C.K. Prahalad on managing volatility

C.K. Prahalad thinks we are entering a period where a key challenge is managing volatility and discontinuities.

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C.K. Prahalad offered an interesting perspective on the economic crisis when he spoke today at HSM’s World Innovation Forum conference in New York City. Prahalad, who is the author of the well-known book The Fortune at the Bottom of the Pyramid, said he thinks that, as a result of the economic crisis, every global industry will be restructured –and it’s not clear that the dominant players will remain dominant.

In particular, Prahalad sees us entering a period where a key challenge is managing volatility and discontinuities. Managing volatility, according to Prahalad, requires two very different skills: strategic clarity as well as operational agility and resilience.

Prahalad suggested that companies need to learn to innovate within the constraints imposed by volatility — for example, with low capital-intensity businesses,  with continuous churning of business models and with the capacity for real-time reconfiguration of resources.

Prahalad identified four forces behind the new economic structure he sees emerging: sustainable development; global markets; connectivity and social networks; and inclusive development (i.e., economic development that includes the world’s poor.)

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Comments (2)
Martha E. Mangelsdorf
Good point and good comment; I was just capturing one aspect of the speech.
Best,
Martha E. Mangelsdorf
Senior Editor
MIT Sloan Management Review
ejoachimsthaler
There was this and a lot more that CK Prahald spoke about. He described the firm of the future -- that is not merely about disruptive business models but one that is defined in terms of four dimensions of the volatility sandbox.

His speech was inspiring and forward looking -- providing his thoughts on where this whole recession will lead us in the future. Well done