Three beliefs shaped the thinking of C. K. Prahalad (hereafter ‘CK’): business school research must have managerial relevance; business is a powerful positive force for the greater good; and much of extant management theory is not capable of explaining business realities. These beliefs led to three distinguishing characteristics in CK’s scholarly contributions. First, CK opened up new fields instead of exploiting the same concept throughout his career. This is illustrated in some of his groundbreaking ideas: strategic intent, core competencies, bottom of the pyramid, customer co-creation. None of his books were written with the same co-author. Second, he was a contrarian thinker. His work is full of counter-intuitive insights and fresh thinking. Third, CK had a strong bias towards managerial action. Most researchers confirm hypotheses using a wide range of samples. By definition, such research implies that the majority of companies have embraced the idea. CK was interested in next practices, not current best practices. He observed a few companies who are leaders and captured their practices.

This article highlights the three distinguishing characteristics of CK’s work through three of his books.

The Multinational Mission

Until the early 1980s, global strategy was viewed as a choice between global scale and local responsiveness. Global scale implies standardization (Prahalad and Doz 1987). Local responsiveness implies differentiation. Michael Porter’s pioneering work (1980) posited that competitive strategy has to make a choice between differentiation and cost leadership. Multinational strategy, too, was viewed as making a similar choice.

CK argued that multinationals do not have to choose between scale and localization. In fact, an effective strategy must optimize both. CK introduced the now famous ‘integration-responsiveness’ (I-R) grid and showed how multinationals can ‘have their cake and eat it too’. First, he argued that multinationals should develop strategies at the business level, not at the corporate level. He showed that three of the Corning businesses – electronics, TV products and cookware – were at different places in the I-R grid. Second, even within the business, it is best to break down the overall value chain into its components and ask where one can derive scale benefits and where it is good to localize. This fine-grained approach assures the business the benefits of differentiation and cost leadership. Third, CK argued that the organizational architecture has to be re-crafted to support the multinational mission to balance local demands and global scale.

Global strategy researchers in the past 25 years have been strongly influenced by CK’s thinking (e.g., Bartlett and Ghoshal 1988; Ghemawat 2007).

Competing for the Future

Perhaps CK is best known for his book Competing for the Future(Hamel and Prahalad 1994). This is a groundbreaking work which challenged much of conventional wisdom. Let me give three examples:

  • Mike Porter’s work (1980) focused on product/market imperfections and how a firm can create competitive advantage through erecting entry barriers to sustain such imperfections. CK’s position was that there are also factor market imperfections and a firm can create lasting advantage by building core competencies that distinguish it from others. CK’s work gave momentum to the resource-based view of the firm and the dynamic capabilities literature (Helfat et al. 2007).

  • Behavioural theories have posited that goals that are achievable are the best motivators. Unrealistic goals are argued to be a demotivator (Maciariello and Kirby 1994). CK introduced the concept of strategic intent – goals that are bold and unrealistic. John F. Kennedy’s ‘man on the moon’ is an example of an unrealistic goal. A bold intent has the potential to produce breakthrough innovations. Why? Because people are drawn to a bold and challenging goal. Deep inside, we feel uplifted by the thought of climbing a mountain in a way we are not by the idea of scaling a molehill. Performance is a function of expectations, since we rarely exceed our expectations or outperform our ambition.

  • Marketing scholars have argued that high market share leads to high profitability due to experience curve effects (Kerin et al. 1990). CK provided many examples where small, resource-challenged firms were unseating incumbents: Honda versus General Motors; CNN versus CBS; Canon versus Xerox; Wal-Mart versus Sears. CK challenged the prevailing theories about the market power of incumbents and the advantages of market share.

Fortune at the Bottom of the Pyramid

Development economists have long focused on poverty, and NGOs and governments have devoted considerable efforts and resources to the problem, yet we have not redressed it (Prahalad 2005). CK offered a fresh and unique approach. He argued that poverty alleviation is not a problem for charity, it is a problem for commerce. He presented a framework showing how the private sector and entrepreneurship can serve the bottom of the pyramid (BOP) and make profits in the process. Not only can the world’s poor be relevant customers, but they represent the faster-growing customer segment. Meeting their needs requires breakthrough innovations that have to scale – something that corporations know how to do. There are precedents: the Unilever subsidiary Hindustan Lever has transformed the distribution model for rural India, thereby bringing the enormous rural population of that country into the consumer base. According to CK, we will have succeeded when business views BOP as a mega opportunity, with billions in profits at stake.

Concluding Thoughts

CK practised what he preached. There are two views of strategy. One argues that the firm should match its resources with external opportunities. Another, the one CK espoused, is that the firm should expand its resource base to meet its ambition. Most doctoral students’ lifestyles are constrained by meagre scholarships. As a doctoral student, CK took on a job and consulted with corporations so that he could expand his resource base to live more like an executive. His life is his message.

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