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How does this get delivered?

Prahalad: Take General Motors' OnStar navigation system. Here's a company that delivers an experience on demand, using technology convergence. It's all about delivering value based on customer context. Say I'm a single parent living in Pike's Peak. In winter, wouldn't it be nice if, before I take the kids to school, somebody would call me and say there is going to be a blizzard, and tell me not to take a particular route? Or if I do, asks me to keep OnStar turned on and, if it's okay with me, let OnStar tell me what to do and what not to do?

Now that might be a unique experience for me, but Venkat may have an entirely different need. Say he's driving from Ann Arbor to Chicago. He wants to stop and have dinner, and he prefers Italian food. OnStar can tell him the best way to get that. Furthermore, that is Venkat's need for an experience at the moment, not mine. My need was for safety information. In other words, what we're saying is that customer experiences are driven by events, and it's all very contextual, and it is not uniform for all of us—but that with mobility and technology convergence, companies can help to deliver those different types of experiences to their customers on demand. In this case, customers and companies co-create that value by giving each other information about what customer value means at the moment.

Ramaswamy: There's been a lot of talk about the commoditization of information technology. Now everyone has the same information technology. The differentiator now is not the product but the personalized experience. The value to the customer is in the personalized service—which is sensitive to real-time location and need. The value to the company is it's delivering a unique value or service to people that customers can't get elsewhere and are willing to pay for.

What are the implications for IT?

Ramaswamy: Today's CRM is all about what the company wants. But in this new world, value is co-created by both the customer and the company, and part of the "how" of doing this is that a dialogue between customer and company needs to be captured, not just profile data.

Prahalad: There are phenomenal implications for IT in this, in how you create the experience and deliver it quickly. For most companies, their technical infrastructure will have to change from a system that's driven by transactions—I give the company money and it gives me something in exchange—to event-driven or experience-driven IT. They must deliver to customers a service or experience that customers want on-the-fly, specific to where the customer is at a given moment. When companies build these new infrastructures, they will need to develop the level of granularity and the level of assimilation that customers want in their engagement with the company at any given time. These event-sensitive IT infrastructures that we need to build won't be only about business analytics—measuring what just happened. These will need to be built differently, around dynamic events.

Experience cannot happen without events. I must be here or I must talk to you or I must eat breakfast. With no event, there is no experience. What this means is companies will be able to leverage specific events in customers' lives within the context of where it happens, which is as important as when it happens—and that will determine what companies can offer in terms of value. My getting a heart problem at 9 o'clock in the morning has a different meaning than if I got it at 2 o'clock at night. And then where I have my heart problem also matters. If I get it in Ann Arbor, where I know all the doctors, it's very different from getting it in New York City or in, say, Costa Rica.

And there's also the question of how engaged I am at the moment, how urgently I think I need something from the company. Now obviously, if I'm having a heart attack, I'm totally engaged with the hospital that's providing me a service. If I'm suffering from tennis elbow, I may not be so totally engaged with that hospital; in fact, I might not reach out to it at all.

The challenge is, how do you get line managers focused on the customer in this new and more dynamic context? They must experience the business like the customer does, in real time. That will mean, at its very basic IT level, real-time alert systems. Traditional archival information, which has been an IT problem for a long time, won't help me now. If a customer is having a problem today but you as a manager won't know that for another week, it's not going to help anyone. So how do you build IT systems that are capable of continuous resource reconfiguration, rapid application development and real-time device alerts? That will be the challenge facing CIOs and IT leadership teams in the coming decade.

This article was originally published on 12-01-2003
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