Technology and the Firm

Knowledge@Wharton reports on a talk given by CK Prahalad:

The old game was about a focus on efficiency. The new game must take into account not only new technologies but such forces as deregulation, globalization and emerging markets, including China and India. Among those new forces, Prahalad highlighted the convergence of traditional industry values that comes from the blurring of lines between various kinds of products and services.

“The fusion of new and old knowledge is creating hybrids, Prahalad noted. Companies respond by putting every possible feature into a device [or product] But there is cognitive dissonance from the enormous complications. The good news is that there is tremendous product variety. The bad news is, experience is the essence of value, not features. Customers are often frustrated and displeased because they feel there is a better one another newer product out there already or about to come out soon.

The lesson for strategists, said Prahalad, is that the definitions of the industry are driven by consumers and not by the companies. [Individual] consumers are making their choices, not you [strategists]. Each consumer is picking his or her own portfolio of products and services and defining the limits of the sector to meet his or her needs.


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Rajesh Jain

An Entrepreneur based in Mumbai, India.