The new age of innovation

The book by the same name written by C.K. Prahalad and M.S. Krishnan has much to offer us in the learning industry. There is a fundamental transformation in the way we do business and it is critical for companies to negotiate two fundamental pillars of this change – co-created experiences and access (rather than ownership) to global resources.

If we look at traditional distinctions such as between products and services, hardware or software, these distinctions are getting blurred. Rather, a new order is emerging that conforms to global standards yet is locally responsive. This change can be seen in companies like Bridgestone and Goodyear, traditionally thought of as a product (tires) companies. Both companies now offer their customers an experience rather than a product. This experience is based upon creating a revenue model based on actual usage rather than on the product itself. The relationship becomes more of an ongoing relationship with the customer and from just a business to business interaction, it starts focusing on the consumer directly. The service model is simple – provide guarantees, support and services on the usage of the tires (say in a fleet management scenario) rather than transactionally on just the tire. The experience includes then additional services such as fleet management, sensors in the tire that send real time usage information to the company and training  for tire users to manage their investment better.

A similar experience is being brought to us by TutorVista, an online tutoring service. TutorVista provides its customers with the ability to choose what they want to learn, when they want to learn and for what duration they need tutoring. The student can decide she needs tutoring on a particular area, go to Tutorvista and determine the exact training fit for her requirements.

This is different from mass customization where customers have preset choices or combinations thereof. It also moves away from the heavily used tools and techniques for market segmentation. The market segment consists of one consumer at a time. Personalized yet scalable, affordable and high quality. This is what they call N=1. The locus of value is seen to be shifting from products and services to experiences.

Making this happen means the firm has to be very flexible. Operationally it must be able to plan based on needs and trends, i.e. ability to reconfigure resources is key. Complexity increases in an N=1 world because we are dealing with more and more analytic or consultative selling rather than information based selling. Simplicity of the customer interface also becomes critical along with the ability to initiate and grow a dialogue with the customer. This also requires a new level of IT sophistication.

N=1 involves a new approach to access and use of resources. The authors term this R=G. We need to move away from owning access to resources to co-opting them rather than attempting to own them. There are two big advantages to this and one necessity. The advantages are that the firm can rapidly scale based on expectations and needs of customers and that each resource is an independent entity capable of providing innovations that can percolate to your customers (innovation arbitrage vs. traditional cost arbitrage). The necessity is that no one firm can even attempt to own all the different resources that it would need for creating new experiences for the customer in an N=1 world.

Business processes and associated analytics are what will be the key enablers of an innovation culture. And firms should move from a cost based to a value based model operating as a nodal enterprise in a complex network of global resources. N=1 and R=G need not be costly to create, rather it should be possible to create the social and technical enterprise infrastructure to support these in an affordable manner.

What does this augur for us in learning? We have seen outsourcing and leveraging a global vendor base as a trend and necessity in most situations for large global firms. I would also believe that R=G is thriving in the learning industry and innovation arbitrage is a key factor along with rapidly shrinking and sensitive-to-performance budgets for training. But N=1 is not and that I think is the challenge facing the learning industry as well – how to co-create effective learning experiences for learners. To take an analogy from the tire example above, WBTs/ILTs etc become the “tires”/products that are produced by the firm to train employees and partners. But the end experience for each customer is very personal; learning needs a personal touch. In a socially networked world, this can become a reality because it is a high touch network and based on relationships. This could imply that firms start breaking down content and instruction into manageable transformable forms. Or it may imply that L&D needs to play a more active role in ensuring learning happens by facilitating it more strongly in a 2.0 manner.