms should uncouple the notion of access from ownership. For example, cyber cafes provide access to Internet facilities without ownership. Access also implies access to value chains of entire industries that were traditionally company controlled. Consumers who actively participate in co-creating value insist that companies inform them fully ...


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