How is innovation different today? Are there a new set of dynamics at work? Are the days of mass production over? Is the new trend in innovation more about personalization?  Have we entered a new age of innovation that is very different from the 19th and 20th century industrial mindset that treated
consumers as an undifferentiated group? Well, it certainly seems that way when you look at the
emergence of iPod, FaceBook, MySpace and others. The focus of these companies is  about personalization and experience. It is this change in attitude and shift in the innovation process that is the subject of a new book titled The New Age of Innovation In Driving Co-created Value Through Global Networks written by CK Prahalad and SM Krishnan. Both are professors at University of Michigan.

The title of the book captures the essence of the book. How do you leverage your global networks to create innovative solutions for consumers?  The authors describe this new age of innovation through their new house of innovation analogy. This new house of innovation  consists of two pillars: co-created experience (N=1) and access to global resources (R=G).  They describe N=1 as one consumer co-created experience at a time. For instance think of Starbucks, which the authors describes is a store front or platform of experience.  You, the user can do what you want at Starbucks with your cup of coffee, latte or chai latte. You can stay at Starbucks and enjoy your coffee, or decide to meet a friend or pick up your coffee and leave. To co-create that experience you need access to global resources,which the authors describe as R=G. So, in the case of Starbucks it leveraged its  global resources to create that single instance of consumer experience. A better example is Apple’s iPod, which consists of parts manufactured in different parts of the world and the device itself is finally assembled in China, but the important thing to remember is that the iPod was designed in California.

The twin pillars of this new house of innovation consists of a basement and a roof. The technical architecture of the firm forms the basement, while the social architecture forms the roof of the house.  Social architecture comprises of organization structure, performance measurement, training, skills etc while technical architecture refers to the IT infrastructur, business process of the company.

Through various case studies of organizations like ICICI, Ramco, UPS and other companies the
authors capture how business and innovation is morphing in this changing and inter-connected (read
converged) world. How do you tap into the global talent is one of the key questions that is addressed in this book.

The goal in the first half of the book as the authors describe is “to identify the emerging nature
of competition and value creation process…” They do this for instance by highlighting how India’s
ICICI Bank is focusing on personalizing its array of services to its domestic and international
customers. The bank has harnessed the best of breed IT solutions to implement  innovative
services for its customers like solar powered ATMs, making ATMS accessible to blind people etc.
Since ICICI is a fairly new bank with no IT legacy it is able to scale its operations by spending 80 percent of its IT budget on new applications and spend just 20 percent on maintenance of its IT infrastructure.

In the 5th and 6th chapters the authors focus on the question: how do you escape an organization’s
legacy and build capabilities for managing innovations?” And the solution they offer in chapter 7 is
to move from a well-defined organizational role to a “Velcro” like organization. What this means
is that people come together on a temporary basis to compeller a task. Talented people need to be
mobilized on a global basis to complete a task is how these Velcro organizations will execute their task. “Value is co-created, one consumer and one experience at a time.” Agility is the hallmark in this new age of creation. As they point out monolithic, industrial structures are gone, replaced by flexible, small, agile teams. While in  theory the notion of Velcro organizations with agile teams seem like an excellent suggestion it might not be all that easy to implement.

While reading the book I was strongly reminded of how technology has changed the way wars were fought in the 18th, 19th and 20th century. It was during this period that the strategy and tactics of warfare underwent major changes and Clausewitz wrote his seminal book on warfare. It was also during this period that technology shaped the way weapons were produced and used in various wars. For instance the evolution of tanks and the introduction of mechanized infantry changed warfare during the 20th century. And I guess I was not off the mark in thinking about technology and warfare since
the blurb on the inside jacket cover  reads: “To successfully compete on the battlefields of the 21st-century business, companies must reinvent their processes and culture in order to sustain innovative solutions.”  I was left thinking if these small agile teams will be akin to the Green Berets or Navy Seals that are special crack force teams in the US defence forces? I am wondering if that would that be a fair analogy?

Back to the book.The authors have tried to capture the current, changing business climate in different
parts of the world. Many of their case studies are drawn from Indian companies like Tutor Vista, TCS, Ramco, ICICI and others and then there are a few cases from Europe and USA. While reading the book I kept wondering: but, what about the rest of the world?  What about Germany, France, Dubai, Japan, Korea and countries in Africa and Latin America? How is innovation changing the business landscape in these countries?

The book does force you to think differently about  new, emerging opportunities in the global landscape. There is a growing class of consumers or users around the world who tend to lay a lot of emphasis in controlling their experience whether it is online or offline. How do you address the dynamics that is emerging between the firm and the consumer and how do you innovate and tap into these new opportunities? You need to read the book to find out and discover for yourself how some companies have been successful in innovating in this new, changing global landscape.

If you are interested, you might want to check out this blog that is devoted to The New Age of Innovation to the book and has some really interesting posts.

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