Explaining how Prahalad and Krishman's RG, N1 formula applies to Operations - Essay Example

Explaining How Prahalad and Krishnan’s R=G, N Formula Applies To Operations Introduction In present days, the nature of association between customers and organizations has transformed radically. Traditionally, organizations developed the products and services by considering undifferentiated customers. However, in modern days, organizations have progressed through several levels of marketplace segmentation regarding different customer groups with diverse choices. Today, organizations have reached to that point where convergence of internet, digitization, and the merging of industry and technology limitations are generating new demand forces in the market.

Previously, it was anticipated that organizations build value and then communicated the value with the customers; however, this product oriented outlook of building value is swapped by co-creation of value through personalization of customers’ experience (Prahalad & Krishnan, 2008). Emergence of Prahalad and Krishnan’s Formula Nowadays, new managerial demand arises which necessitates new bases of value formation in organizations. Prahalad and Krishnan had depicted that in today’s competitive business environment, organizations need to tailor the products by considering the requirements of each customer groups in order to gain access to new assortment of dealers.

The out-dated methods of gaining competitive advantage are disappearing and new sources are evolving for organizations. Prahalad and Krishnan recommended that inner capability of an organization of reconfiguring the resources by concentrating on plainly recognized, apparent and robust business procedures which create connection between organizational strategy with business models and business tasks have become durable differentiators in today’s business environment. They had developed the formula R=G and N=1 and claimed that it can generate strong competitive advantage for organizations by recognizing the tendencies and prospects in the market.

R=G, N=1 is an outline which necessitates blending numerous disciplines in organizational business processes (Prahalad & Krishnan, 2008). R=G, N=1 Formula in Business Operations The alteration from traditional business operations to R=G and N=1 has two basic aspects which are value and capacity of organization. Value in this sense is the exclusive and tailored experiences of customers. On the other hand, capacity denotes the magnitude and scope of organizations to fulfill the expectations of customers.

In R=G and N=1 framework, it is being assumed that no organization is large enough to fulfill the requirements of one customer at a single time. Therefore, organizations focus on access to the resources rather than proprietorship (Leavy, 1975). The changing focus to the individual experiences of customers has saturated the industries separately. Diversity, flexibility, variation, and incessant innovation have become critical for success in today’s business environment which are embedded in the concept of R=G and N=1 formula.

Competing in international business context necessitates executives to recognize the appropriate prospects for competency and innovation. Whatever the business is, finding the appropriate mix of capabilities for flexibility and efficiency is the key for success in R=G and N=1 framework. In business operation, N=1 requires businesses to concentrate on the value of separate customers experience and modify the products or services consequently. On the other hand, R=G requires businesses to concentrate on procuring raw materials for operations from ranges of suppliers.

Applying R=G model in business operation delivers the prospect for organizations to pull the vital resources in order to generate personalized products or services for each customer (Johnston, 2008). The value of customers has changed from being product and service oriented to solution oriented and experience centric. Therefore, all organizations in modern days are pursuing access to best aptitude and best sources of resources which can lead to competitive advantage. For instance, when customers purchase new vehicles, they are provided with an experience by having an opportunity to test drive which can help to create a unique customer experience.

In service organizations also customers can get exclusive personalized experience in replicated settings. Organizations are seeking new and improved methods to make value and differentiate their offerings to entice and retain customers in order to generate higher revenue. In present days’ competitive business environment, Prahalad and Krishnan’s formula can be applied in several ways, for instance, in service organizations by delivering outstanding customer experiences and feelings. Any organization, where services are fore-grounded and open can definitely add value to the customers.

In product oriented organizations, customers can be included in pre-purchase experience, which can significantly improve the value to the customers (Edvardsson, Enquist, & Johnston, 2003). Conclusion Prahalad and Krishnan’s formula has gone beyond the mass customization through recognizing the activities, necessities and aptitudes of individual customers and creating experience which can be unique to them. A single organization cannot deliver complete N=1 environment, as there is need for uniqueness (such as new ideas, new infrastructure or new sources of resources) at the centre of organizational structure, manipulating the entire operational network through shared outline as well as creating the morals and customer interface.

The cycle time of operational process and speed are critical elements for N=1. To apply the formula of Prahalad and Krishnan, organizations require incessant scaling and economizing of business operations. With a number of organizations applying the R=G and N=1 formula in their operations, the characteristics of competitive advantage is shifting accordingly, which in turn has created new approach of rivalry in the market among competitors. References Edvardsson, B., Enquist, B., & Johnston, R. (2003). Cocreating customer value through hyperreality in the prepurchase service experience.

Journal of Service Research 10(10), pp. 1-13. Johnston, L. (2008). The new age of innovation: driving cocreated value through global networks. Business Book Review, 25(34), pp. 1-12. Prahalad, C. K., & Krishnan, M. S. (2008). The new age of innovation: driving cocreated value through global networks. New York City: McGraw-Hill Professional. Leavy, B. (1975). Prahalad’s new value creation formula: N=1, R=G. Strategy & Leadership 36(6). Bibliography Jacobides, M.G., Knudsen, T., & Augier, M. (2006). Bene?ting from innovation: Value creation, value appropriation and the role of industry architectures.

Research Policy 35, pp. 1200-1221. Schroeder, R. G., Goldstein, S., Goldstein, S. M., Rungtusanatham, M. J. (2010). Operations management: contemporary concepts and cases. US: McGraw-Hill/Irwin.