Can C.K. Prahalad Pass the Test?

It's all the potato's fault. C.K. Prahalad might still be ensconced in his old life as revered management guru. He might still be teaching strategy to rapt MBAs and senior executives at the University of Michigan, still driving home each night to his lush 60-acre spread in suburban Ann Arbor. He might still be charging top dollar to advise companies -- paid richly to scare the bejesus out of powerful CEOs and, in the process, to help save them from ruin.

Instead, about five years ago, Prahalad read a book about the history of the potato and how its eventual spread transformed the world. Somehow, it made him think differently about the Internet. Just as international trade had fostered the potato's growth, the Internet would foster the global diffusion of individual power -- and that would transform the world.

The connection is perhaps obvious only to Prahalad. But that's his way. "If you want new ideas, you have to push yourself into the periphery," he says.

Prahalad's periphery is a nondescript office in San Diego overlooking a parking lot and a dusty dry canyon. Since April 2000, the 60-year-old has been chairman of a small, profitless high-technology company called Praja Inc. And he is doing what many executives of small, profitless high-technology companies do these days: He's working the phones, offering to fly up to the home of a GM executive (a potential customer) for a quick meeting. He's crisscrossing the globe in search of funding. He's agonizing over layoffs. And, oh yeah, one other thing: With this modest, 30-plus-person company, he is also trying to change the world.

This is the story of a man who had it all and decided that it wasn't enough. Instead of slowly lowering the flame on a white-hot career, Prahalad has lit an entirely new flame. He has taken a leave from Michigan, dramatically scaled back his consulting work, put up several million dollars to get Praja going, and moved his family to San Diego. "He's taking financial risk, professional risk, reputational risk, and personal risk," says B. Joseph White, dean of the University of Michigan Business School. And yet, adds White, "it's totally in character."

What Prahalad wanted was a new, huge challenge. Not incidentally, he also wanted to create a laboratory for the application of the ideas that he had been preaching to others.

This is a personal test, the latest step in a search for self-knowledge that has defined Prahalad's life. "I was in a very good zone of comfort," he says. "And I felt that this opportunity was so large that I needed to experiment with it myself. What we're selling is a new way to run a business. Our ultimate motivation is to make a difference."

The collapsing economy has made that job tougher than Prahalad had ever imagined when he abandoned his life in Ann Arbor. Yet now he appears more committed than ever to Praja's ideals and technology. "You have to have faith," he says. "You cannot lead if you don't believe."

"Consumers do not have much share of a voice. Now they do."

What's in a name? In Sanskrit, praja means "common people." Prahalad and cofounder Ramesh Jain, the company's 52-year-old CEO, say that it is the inverse of the word raja, which means "nobility." It is not, they insist, a play on Prahalad and Jain, despite employee jokes to the contrary. At its most basic, Praja is a high-technology company that allows people to personalize their own experiences on the Internet -- whether as a sports fan, a student, a data analyst, or a farmer. Its platform, ExperienceWare, organizes data by context, rather than by time or written words, sorting such information as text, video, audio, and sensory data. Prahalad and Jain think the implications of the process are cosmic.

"The problem so far has been data as information," says Prahalad. "We are still operating as if we never left Gutenberg. If you look at keyword searches, the document is still going to be the organizing idea. But now the metaphor is not going to be the document -- it's going to be the experience."

Prahalad, a mustachioed, bespectacled, slightly round man, fills the room when he speaks. He is a contagiously high-energy guy. His language, while complex and academic, is sprinkled with expressions meant to draw in the listener. "Is it not?" he asks often. "Okay?"

Prahalad says that Praja will facilitate the most profound impact of the Internet: the empowerment of the individual. The Internet is rapidly democratizing information, and the effects are mind-boggling -- from the rise of global antibusiness activism to the organized cells of consumers everywhere. "Consumers did not have much share of voice," he says. "Now they do. There is a fundamental transition that is taking place -- from a firm-centric society to a consumer-centric society."

In a consumer-centric society, says Prahalad, everyone -- even the poorest of the poor -- can gain more control over their own life. "Why don't people have economic opportunities? Because there's no information. You don't know what the price of fish is in the next village. The large-company Internet business models, the Internet poor, the new business models -- they're one big circle. They all interact with one another. But we have to make this a business issue."

And that is exactly what Prahalad has signed on to do.