The New Age Of Innovation
Tuesday, April 15th, 2008The April 14, 2008 edition of InformationWeek includes a lengthy review of The New Age Of Innovation (McGraw-Hill, 2008), a seminal new book from C.K. Prahalad and M.S. Krishnan by Bob Evans. He lists 12 powerful ideas from the book, one of which is particularly germane to the question raised at the International Institute for Indigenous Resource Management’s Third Annual Tribal Energy Policy Roundtable, i.e., “How do tribal colleges and universities help Indian tribes make the transition from economies that are based primarily on extractive industries to economies that are based on services or knowledge?”
He cites the example of tire manufacturers working on service models that charge for tires by the mile, instead of selling them as discrete products; monitor tire wear, perhaps soon in real time through remote sensors; and provide advice on how drivers can get better mileage. Bridgestone is piloting an early version of this in Europe.
Evans notes three distinct transformations taking place in this example:
(1) The firm is moving from selling a product to selling a service. The product is an integral part of the service. But the value is based on the service. (2) The firm is moving from a transactional relationship with a customer to a service relationship with a customer. When strategy focuses on better fleet management–including lower costs, improved safety and skills of drivers, and improved understanding of truck dynamics–the core value proposition shifts from the physical product (tire) to services and solutions (better overall costs) to superior experiences (for individual drivers). (3) When the manufacturer is selling a tire (just the physical product) to the fleet owners, this type of business would be described as a business-to-business (B2B) organization. However, when that company is providing feedback that improves individual driver safety and skills, it looks more like a business-to-consumer (B2C) organization. In the new competitive arena of one customer at a time and global networks of resources, B2B and B2C definitions converge.
Evans says if managers (in our case, tribal college leaders) do not recognize these trends and get organized to compete in this new environment, they will be left behind. This transformation is not a choice.
The authors of the book say this mandatory transformation is manifested in five ways:
(a) value is shifting from products to solutions to experiences; (b) all companies will have to access resources from around the globe; (c) flexible systems are indispensable; (d) resources must be reconfigured continually; and (e) models and processes must be shifted from a focus on millions (for us, hundreds or thousands) of customers to the individual.
I think the discussions we’ve had on the role tribal college can play in helping tribes develop the 21st century energy workforce have acknowledged the need to adopt these transformational perspectives. We’ve used words like “agility,” network-centric,” and “adaptive management” but I think the core ideas are essentially the same.
However, the challenge for the American Indian & Alaska Native Climate Change Working Group and the participants of the Institute’s Third Annual Tribal Energy Policy Roundtable is to get these ideas accepted by the larger tribal college community and its allies. Additionally, we’ve got to convince industry, government, and foundations of the centrality of information technology in effectuating these transformations and to muster their support in building these information systems.