Professor's C.K Prahlad and M.S Krishnan of the University of Michigan talk about a new innovation equation in their latest book. So what is N=1, R=G?
N=1 is about "personalized, co-creation of experiences". It is not the same as "mass customization". Mass customization allows the consumer to choose from a menu of products, sub-systems, that he/she has built or has access to. It is the firm's determination of what the consumer might need. Neither is it the same as the "segment of one" concept which targets one customer at a time by learning about their various characteristics such as spending and usage patterns etc. This again is a firm centric view of the customer. Both of these are B2C views. N=1 is a C2B2C view - consumers are joint problem solvers. Experiences for the customer are personalized and are co-created with customers themselves. Examples include - the 6000 Facebook application developers, Ebay participants, and iPod buyers (each buyer creates a unique portfolio of music for his/her self and thus has a personalized experience). iGoogle is another example of co-creation of value and personalization of experience. Google provides the platform. Individual consumers decide how to use it (personalize it) to suit their particular needs.
R=G implies leveraging talent globally. Since no company can hope to satisfy the varied expectations of so many customers, it must diversify how it operates. Firms would need to access resources from a wide variety of other big and small firms - a global ecosystem. In other words, companies' internal focus should be on gaining access to resources, not necessarily owning them.
Interestingly, the concept also applies to the million's of poor in India and other countries. In India, Self help groups (SHGs), which are voluntary organizations consisting of about 12 to 15 women in a village, are able to obtain loans from large banks that are developing microfinancing mechanisms to make such loans possible. The loans are given to the groups, not to individuals. The group then decides, based on discussion among its members, who among them and what projects need to be financed on a priority basis. Because the self-help groups have intimate knowledge of the local circumstances—of individuals (their financial standings, their behaviors,and their character) as well as the community—their decisions are as local as they can get. The groups cocreate their ownexperiences. They also implicitly supervise how the money is being spent. It is no surprise that the repayment rates tend to be extremely high—as high as 99.5 percent.
In their book, the professors explain how to accomplish this shift - one where IT and the management architecture form the corporation's fundamental foundation. Even if a company is dealing with a hundred million consumers, each manager must focus on one consumer experience at a time. The firm can provide the platform around which the customers can cocreate their experiences.
Ultimately, the two ideas must be connected - the resources of many to satisfy the needs of one.
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