With his groundbreaking work on core competencies, modern strategy and tapping markets among the world’s poorest consumers, CK Prahalad has proven time and again that if there is a successor to Peter Drucker, he is it. I had a chance to speak with Professor Prahalad in early-February and was inspired to write this account of the interview.
As many readers will know, Dr Prahalad practices what he preaches. In 2000 he left a lucrative consulting practice and a tenured professorship at the Universityof Michigan to captain a technology start up. Praja.com (since sold to TIBCO) was a platform that aimed to flatten or eliminate the typical hierarchies in organisations through access to information that would empower the individual, no matter their position in the company.
Citing numerous examples, Dr Prahalad has demonstrated the power of this approach. None is more telling than the story of India’s farmers, told in his 2004 book, The Fortune at the Bottom of the Pyramid. Uneducated and beholden to ruthless middlemen, for decades, India’s farmers had realised only tiny fractions of the revenue generated from their produce.
By providing internet access, community computers and minimal training through an initiative called “e-Choupal”, the farmers (many illiterate) were soon accessing the Chicago Board of Trade to check local and global futures prices before going to market. Today, thousands of Indian farmers use the internet to access best practices in modern farming, including soil-testing techniques and crop rotation, and to make market-driven decisions on what to plant and when to sell. Happily, for the farmers, middlemen are becoming a thing of the past and rural living standards are on the rise wherever e-Choupal has been introduced.
You might be wondering what talent management lessons this holds for sophisticated organisations? According to Dr Prahalad, “The new generation will not work any other way, they’ll demand access to information”. He believes this will change the meaning and purpose of hierarchies because hierarchies have always been sustained through the flow of information. He questions the point of hierarchies if everyone can access information. “Information is power and if everyone has it, the hierarchy collapses”.
It is clear from talking to Dr Prahalad and reading his recent work that he believes corporate transparency and less hierarchy result in stronger organisations. He points to our political systems. “Democracies have their faults but they have proven to be far more resilient, far more sustainable than the alternatives. The rigid command and control structures, still common in many organisations, stifle innovation and creativity and can never unleash the full potential of the workforce.”
Dr Prahalad’s remarks triggered a rush of thoughts. If we give people a chance and the right tools, can even those we wouldn’t classify as “talent” do incredible things? “Democratising information democratises the process of managing the large organisation and raises intriguing questions about leadership,” he said, and then went on to explain the implications for talent management practices. “Talent has nothing to do with hierarchy. In the past we formed teams of people at roughly the same levels, the junior teams having very little influence. Today, to compete effectively, we must form hierarchy agnostic teams that attract views and ideas at all levels. Senior people have to learn how to listen to junior people.”
Dr Prahalad explains that a quiet revolution is underway and the first companies that will have to master this are in India and other developing countries. He says that Tata, Wipro and others have to come to grips with this soon given the demographics in India. But they will benefit from being the pioneers, he states: “A democracy is capable of being challenged constantly – like our political system. Such a system in place in an organisation will give it tremendous long-term advantage.”
At this point in the conversation, I was gripped by the possibilities. True democracies at work could be revolutionary. Dr Prahalad’s long-time partner in management strategy thought leadership came to mind. Gary Hamel’s provocative 2007 book, The Future of Management, challenges leaders to cast aside current organisational structures and management beliefs to achieve breakthrough results. I asked Dr Prahalad about the consistencies with his work.
“How does Apple do what it does? Manufacturing is done in South-East Asia, design is centred in California. It’s not only about Steve Jobs or a small band of innovators.” Prahalad attributes some of Apple’s and other successful global companies’ good fortunes to having learned how to manage global talent virtually and remotely, with less hierarchy and greater flows of information. Beyond Apple, he believes that ultimately transparent and democratic companies, like Brazil’s Semco, are well-positioned, “but it is culturally very difficult to stop the hoarding of information as it is a source of private power. Asking people to move away from that, to make information sharing a competitive advantage, can take years. It is both cultural and generational. Luckily, the younger generations have grown up with free flows of information and, as I said before, they will demand nothing less.”
Dr. Prahalad is the opening keynote at the Human Capital Institute’s US National Summiton 10March in Scottsdale, Arizona (www.humancapitalinstitute.org).
By Allan Schweyer, president of the Human Capital Institute