Face to Face: Venkat Ramaswamy - New Business Model for the Future; Economic Recovery from the Global Financial Crisis Won't Happen without a More Innovative Approach to Enterprise. Global Thought Leader in Innovation and Best-Selling Business Book Author, Professor Venkat Ramaswamy, Says Co-Creative Enterprises Are the Way of the Future
Byline: Reg Birchfield
The same old business tricks don't work any more," says Venkat Ramaswamy. "Enterprise is effectively starting from rock bottom after the GFC. And there is a new receptiveness to the transformational changes that a co-creative approach to doing business and running organisations brings."
Ramaswamy is Hallman Fellow at the Ross School of Business, in America's University of Michigan. He co-authored the prophetically insightful business book The Future of Competition with equally high profile management guru CK Prahalad, before joining forces with Francis Gouillart to write The Power of Co-creation, his latest book.
Prahalad, who died last year, and Ramaswamy wrote a series of articles between 2000 and 2004 on the probable impacts for business and society of a more "connected and empowered" customer. They described the accelerating shift toward networks of customer communities and global talent that reside outside, but interact with businesses on the one hand and the emergence of global resources networks of enterprises on the other.
Customer experience, they said, was central to "enterprise value creation, innovation, strategy and executive leadership". These broad changes in business and society called for co-creation -- a practice of developing systems, products or services through collaboration with customers, managers, employees and other stakeholders.
Seven years on and enterprise is now confronted by the everyday realities of a rapidly expanding world of highly connected and networked people and enterprises. The new actuality is, as Prahalad and Ramaswamy predicted, changing consumer and employee attitudes toward products, services and to the organisations they buy from or work for.
Consumers want to help "design" the value of the products and services they use; want ongoing conversations with the companies they do business with and want to be heard. "Simultaneously, surveys show that between 70 and 80 percent of employees are either fully or somewhat disengaged from their employing organisations," says Ramaswamy. "Enterprise must engage more fully with both customers and employees. The co-creative enterprise answers, at least in large measure, these challenges."
Enterprise transformation is not, in his opinion, a matter of choice. It is more "structural" than that and probably represents the next iteration of the organisation and traditional business model. Co-creation is about "engagement platforms" and is, says Ramaswamy, a direct outcome of rapidly evolving and increasingly advanced communication technologies. "It will probably lead to a very different design of the enterprise and management structures."
In his opinion, the future belongs to the co-creative enterprise, the core principle of which is transforming enterprises toward engaging individuals to "create valuable experiences together while enhancing network economics".
"Co-creation," he says, "involves both a profound democratisation and
decentralisation of value creation." His book describes the process as moving value creation from inside the firm to interactions with customers, customer communities, suppliers, partners and employees and other stakeholders. The enterprise then operates by communicating with both internal and external groups through a series of communication technology-driven engagement platforms.
Co-creative organisations use individual experiences as the starting point in building a relationship with a customer. Developing compelling experiences with individuals means they participate directly in the design of value. This leads to a recasting of the conventional role of strategy, innovation, marketing, supply chain management, human resources management and information technology.
According to Ramaswamy, the co-creative enterprise drives growth. "It enhances strategic capital, increases returns, and expands market opportunities," he says. …