Satish Nambisan

C K Prahalad - A Giant Among Management Thinkers

Renowned management scholar and thinker C K Prahalad passed away last weekend. The untimely death of any active scholar is always shocking—particularly so in the case of CK as he was just 68 and still full of energy and ideas (at the time of his death he was working on a new HBS Press book on innovative management practices from emerging markets).

CK was one of my role models—an innovative and visionary thinker with the ability to communicate with (and more importantly influence) both practicing managers and the academic community world-wide. His ideas were fertile enough for others to conduct research for years (his work on core competence and strategic intent generated distinct research streams in strategic management; his work on the Fortune at the Bottom of the Pyramid launched a separate field of practice and inquiry).

As my friend and mentor VG (Prof. Vijay Govindarajan of Tuck School) so eloquently noted in a recent article in the Economic Times: “There are two types of academics. Vast majority of academics try to catch fish in a well understood pond. There are very few academics who point us in the direction of a new pond where we can go and start the process of catching fish all over again—this is CK’s forte. He has opened up so many new research paths. One of the hallmarks of CK is that he never published two articles on the same topic—his style is to create a new line of inquiry, leave the space for ‘mere mortals’ and move on to the next.”

I am particularly indebted to CK for encouraging me to conduct research in the area of customer co-innovation and value co-creation. It was an article that he co-wrote on this topic in 2000 in Information Week that got me interested in this area. Over the next ten years or so, as I continued my work on customer co-creation, I kept in touch with him (and his continuously evolving ideas on this topic).

The last time I met CK was in 2008 at a conference at Wharton—I was presenting my work on network-centric innovation and CK was the keynote speaker. As usual, his keynote was insightful yet intuitive, thought-provoking yet simple, and passionate yet humorous. After his speech (and despite his obviously busy schedule), he took some time to talk with me, commended me on my recent book, and encouraged me to delve deeper into the area of collaborative innovation. I came away both humbled and highly energized.

There is no doubt that CK’s books and ideas will continue to influence all of us for years to come. But much more than his ideas, it is his passion for innovative thinking, his steadfast focus on practical relevance, and most importantly, his fearlessness to pursue big ideas that will continue to inspire me.    

Consumer Value Co-Creation in Health Care

Health care has become the front and the center topic in our national dialog in the last couple of years or so. As the politicians, lobbyists, and policy experts hotly debate how to reform health care, it is becoming increasingly evident that true healthcare reform is unlikely to originate from Washington D.C. Indeed, such reform will have to come from all of us, as individual consumers – as we take greater responsibility for and participate more actively in managing our own health.

Importantly, recent trends indicate that consumer participation in health care doesn’t need to be limited to such personal healthcare management. Consumers can also participate in innovation and value creation in varied areas of the healthcare industry, and thereby contribute to reducing healthcare costs and enhancing the overall quality of health care. A critical enabler of such consumer value co-creation is new information and communication technologies such as online health communities and Web 2.0 (social media) technologies.

Recently I co-authored an article on this topic – "Models of Consumer Value Co-creation in Health Care" – which was published in the October/December 2009 issue of the Health Care Management Review. Here is a link to the article (subscription required).

In this article, we identify four alternate models of consumer value co-creation - the partnership model, the open-source model, the support-group model, and the diffusion model. Our objective was to develop a better understanding of how consumers can co-create value in health care and also offer guidance to healthcare organizations (HCOs) in adopting appropriate strategies and practices to embrace consumers as partners in the development and delivery of innovative health care products and services.

Platforms for Collaborative Social Innovation

It is quite evident that to address some of the key social challenges that we currently face (in health care, public school education, national security, environment, energy, etc) organizations across the three sectors – public, private, and non-profit – will need to come together and collaborate extensively. However, the infrastructure or platforms to promote and facilitate such cross-sector collaborative social innovation do not exist or are not well developed at all.

Lack of such collaboration platforms could seriously hamper our efforts at developing and implementing innovative solutions to important social problems even if individual organizations have creative ideas, practices, and technologies.

My research over the past couple of years indicates the need for three types of collaboration platforms:

• Exploration platforms to jointly formulate or define problems and identify preliminary solutions;
• Experimentation platforms to test or evaluate alternate solutions in "near real-world" contexts; and
• Execution platforms to develop and diffuse solution templates.

In an article titled “Platforms for Collaboration”, published in the Summer 2009 issue of Stanford Social Innovation Review, I describe these three types of collaboration platforms for social innovation and identify some of the capabilities that participating organizations would need to acquire (Note: SSIR is a subscription-based journal, however, many of the articles are available for free and it is likely that this article too would be made available free of charge in the near future).

Update: Here is a link to the full article: http://www.ssireview.org/images/articles/2009SU_Feature_Nambisan.pdf

Agenda for President Obama's Office of Social Innovation

As has been reported recently, President Obama has established a new Office of Social Innovation (OSI) at the White House. While the goals, structure and other details of this new entity are yet to be announced, the very fact that such an office was created indicates the considerable importance the new administration has assigned to social innovation.

Two questions are likely to arise when one hears this news. First, should the Federal government play a role in social innovation, and if so, what should that role be? Second, is there a danger that such a White House -based government office would make social innovation initiatives more bureaucratic (and, possibly less effective)?

I think these are two important, valid, and related questions and the answers to these questions should help shape the agenda of this new office.

I believe the federal government has a critical role to play in promoting and facilitating social innovation, but not in directing social innovation initiatives. More importantly, if the government plays the right role, then it would also minimize the potential risks associated with introducing bureaucracy into the social innovation process.

Social innovation has become more important now than at any other time in the past as we face a host of complex social issues in areas ranging from public school education and health care to disaster management, energy, and environment. At the same time, it is also quite evident that the solutions to most of these social issues are unlikely to come from the government (or the nonprofits or the private sector) acting alone. Instead, organizations in all three sectors would need to collaborate in identifying, evaluating, and implementing potential solutions. And, the Federal government may have a key role to play in promoting and facilitating such collaborative social innovation.

My ongoing research in this area has revealed the importance of and the need for establishing different types of platforms to facilitate collaborative social innovation. In an article forthcoming in the Summer 2009 issue of the Stanford Social Innovation Review, I describe three types of collaboration platforms for social innovation (more on this in a future blog).

If the new Office of Social Innovation focuses on establishing the right conditions (and the infrastructure) for public sector organizations, private companies, and nonprofits to come together and pursue collaborative social innovation, then it would be making a big step in the right direction. On the other hand, if the OSI intrudes upon the collaborative innovation process and inhibits nonprofits and private companies from deploying their own unique capabilities and perspectives, then it is not likely to advance the cause of social innovation.

We will need to wait and see as the agenda for this new Office of Social Innovation unfolds over the coming months!

Social Innovation and the Coming Age of Volunteerism

It is said that we are at the dawn of a great, new age of Volunteerism in America. In the last couple of years, there has been any number of articles written about citizen innovators and volunteers engaging in grassroots-level social innovation initiatives—in areas ranging from public school education and disaster recovery to environment and green energy.

Two distinct sets (or generations) of volunteers have emerged: the first set includes members of the baby boomer generation who have retired recently and are looking for “meaningful civic engagement roles”; the second set includes young adults of the (Obama-inspired?) Millennium generation who increasingly consider volunteering for nonprofits as a way of life.

There is no better indicator of this volunteer fever in America than the number of young graduates from top universities who regularly sign up with the Teach for America (TFR) program. TFR is a nonprofit organization that recruits and places fresh graduates in challenging urban and rural teaching jobs throughout the country. Strictly speaking it is not a volunteer task – participants in TFR (called ‘corps members’) do get paid an annual salary, typically around $35,000. However, given that most of these graduates from top-tier universities could have pursued much more remunerative job opportunities elsewhere, it is as good as volunteerism. The program has become so successful that for the 2009 academic year the acceptance rate for new recruits is close to 15% (lower than that of most top-tier Wall Street firms!).

While these and other examples lend proof to the large influx of potential volunteers showing up at the doorsteps of the nation’s numerous nonprofit organizations, the critical question remains: How well prepared are the nonprofit organizations to engage with all these volunteers? Or, do the nonprofits have the ability to tap into and channel the creativity and expertise of this emerging volunteer workforce, to solve key social problems?

Based on my own ongoing research on social innovation, the answer, unfortunately, is No. 

Nonprofit organizations’ challenge of involving citizen volunteers in social innovation initiatives is not much unlike that of business organizations in partnering with customers in innovation and value creation. Customers act largely as volunteer innovators in the private sector; most often, they do not derive any monetary gains from their activities. As research shows, companies that are successful in engaging their customers in innovation activities are those that create “valuable experiences” for customer innovators and bring a lot of clarity and transparency to the innovation process. These and other lessons from the private sector imply three key issues for consideration for nonprofits confronted with the ‘volunteer challenge’:

• Does the nonprofit organization have a strategic approach towards engaging volunteers in its activities? (Identifying the organization’s expertise/skill gap, mapping out the roles that the volunteers will play to fill those gaps; etc.)

• Is the nonprofit organization structured to truly embrace volunteers as partners in its activities? (Establishing communication channels between volunteers and paid-staff; offering orientation and training programs for volunteers; implementing processes to integrate the inputs from the volunteers; etc.)
  

• Can the nonprofit organization offer “meaningful experiences” for its volunteers? (Assigning tasks that are aligned with the individual volunteer’s skills and interests; enhancing the transparency of the activities so that impact of the volunteer’s contributions is clarified; etc.)
  

Teach for America is a good example of a nonprofit that has been successful in addressing all of the above three issues. Hopefully, other nonprofit organizations can learn from TFR and prepare themselves to leverage the coming wave of volunteers.

If they do, then we will likely see a revolution in social innovation—one that is truly grassroots-driven and with enduring social impact!

Cisco’s I-Prize Contest

Cisco Systems is close to announcing the winning team for it’s first-ever I-Prize, a global competition to come up with a concept for the networking giant's next $1 billion business. The company says that it has received more than a thousand entries from all over the world. The team with the winning entry will receive a $250,000 prize and also get a chance to join Cisco as leaders of the new business venture. Cisco says it will commit as much as $10 million over the next three years to fund the effort.

Such “idea contests” have been conducted by several companies in recent years—Henkel Corporation’s “Henkel Innovation Trophy”; Staples’ “Invention Quest” etc. comes to mind. But what is probably new about Cisco’s competition is the expectations – the company is expecting not just another innovative product/service idea but an idea that would help create a $1billion business division!

I do believe that companies can harvest a lot of interesting ideas from the global pool of customers and other independent inventors (i.e. the Global Brain) through these types of idea contests. However, there are two sets of issues that assume importance in deciding the eventual success of such initiatives.

• First, how well does the company manage its relationships with the independent inventors? How transparent is it with regard to IP rights management? How does the company share the rewards from the innovation (e.g. license fees, royalties) with the inventors? Does it invest in building trust and openness in the interactions? Overall, does it adopt a long-term relational perspective or a more transactional approach in dealing with the inventors?
  

• Second, how well prepared is the company to act on these winning ideas? Does the company have well-developed internal business processes to embrace those external ideas and convert them into marketable products and services? While the Internet and Web 2.0 technologies are great facilitators, what a company ultimately does with an idea is the true test of success. Many organizations simply collect ideas and don't make the internal changes necessary for moving these potential moneymakers through the company. Without the proper cultural and business process adjustments, winning teams end up walking into what I call ‘The Valley of Death,’ and their ideas die from a lack of organizational support.

For more details on Cisco’s competition and my comments on it, read the following news report: I-Prize Contest Proving a Winning Approach to Discovering Billion-Dollar Business Ideas.

We’ll need to wait and see how Cisco’s I-Prize competition turns out! And, whether the company is successful in creating that new $1billion business unit!!

The Global Brain and the Service-Dominant (S-D) Logic

Last week, I gave the keynote address at the 2008 Logic and Science of Service Conference in Hawaii. The conference, focused on service-centered research and sponsored by the IBM Almaden Services Research Center, was co-chaired by Prof. Steve Vargo (University of Hawaii) and Prof. Bob Lusch (University of Arizona).

Steve and Bob are also the authors of an award-winning article on Service-Dominant (S-D) logic of marketing (Journal of Marketing, 2004) that argued for a shift away from the goods-dominant (G-D) logic that has pervaded much of our thinking so far. The foundational proposition of S-D logic is that organizations, markets, and society are fundamentally concerned with exchange of service. Thus, as per S-D logic, service is exchanged for service; all firms are service firms; all markets are centered on the exchange of service, and all economies and societies are service based. A very interesting and thought-provoking perspective!

In preparing for my presentation at the conference, I was struck by how close some of the themes discussed in The Global Brain are to those espoused by the S-D logic – in particular, the role of customers.

As stated in the book and elsewhere in my research work, customers form an important part of the Global Brain, and increasingly firms will co-innovate and co-create value with customers. The S-D logic also embraces the concept of co-creation of value – as Steve and Bob note, “instead of firms being informed to market to customers, they are instructed to market with customers, as well as other value-creation partners in the firm’s value network”. Thus, the focus on collaborative innovation and value co-creation, that is the premise of The Global Brain, underlines the S-D logic too.

The challenge then for companies would be to put together and offer the appropriate set of resources and knowledge to facilitate the right level of involvement of customers in the co-innovation or co-production of the service offerings. Companies who are able to “integrate” the knowledge and the value that is thus co-created by customers (and by other network partners) are likely to see themselves well ahead in the game!

'The Global Brain' and Government Innovation

One of the things that I discovered after writing my book, The Global Brain, was that the public sector (or Government) is not that much different from the private sector in terms of the nature of the innovation and problem-solving challenges it faces. Indeed, in many areas of the government, ranging from education and health care to homeland security and environmental conservation, the nature of the problems has changed drastically—they are increasingly ill-defined or emergent, involve diverse sets of stakeholders, and cross organizational and geographic boundaries.

It has also become evident that the transformational innovation – in business models, operations, and services offered by government agencies – needed to address such problems are unlikely to always originate from within the four walls of the government. Government agencies will need to “look outside” and harness the creative talent and expertise that reside outside their boundaries. In short, the opportunities offered by The Global Brain are as relevant and valuable to government agencies and other public sector organizations as they are to private companies such as IBM, P&G, and Boeing.

I recently completed a research report (sponsored by the IBM Center for the Business of Government) that describes the different roles government agencies can assume in pursuing collaborative innovation with a diverse set of partners including other government agencies (federal/state/local), non-profit organizations, private companies, citizens, and universities.

As I write in my report, the performance of American government in the 21st century will be shaped by how well it adopts such collaborative innovation to harness external resources and creativity in addressing the nation’s most challenging issues.

To download a copy of my report (or to get a ‘free-of-charge’ hard copy), pl. visit the IBM Center for the Business of Government website.

The Global Brain & ‘Virtual Customer Environments’

It is no secret that customers form an important part of the Global Brain. Indeed, customers can be actively engaged in different aspects of innovation and value creation – from the design and development of new products and services to marketing and product support activities.

To tap into the innovative power of customers, in recent years, many companies (including Microsoft, BMW, Ducati, Volvo, and Nokia) have established ‘Virtual Customer Environments’ or VCEs – i.e. technology-based collaboration platforms that incorporate online discussion forums, wikis/blogs, virtual reality tools, and other such technologies to support customer contributions in ideation, design, development, testing, and marketing activities.

Over the last few years, I have been studying how companies can implement and manage such VCE-based initiatives that promote customer co-innovation and value co-creation. One of the interesting issues that I have found from my research work has been that customers’ experiences in such VCEs can have broader and more profound implications — particularly for customer relationship management.

In an article published in the Spring 2008 issue of the MIT Sloan Management Review, I discuss this issue in detail. Customers who have positive experience in VCEs tend to not only participate more in innovation activities but also develop more positive attitudes towards the product as well as the company. And, vice versa!

So what is the key message here? In pursuing VCE-based initiatives, companies should carefully select and implement a portfolio of strategies and practices to enhance positive customer experiences in VCEs, and thereby ensure favorable outcomes in terms of both innovation management and customer relationship management.

More importantly, managers should view their VCE initiatives as an integral part of their overall innovation and customer strategies. For more on this, read the article.

Is India Ready to Tap the Global Brain?

I was recently invited to write an op-ed piece for Mint (the Indian affiliate of the Wall Street Journal) on the above issue. The article was published in the issue dated 24th December 2007. 

As I note in my article, while Indian companies still have a lot of distance to cover before they can assume leadership in global innovation networks, there are several encouraging signs regarding the potential for that. Importantly, the experience they gained during the outsourcing revolution – i.e. from partnering with global innovation leaders such as IBM, Eli Lilly, Intel, HP, and Boeing - may prove to be very beneficial as they pursue efforts to establish and lead their own global innovation networks. 

Here is a link to the full article: Ready to tap the Global Brain?