Wider reach key for value creation, says C K Prahlad

CII's 10TH PARTNERSHIP SUMMIT

There are five key drivers related to distribution channels and technology that would change the process of value creation in the Indian context, C K Prahlad, the management guru and professor of business administration at Michigan Business School, said.

The first was the single serve revolution, where in corporates could reach their products to consumers at most affordable prices.

The major benefit of innovating single-serve packaging is creating a capacity to consume for people with little cash flows.

Today, shampoos could reach 97 per cent of the population in India because of the sachet revolution, Prahlad said at a session on "The Future of Competition" at the second day of CII Partnership Summit here.

However, corporates should focus on changing the packaging of these single serve sachets from the existing plastic to some bio-degradable materials to protect the environment, he suggested.

The evolution of direct distribution system, which is the second key driver of value creation, enabled firms to have thousands of individual entrepreneurs marketing their products across the country, particularly in the rural areas, he explained.

The third important factor is the increased rural connectivity that ensures that the asymmetries related with access to information, choice and social standing in rural areas would diminish and thus force Indian companies to consider tastes of consumers at the bottom of the pyramid while designing products.

He said focused chat rooms were the fourth major driver of change that enabled firms to interact with their customers and receive their suggestions, which has increased transparency to a greater extent.

The fifth key driver was the wireless revolution in the country that increased the ability of corporates to reach out to customers any where any time.

In the global context, Prahlad said widescale deregulation taking place across sectors around the globe is driving companies to redesign their value creation strategies.