Future Of Competition

Summary of Key Ideas

Changing Role of Consumer
Information Access
Consumer has access to unprecedented amount of information
Global View
Consumer has access to information across the globe
Networking
“ Thematic consumer community” in which individuals share ideas & feelings
Experimentation
Experiment with and develop products through Internet
Activism
Web as a powerful tool by which groups focused on issues seek corporate & government attention and promote reform

The New Frame of Reference for Value Creation The new starting premise is that the consumer and firm Co-Create value, and so the Co-Creation experience becomes the very basis of value. The value creation process centers on individuals and their Co-Creation experiences.

Building Blocks of Co-Creation - DART
D ialogue
It focuses issues that interest both consumer & firm
It requires a forum in which dialogue can occur
It requires rules of engagement
A ccess
Goal of consumers is to have access to desirable experience
R isk Assessment
Risk disclosure to consumer and allow informed choice
T ransparency
To facilitate collaborative dialogue with consumer

The New Dynamics of Co-Creation Co-creation challenges the traditional roles of the firm and the consumer. New framework is required for handling the emerging dynamics at the Points of Interaction between the consumer and the company.

The Co-Creation Experience (1 of 2)
Company Think versus Consumer Think
Co-creation of value exposes the disconnect between company think and consumer think at the “Point of Interaction”
Dimension of Choice
Co-Creation Across Multiple Channels
Co-Creation Through Options
Co-Creation Through Transactions
The Price-Experience Relationship in Co-Creation

The Co-Creation Experience (2 of 2)
Traditional Exchange
Goal of interaction is value extraction
Locus of interaction is at the end of value chain
Quality is based on what firm has to offer
Co-Creation Experience
Goal of interaction is value creation as well as value extraction
Interaction can take place repeatedly, anywhere and anytime in the system
Quality of consumer-company interactions and co-creation experience

Innovating the “Experience Environment” Business managers can compete in myriad ways by discovering new opportunities through an individual centric lens of choice in consumer-company interactions, and carefully managing the quality of co-creation experience.

Experience Innovation (1 of 3)
Innovating Experience Environment
Offer Opportunities for consumer to Co-Construct their own-experiences
Recognize that every consumer does not always want to Co-Create
Facilitate new opportunity afforded by emergence of new technology
Accommodate & involve consumer communities
Engage consumer emotionally & intellectually
Recognize social & technical aspect of Co-Creation experience

Emerging Technology Capabilities as Experience Enablers
Miniaturization
Environmental Sensing
Embedded Intelligence
Adaptive Learning
Networked Communication

Levers for Experience Innovation
Granularity – giving consumer the choice
Extensibility – established function in new way or create entirely new functionality
Linkage – recognition that events connect in multiple ways
Evolvability – capturing the learning & using it to develop experience environment
Experience Innovation & Efficiency
Two side of the same coin

Unique Value for Each Individual To innovate experience environments that allow for co-creation of unique value for each individual, we must appreciate what constitute personalized co-creation experience.

Experience Personalization (1 of 2)
Key Dimensions of Personalized Co-Creation Experience
Events
Context of Events
Individual Involvement
Derivation of Personal Meaning

Experience Personalization (2 of 2)
Traditional Customization
Segment of one
One off-products and services
Features, menus, components, costs, speed
Fulfillment of variety of customized products & services through modularity
Configuration & fulfillment services for build-to-order processes
Experience Personalization
Experience of one
Personalization of interactions with the experience environment
Events, context of events, individual involvement & personal meaning
Facilitating a variety of personalized experiences through heterogeneous interactions
Infrastructure to support an experience network

Infrastructure for Personalized Co-Creation What kind of experience network do we need? What would such network look like, and how would it function? This infrastructure should enable managers to compete on experience.

Experience Networks ( 1 of 2)
Building Experience Network
Aim is to allow consumers to easily interact with experience environment
Has a technical and social dimension
Nodal Firms can create the experience enablers
Rapid Resource Reconfiguration
Access to Competence
Experience Quality Management
Quality is associated with individual co-creation experience
Accommodate heterogeneity of consumer experiences
Co-creation protocols, disciplines and rules of engagement
Each outcome is unique

Experience Networks ( 2 of 2)
Migrating to Experience Networks
Continuous co-creation of experience at point of interaction
Employee as experience gateway
Consumers to initiate experience on demand
Accommodating consumer heterogeneity is crucial
Experience network to provide mechanism for dialog and ways to manage risk
Balance consumer’s desire for access with company’s desire for control
To win consumer trust requires transparency
Managers need capacity to react quickly
Effective experience network requires both social and technical enablers of experience
Selective activation of competence base
Heterogeneous individual-centric experience

Changing Perspective of the “Market” Is the traditional marketplace still the locus for exchange between the firm and the consumer, and place where the firm extracts value from the consumer? How does meaning of market change in the light of the new paradigm?

Market as a Forum (1 of 2)
Heterogeneity of Interaction
Sophistication
Eagerness to Engage in Dialogue
Tolerance for Irritants
Willingness to Switch Suppliers & Products
Stages in Co-Shaping Expectations & Experiences
No Focus
Reactive
Responsive
Anticipatory
Shaping
Co-shaping individual experience

Market as a Forum (2 of 2)
Migrating to Market as a Forum
The firm and the consumer converge
Supply is associated with facilitating a unique consumer experience
Value is co-created at multiple points of interaction
Consumer and consumer communities can initiate a dialog among themselves
Consumer choose the nodal firm and the experience environment to interact with
Trust and stickiness emerges from compelling experience outcome.
Consumers are competitors in extracting value
Experience Is the Brand

Experience based view of Economic Theory The new frame of value creation challenges the traditional economic view of the market. It also creates new competitive space for firms and the need for building new strategic capital.

Building New Strategic Capital
Source of Competence
Corporation  + Extended Enterprise  + Consumer
Shifting Locus of Innovation
Product Space  Solution Space  Experience Space
Building New Strategic Capital
Building Bridges Between Managers & Consumers
Facilitating Rapid Knowledge Creation
Strategy as Discovery
Building New Capabilities for the Future

Changing Role of Manager What are the challenges & opportunities the new competitive space presents? What are the constituents of the strategic capital that need to be created? What are the new capabilities that will be required?

Manager as Consumer (1 of 2)
Providing Manager with “Embedded Intelligence” at Point of Company-Consumer Interaction
Building the Managerial Environment
Access to Information in Context
Capacity to Create New Knowledge and Insights
Recognizing Managerial Heterogeneity
Sophistication & Domain Knowledge
Willingness to Operate in Real Time
Propensity & Need for Dialogue
Willingness to Experiment
Risk Preference

Manager as Consumer (2 of 2)
Capability of the Managerial Environment
Consistency of Decentralized Action
Visualization of Experience
Aggregation & Disaggregation of Events & Metrics
One System, Multiple Experiences
Ability to Ask New & Non-routine Questions
Enabling Managers to Evolve with Consumer Experience
Personalized Alerts
Contextual Information
Real-time Collaboration
Real-time Monitoring
Experience-based Operating Rules & Procedures

Knowledge Environment When heterogeneous customers interact with a firm, they will make demands that cannot be predicted. How can the organization combine the experience and skills of its employees to co-create new knowledge?

Rapid Knowledge Creation (1 of 2)
Building a Knowledge Environment
Competitive discontinues put premium on new knowledge creation
Globalization puts a premium on access to competence across the firm, since redundancy increases cost
Knowledge is different from information. Knowledge, like experience, is inherent in the individual and cannot be separated from the individual.
The creation of new knowledge requires that individuals have access to competence, not just databases
The knowledge environment is as much about people as about technology
The knowledge environment must be woven into the culture of the organization

Rapid Knowledge Creation (2 of 2)
Catalyzing Tacit Knowledge Versus Managing Explicit Information
Creating Access to Competence for Knowledge Creation
Co-Constructing & Codifying Knowledge
Harmonizing Multiple Streams of Knowledge
Engaging the Total Organization
Co-Evolving the Knowledge Environment
Seven Layers of Knowledge Environment
Layer 1: Training & Development
Layer 2: Information Sharing
Layer 3: Using Information
Layer 4: Leveraging Sources of Competence
Layer 5: Mobilizing Action Teams
Layer 6: Facilitating Discovery
Layer 7: Co-Creating Value

Strategy – a Process of Innovation & Discovery In the world of co-creation, strategy is a process of continuous experimentation, risk reduction time compression, and minimizing investment while maximizing market impact.

Strategy as Discovery (1 of 3)
Collaboration & Strategy
Improved Cycle Time & Cost Reduction
Achieving Scale & Scope
Access to Knowledge
Investment Leverage
Method for Change
Partitioning Risk
The Risk & Cost of Collaboration
What Information Should be Shared?
Supply Chain Volatility – Who Pays the Price?
Who Extracts the Value from the New Efficiency?
Who Bears the Burden of Learning Multiple Systems?
Who Owns Intellectual Property that is Co-Created through Collaboration?
Who Bears the Costs of Creating IT Capabilities?

Building the New Capacity to Collaborate & Compete
The ability to provide a compelling view of the opportunity, so that the firm can be the nodal firm
An infrastructure that spans the network and can selectively activate any combination of firms
An information infrastructure within the experience network that is transparent and operates in real time
A managerial mind-set and skill that enables participants to access competence and build consensus rapidly within the experience network

Role of Company’s Leadership
Invest in developing the capacity to compete on experiences
Develop and articulate a clear point of view about the future
Reinforce the mind-set and skill set of managers
Foster internal collaboration
Support and nurture the knowledge environment
Role of Line Managers
Have a deep understanding of the strategic intent
Understand relationship between their job & strategic intent
Continually monitor the experience of customers, suppliers & employees
Continually adjust actions as demanded by change in environment

New Capacity to Govern and Compete We must re-examine every functional skill in the organization and ask: Are the assumptions behind this function and its management consistent with the new requirement. What new capabilities are needed?

Building New Capabilities for Future (1 of 2)
Product Design & Development
Experience Design
Evolvability
Information Technology
Event Orientation
Contextual Navigation
Multidirectional Transparency
Unified View
Support for Hypothesis Generation & Evolution of Next Practices
Application Portfolio Approach
Accommodation of Heterogeneity in Interactions
Balance between Innovation & Efficiency

Building New Capabilities for Future (2 of 2)
Becoming an Experience-Centric Company: The Managerial Challenges
Managing Collaboration
Managing Migration Paths
Managing the Mind-Set
Managing the Skill-base
Managing Teams
Managing Reaction Time
Internal Governance Dilemma
Growing Complexity of Networks
Need for Collaboration Agenda
Coping with Rapid Change in the Competitive Landscape
Zero Latency Decentralization
Balancing Flexibility & Accountability

Welcome to the Future of Competition A world of co-creation is emerging on the horizon with opportunity to co-shape and co-create the future.

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Future Of Competition

by Udayan Banerjee on Mar 31, 2008

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Future Of Competition — Presentation Transcript