S+B: What happened next?
PRAHALAD: In the late 1960s, I worked for a company called India Pistons, which made automotive components. I loved teaching, so in my spare time, I taught courses on management at the Indian Institute of Technology in Madras. Then on Saturdays, for the All India Management Association, I ran computer simulation games on production planning with two other guys. I also worked over the weekends in the Vellore Hospital [the Christian Medical College and Hospital], a major facility close to Chennai, scheduling outpatients using some operations research tools and technology management.
Meanwhile, I was very keen to write. I found writing was the best way to clarify my own thinking. When you talk you can be vague, and the English language can be delightfully vague. When you sit down to write, you see whether you can express your ideas clearly or not. That habit has stayed with me. When I think I have an interesting idea, I try to write it down for myself first.
I then got an MBA at the Indian Institute of Management in Ahmedabad. I knew enough about industrial engineering by then to be dangerous. It became very clear that to be taken seriously as a teacher or writer, I had to get a good Ph.D.; it was like a union card. In strategy, the choices were very narrow at the time; you went to Harvard to get a strategy education, so that’s where I went.
S+B: What was that like?
PRAHALAD: It was my first time in the U.S., but many of the cases were easy for me, because I had taught them before in India. I spent a lot of time trying to understand large-scale technology management. For example, with Mel Horwich at MIT, I wrote the first series of cases on the evolution of the barcode. I was also very interested in how global companies work, and in strategy. My dissertation was about how a large global chemical company allocated resources. It introduced the idea of balancing global integration and local responsiveness as an essential tension in understanding a multinational company. Corning was a big example at the time, and one conclusion was that you can’t run a diversified global company with one approach to management, because the level of integration and responsiveness is very different for television tubes than it is for cooking ware.
I worked on similar subjects through the 1970s and 1980s, with Pankaj Ghemawat, then with Yves Doz, and then Chris Bartlett and Sumantra Ghoshal. We all started with the same framework — the tension between global and local — but we approached it in different ways.
Of course, we all invented our own terms. Indeed, the biggest impediment in the growth and strategy literature is that, unlike in the financial literature, there are no standardized terms. There is no organizing thesis and principle. My bottom of the pyramid becomes someone else’s “base of the pyramid.” What’s the difference? There’s not even agreement about appropriate units of analysis. Is it one person? A team? A division? What is the fundamental building block of HR?
Changing the Strategy Paradigm
S+B: Did you go directly from Harvard to Michigan?
PRAHALAD: No. I went to India first, but I only stayed a year and a half. There was no ability to do research there; people wanted to kill the multinationals, or at least to nationalize them — not to study them. So I came to Michigan. I met Gary Hamel there when he was a student; he got intrigued with some of the crazy ideas that I had, and our work together led to the research which led to Competing for the Future.