From P2P Foundation/Blog Ref http://www.p2pfoundation.net/Transfinancial_Economics
The participation and involvement of consumers in the creation process formerly dominated by businesses.
"Co-creation is a very broad term with a broad range of applications. We define co-creation as any act of collective creativity that is experienced jointly by two or more people. How is co-creation different from collaboration? It is a special case of collaboration where the intent is to create something that is not known in advance." (http://www.osbr.ca/ojs/index.php/osbr/article/view/1012/973)
2.
From the Wikipedia:
"Co-creation is the practice of developing systems, products, or services through the collaborative execution of developers and stakeholders, companies and customers, or managers and employees. Isaac Newton said that in his great work, he stood on the shoulders of giants. Co-creation could be seen as creating great work by standing together with those for whom the project is intended." (http://en.wikipedia.org/wiki/Co-creation)
1. The wide range of contexts, interpretations and applications of co-creation in the literature. Co-creation is used to describe versions of highly focused crowdsourcing (e.g. one-off collaborative naming using a site like Kluster’s NameThis), but also large-scale, ongoing, innovation programmes that engage customers in communities of innovators or developers with powerful application in the public sector, e.g. the co-creation of health services.
2. The term co-creation is often used fairly synonymously with related ideas such as open innovation, collaborative innovation, customer-led innovation and so on. Mass customisation – such as NikeID (trainers), Threadless (t-shirts) or even customisable M&Ms. Working out which is a subset of which and identifying the ‘distinctions’ that allow us to identify the co-creative is a challenge." (http://www.promisecorp.com/blog/?p=116)
"there is also a form of co-creation that is largely independent of markets, where individuals willingly come together to create and share self-generated information, knowledge and content independent of any mechanisms of market exchange. In The Wealth of Networks, Yochai Benkler explores the dimensions and potential of such non-market co-creation / collaboration in some depth.
Making the distinction between the two types of co-creation primarily depends on how we define a market… Put simply, i would suggest that a market is where there is some kind of economic mechanism or price for the value exchanged between two parties and where the value is proprietary, that is, it is produced and owned by one party who expects some value in return for its exchange.
But in a non-market context, there is no economic mechanism or price for exchange and no ownership of information or goods. In a co-creation sense, such environments are characterised by the collaborative creation and sharing of knowledge and information by individuals in decentralised communities. The “value” derived by individuals in such communities is not moderated by an economic price but by social factors, experiential elements, meaning, learning, attention and shared values. Importantly, the co-creation that occurs here is independent of any market mechanism or desire for ownership by any party. We can see these forms of co-creation in open source software, media, journalism, blogging, entertainment, gaming and other digital environments. e.g Wikipedia.." (http://chrislawer.blogs.com/chris_lawer/2009/04/market-and-nonmarket-cocreation.html)
"In the following twelve statements, I develop a logic that concludes in a concise definition of “co-creation” and how firms may derive competitive advantage by facilitating co-created value.
1. Traditionally, customer value has been defined and differentiated by product quality (Features, Attributes and Benefits - the old Kotlerist FAB of 1950-1990s marketing textbooks).
2. Open source product innovation (or “co-production” not co-creation) emphasises the technical co-production of new and improved products, their features and attributes with customer's direct involvement in the idea-generation, concept development stages of the innovation process; it is limited to the design, development and testing of enhanced functional “things”, “objects” or “technologies” with individuals or in communities of users.
3. Increasingly though, value is migrating from products to experiences as customers seek out personalised value to satisfy their situational needs. (Drivers: demand for better experiences, technology enablers, enhanced cognition, new sources of knowledge, increased socialisation, product functional similarity, etc.)
4. Customers are therefore placing increased value on the quality of the experiences they have when they interact with firms and their products (and services).
5. The quality of an experience is determined by how relevant or personalised the experience is for an individual customer; Experience quality is a combination of the functional and emotional elements specific to the situational and temporal context of each customer or context.
6. The locus of value-creation therefore shifts from product quality and design innovation to experience design and quality innovation, or service design.
7. As value-creation is “innovation”, traditional firm-centric innovation processes are becoming distributed in order to provide the means to deliver ongoing, adaptable, personalised, unique experiences for individual customers in unique space – time – event contexts (or “experience environments”).
8. Therefore, the locus of innovation is shifting towards the individual in distributed experience environments.
9. In distributed experience environments, the firm and customers come together to create value; value in the form of personalised unique experiences for customers; knowledge, capability for both and revenues and profits for the firm; the by-product of which is know-what and know-how to continue to deliver and shape that value.
10. Therefore, co-creation defines the processes of distributed value-creation between firms and customers or between customers directly, to create personalised experience value and knowledge, or enhanced cognition defined in the broadest sense and goes beyond “rational inference, know-what and know-how, to include perception, interpretation, value judgments, morality, emotions and feelings” (after Nooteboom’s Cognitive Theory of the Firm, 2009).
11. Markets are therefore forums for the co-creation of personalised experiences; value is differentiated according to the quality and relevance of personalised experiences for customers (as in Prahalad and Ramaswamy, The Future of Competition, 2004).
12. To facilitate co-creation, firms must therefore develop platforms that bear capabilities for the creation and release of heterogeneous, personalised customer experiences or distinctive, unique value. These platforms provide the foundation for deriving competitive advantage arising from enhanced service and experience quality, knowledge capability, and novel learning mechanisms for developing dynamic capabilities for ongoing innovation performance." (http://chrislawer.blogs.com/chris_lawer/2010/03/developing-a-concise-definition-of-cocreation-as-a-foundation-for-innovation-and-competitive-advanta.html)
1. Value Co-creation:
ATM Cash Machine, Airport Check-In
More Complex Value Co-creation:
"Truffle-tree.co.uk allows customers to adopt a truffle tree in France. Customers who adopt a tree (annual price £145 / $239 / €219 plus an annual maintenance fee) will either receive the truffles from “their” tree or can choose to pool their “harvest” with others to spread the risk of a low harvest. The experience of adopting, and being able to visit, your tree adds value, in comparison to otherwise just buying truffles, but does not provide for co-creating further, for example by planting the tree or actually harvesting your own truffles.
Other, similar, examples are http://www.kuhleasing.ch/ or http://www.nudo-italia.com/ where you “adopt” a cow for cheese or an olive tree for olive oil."
2. Item/Product Co-Creation:
"At CrushPad customers can participate in the decision making process in order to get to the end result of your own bottled wine. Customers can define the type of grape, the recipe and many other factors making the item/product a personal creation. In comparison to the Category “V” businesses CrushPad does not only have an adoption scheme, but involves and educates the customer beyond the initial and superficial level.
At Threadless.com customers can send in their own t-shirt designs, which are subsequently voted on by the other customers and visitors to the site. The winning design is then printed and sold as a newly created item/product. Again, consumers have a direct participation in and influence on the final outcome of the product development process. By the way, the winning design is rewarded with a cash prize as well as other benefits."
3. Process/Business Co-creation
"the Process/Business Co-creation level requires an almost completely new business structure that is fully supported by the management, its structure and its processes."
Example:
"At Ladybank members can collectively make decisions on business decisions by a majority vote. Once in production, members will be able to influence the style of whisky produced at the distillery. Through committees members could also influence other decisions to make it a business driven by its customers." (http://www.co-creators.co.uk/?p=10)
4 types of co-creation
From Fronteer Strategy [1]:
"The four types of co-creation
The above report is downloadable in pdf form via http://www.fronteerstrategy.com/downloads_files/Fronteer%20Strategy%205%20Guiding%20Principles%20in%20Co-creation%20White%20Paper%20April%202009.pdf
See: the Co-Creation Landscape, by Jess Charlesworth [3]
Full entry has nice graphs and is accompanied by a link to a white paper.
1. Large corporations who engage with a community of advocates to co-create on an ongoing basis. (Lego Mindstorms)
2. Large corporations who call for agencies to submit ideas to then partner with or broker a deal. (P&G with NESTA)
3. Consultancies or agencies who set up and facilitate the whole co-creation project to act as a bridge between a network of collaborators and a corporation. (Companies such as us – Sense Worldwide!)
4. Large corporations who call for ideas by offering a one-off contest with prize money or a manufacturing run. (Muji Design Award)
5. Large corporations who outsource briefs to communities that are fostered online. (Innocentive, Kluster, Crowdspirit)
6. Large corporations that host an online platform where individuals submit ideas or requests based on the brand, which that business can then select for development. (Cuusoo with Muji)
Liz Sanders & George Simons:
"There are at least three types of value in co-creative activities and relationships: monetary, use/experience and social. We will describe them as separate entities.
Monetary Value
In The Brand Gap: How to Bridge the Distance Between Business Strategy and Design, Tom Peters was quoted by Marty Neumeier as saying: "There is an old saying in business, what gets measured, gets done". The monetary value of co-creation is the one that usually receives the most attention in business circles. Co-creation that results in monetary value is fueled by the desire to make money in new ways, more efficient ways, or in ways that provide sustainable revenues over longer periods of time. Economic value is a quantitative proposition and based on relatively short-term needs. Further, it is mostly based on transactional metrics of exchange between what the company offers and what the customer consumes and/or experiences.
Co-creation associated with monetary value may not require direct contact between the company and its customers because the conversation can be mediated by tools of information and communication. This can be seen in web-based surveys that ask consumers to select features of choice or the crowd-sourcing of large numbers of respondents.
Use or Experience Value
In Co-creation experiences: The next practice in value creation, C.K. Prahalad and V. Ramaswamy noted that ”The meaning of value and the process of value creation are rapidly shifting from a product- and firm-centric view to personalized consumer experiences”. The Dornbirn Manifesto states that “The users-producers-participants are creating direct use value, videos in YouTube, knowledge and software in the case of commons-oriented projects. This use value is put in the common pool, freely usable, and therefore, does not consist of scarce products for which pricing can be demanded. The sharing platforms live from selling the derivative attention created, not the use value itself”.
The use/experience value of co-creation is fueled by companies’ desires to transform consumers into users so that the products and services they design, produce and sell will better meet people’s wants and needs. One could argue that this is directly related to monetary value, this value extends beyond monetary gain.
The experience value of co-creation applies not only to products and services, but also to brands and branded environments. There is a new attitude that a brand is really an emotional connection, built fundamentally on trust, and a gauge of how invested a customer feels about a company’s product/service. A charismatic brand develops an allegiance whereby followers are concerned and invested in not only the brand's survival but also its growth. Followers are willing to get involved in making these brands stable and successful.
Social Value
Eero Saarinen reminds us to “Always design a thing by considering its next larger context — a chair in a room, a room in a house, a house in an environment, an environment in a city plan”.
The social value of co-creation is fueled by aspirations for longer term, humanistic, and more sustainable ways of living. It supports the exploration of open-ended questions such as “how can we improve the quality of life for people living with a chronic illness?” When working within this context one does not generally have preconceived notions of the outcome since determination of the form of the outcome is part of the challenge. Co-creation of this type involves the integration of experts and everyday people working closely together. Rapid prototyping and collective visualization of ideas and opportunities can enhance their collective creativity. Direct personal involvement between people is needed for this type of co-creation. Multiple divergent points of view need to be expressed, listened to and discussed. Empathy between co-creators is essential. Although social networks may be used to help identify and locate the participants, the real work in this form of co-creation favours more personal interactions and conversations.
All three types of value in co-creation are important to understand and develop, and are at times inextricably linked. Social value can provide use/experience value as well as financial reward." (http://www.osbr.ca/ojs/index.php/osbr/article/view/1012/973)
1. Small Scale (Bespoke) Production
Before the industrial revolution and the emergence of mass production in the mid 1800s production was small scale. Depending on the type of product, it would be made on a small scale or bespoke.
2. Mass production / Transactional Marketing
During the first half of the 19th century the industrial revolution started in the UK and spread throughout the world. With it came mass production, making many products available to the masses that had been previously been the privilege of the rich. Mass production first popularized by Henry Ford’s Model T in the early 20th century continued to develop and dominate for much of the century. With increasing labour and production prices in Western Europe and North America, production was shifted to the Far East and later Eastern Europe in an attempt to maintain low production costs for mass produced products. With mass production came mass standardization and uniform products.
3. Mass Customization / Customer relationship marketing (customer retention)
With continued development standardized products lost their original appeal and a movement towards customization started. Mass customization only went mainstream in the 1980s and 1990s. Consumers, driven by the desire for choice and personalized products, demanded more than just one model or type of product. The company that could best satisfy consumers’ demand would remain ahead of the game and benefit financially. Still, companies seemed unable to satisfy their customers, who were unable to find products that they really wanted.
4. Co-created Products
Unsatisfied with mass customized products, consumers are looking for more input into the products they buy. With the development of the internet’s communication channels they are able to communicate these desires not only with their fellow consumers, but also with the companies they expect to make these products. What was true for mass customization also applies to co-created products – companies that can better satisfy their customers will stay ahead of the game. However, the step from mass production to mass customization was infinitely smaller than the step from mass customization to co-created products. The reason for this lies in the fact that this step requires not only business processes to change (considerably), but also for the managers’ mindsets to change who lead this change.
5. The Co-created Business
The co-created business follows on logically from co-created products. And indeed, why stop at products, if you can co-create the entire business. Let consumers have a say in creating the business that will be creating “their” products.
Example: he Ladybank Company of Distillers Club
6. Post co-creation = Small scale production?? (http://www.co-creators.co.uk/?page_id=25)
1. The over-reliance on technology platforms as the means of co-creative production. Offline and hybrid techniques receive less attention and are probably underutilised.
2. The centrality of the facilitator / facilitating organisation. Skilled moderation techniques are a feature of the co-creation approach that differentiate it from, say mass customisation.
3. The importance of fostering a transitional space and ‘play’ as a constituent ingredient in the innovation / co-creation process.
4. The potential of co-creation to reduce risk and increase speed to market (for new product development) but also the impact on word-of-mouth advocacy (among participants) and, internally, the potential for co-creation to increase belief and focus.
5. A current lack of measures or frameworks for understanding success." (http://www.promisecorp.com/blog/?p=116)
The Five Guiding Principles of a Co-creation
From Fronteer Strategy:
"The five guiding principles in co-creation
Details in Whitepaper [4]
"The balance of power in value creation is tipping in favor of consumers. How do companies co-create valuable experiences with consumers?
The traditional company-centric view says:
(1) the consumer is outside the domain of the value chain; (2) the enterprise controls where, when, and how value is added in the value chain; (3) value is created in a series of activities controlled by the enterprise before the point of purchase; (4) there is a single point of exchange where value is extracted from the customer for the enterprise.
The consumer-centric view says:
(1) the consumer is an integral part of the system for value creation; (2) the consumer can influence where, when, and how value is generated; (3) the consumer need not respect industry boundaries in the search for value; (4) the consumer can compete with companies for value extraction; (5) there are multiple points of exchange where the consumer and the company can co-create value." (http://www.amazon.com/Co-Creation-Connection-C-K-Prahalad/dp/B00006L5AZ)
Alan Moore further summarizes the insights of the above authors:
"The 5 Powers of the connected consumer
Four building blocks for co-creating value say the authors.
1. Dialogue at every stage of the value chain encourages not just knowledge sharing, but, even more importantly, understanding between companies and customers. It also gives consumers more opportunity to interject their view of value into the creation process.
2. Access challenges the notion that ownership is the only way for the consumer to experience value. By focusing on access to value at multiple points of exchange, as opposed to simply ownership of products, companies can broaden their view of the business opportunities creating good experiences.
3. Risk reduction assumes that if consumers become co-creators of value with companies, they will demand more information about potential risks of goods and services; but they may also have to bear more responsibility for handling those risks.
4. Transparency of information is required to create the trust between institutions and individuals." (http://communities-dominate.blogs.com/brands/2008/02/the-wonderful-w.html)
"I argue it is possible to identify two broad categories or styles of co-creation, 1) Value-Added within a Firm-Centric perspective and 2) a Customer-Centric Value-In-Use perspective (see the definition of Value)
1) Value-Added Co-Creation within a Firm-Centric Perspective
1. Product “Finishing”, The customer completes the product or service and is the final co-creator of value or actor in the business system or value chain, e.g. IKEA
2. New Product Design and Development (Lead User),
Here a limited number of expert customers are invited “into the firm” to share their knowledge and contribute to the development of new products and services. There is a good description of the Lego Mindstorms lead user project in February 2006’s Wired magazine. Other examples include Harley Davidson HOG events, Saturn Cars, Proctor and Gamble’s Connect & Develop programme and Silicon Graphics.
3. Existing Product Adaptation (Customer Feedback),
Here the company actively solicits expressed customer needs or feedback to improve its products, e.g. Cisco and Microsoft Knowledgebase
4. Mass Customisation,
This is the provision to the customer of a limited set of company-determined choices or options with which the customer can personalise a standard product or service template. Examples include Adidas custom shoes, Dell PC’s and BMW cars (plus most other manufacturers)
5. Open Community Ideation and Product Design and Development.
I differentiate the open-source movement because a) it is more distributed and b) firms cede more control to the community of users and creators. Also, open source tends to bias in digital environments, creating mods to games software for example as well as the well-known examples of Linux, Firefox and Sugar CRM. I also include Innocentive here because of its community basis for creating solutions to R&D problems.
6.
New Service Design, I distinguish new service design from new product design and development (Lead User) (2 above) because service tends to involve more consumers in the innovation process and are also easier to test in markets than products through experimentation, probe and learn approaches. Also, of course, service value is inherently more adaptable than tangible product value, involving more knowledge-rich interaction. Examples include Teliasonera’s testing and piloting of new mobile phone services and Alaris Medical Systems constant dialogue with customers to improve its advocacy offering.
2) Customer-Centric Value-In-Use Co-Creation
7. Real-Time Marketing & Service Adaptation,
Moving more to within markets and value-in-use with higher adaptability, this style of co-creation is characterised by high levels of customer dialogue and interaction, enabled by digital technology. This allows individual customers to change the value presented by the firm in real-time, so for example, Cemex allows its customers to modify the delivery time and quantity of cement to fit with their changing operational requirements, Fedex allows large corporate customers to change package transit times and destinations in real-time. These are enabled via an intelligent knowledge interface between the firm and the individual customer.
8. Personalised Experience Value and Knowledge Co-Creation.
Finally, this is where the firm and the customer interact within an experience environment to realise unique co-created value. The unit of value is not the product or the service but the individual experience and its interaction with a host or experience network partners. Examples here include those such as iPod / iTunes (facilitates a personalised music experience, it is less about the white box and more about the experience gateway it provides), Medtronics pacemakers (less about the pacemaker technology, more about the intelligent care network ), John Deere (less about the heavy agricultural machinery, more about the remote sensing capability and adapt-to-farm conditions value) and Amazon (especially in the US which is experimenting with all kinds of personalised interfaces and content).
Capabilities for 7 and 8 Value-in-Use Co-Creation
Traditional Voice of the Customer approaches to customer needs identification tend to emphasise the value-added concept at the expense of value-in-use in their assumptions about customer needs and value. For example, the House of Quality first defined a set of capabilities and a process for collecting customer needs. Since then, many methods have been developed for translating VoC data into inputs into the value-creation process. In each instance, the firm tries to identify known or latent needs/wants of customers through a variety of mechanisms such as interviews, surveys, observational techniques, and so on. In these approaches, the firm’s capabilities are designed to help it learn about customer needs that exist in the market, beyond the boundaries of the firm. The company does the asking, the listening, the observing, experimenting and learning; customer needs/wants are the object of the study. After the firm learns about customer needs and wants, it then develops and delivers the goods and services that it feels will provide value to customers.
Now however, co-creation demands an alternative process for “co-creating the voice of the customer”, one where the customer and the firm are engaged together in the asking, listening, observing and experimenting – that is, both are engaged in learning. Importantly, the subject of the value-creation process is both the firm’s needs and wants and the customers’ needs and wants. This will be the subject of some later posts." (http://chrislawer.blogs.com/chris_lawer/2007/05/value_value_val.html)
1. People practicing co-creation are more responsible 2. The concept of Co-creation facilitates CSR, because it is a more open process than R&D behind closed doors.
Conclusion number 1 operates bottom-up (i.e. from the consumer to the co-creative business), whereas conclusion number 2 operates top-down (i.e. from the co-creative business to the consumer). This allows for a third conclusion:
3. The increasing knowledge of social and environmental issues directly impacts on the creation of personal (conclusion 1) or corporate (conclusion 2) trends towards more CSR."
"In my view, a firm-centred perspective on co-creation is more practically useful as it illuminates the power of the co-creation concept as a new form of market and competitive strategy.
I would stop short of saying that “all value is co-created” because whilst true in the sense that all products are value propositions to get a job done, which is done to a greater or lesser degree by the customer, such a holistic perspective may blind us to the opportunistic and pragmatic aspects of co-creation as a new form of market strategy. Instead, I prefer to think of co-creation as a distinctive form of competition that requires new dynamic capabilities and deliberate firm investments in new resources to achieve greater value for customers and superior returns for the firm. In other words, we should focus on the distinctive aspects of co-creation that embody its practical usefulness now in an age of hyper-competition and diminishing returns from product-centred propositions.
My final point is to ask “do customers always intentionally enter into a co-creation relationship with firms”? I would suggest not. The long and short of it is that customers just want to get a job done. They (we) always have. The only reason firms have stopped short of delivering superior value-in-use (getting a job done) is because in the past they fixated on the efficiencies of a product – make – sell – buy – consume – break economic system. Now, by stepping into a co-creation frame of mind, which at long last is aligned with how customers actually perceive and seek value, firms can move closer to supporting the customer to achieve their ultimate goals. Co-Creation is therefore just a natural way for organisations to help their customers meet their goals in the lifetime of use of their products. But they can only do so if they embrace a different view of value and start building back from the customer’s view of value, not the firm’s." (http://chrislawer.blogs.com/chris_lawer/2010/03/a-few-more-thoughts-on-cocreation.html)
Fronteer Strategy:
Intellectual property
- Can you share all information and who will gain reward? Sharing your knowledge with the outside world can be scary. It is also new, and many don’t know how to deal with the IP issue. It’s hard to create an open and constructive framework for sharing and creating knowledge. You want to open up as much as possible, hoping to get the same in return from external stakeholders, but you have to know your limits.
Complex governance
- Can you manage the process of open innovation with internal and external stakeholders?
You need the right person or people in place to consistently guide co-creation within the company. Co-creation means working together with different teams and/or departments. This more complex way of working should be managed the right way for it to be of value. Next to that, you have to find a way to get higher management behind the idea of co-creation. Otherwise, employees will not easily spend time on a new approach when their priorities lay elsewhere.
Short-term focus
- Can you appreciate that co-creation is a process and see its long-term value?
Especially when starting co-creation, it can take a while before the value of a project or the whole new approach becomes apparent or can be measured. It can be a challenge to both take the time to let co-creation become of value for your company, but in order to keep the motivation alive, to also make sure there are some ‘quick wins’ to show for your efforts.
Rewarding decision structure
- Can you make sure people will spend time on this and how will they be rewarded?
When you want people to dedicate themselves to co-creation, it has to be clear to them what their incentive is or what the rewarding structure will be. Not everyone who is involved in a cocreation project will be rewarded for the same goal.
Operations
- Do we have infrastructure and processes in order to guide open innovation? To facilitate knowledge and creative sharing? There are a lot of operational factors to think about in co-creation processes. For example to facilitate knowledge and creative sharing and to attract and motivate external participants.
Inertia & fear of unknown
- Are you brave enough to take the ‘risk’, without knowing what the rewards can be? Can you steer or follow into the unknown and be open to new ways of working?
Inertia - the resistance to change from a current state of motion - is often driven by fear. Fear of changing your course into the unknown. When not handling it, fear can can even build up inertia against change.
When changing towards a co-creation approach, people don’t know what to expect. It raises many understandable questions:
“Can I do this?”, How should I do this? How can I combine it with my regular work? What if the others are better at it then me? What if we don’t succeed? Can I still make my targets if I have to do it a different way or have to spend time on this? Why should we do it differently anyway? etc.
Originating from the neuropsychology, fear often results in three instinctive reactions: Fight (active resistance),flight (escape) or freeze (cramp up). Chances are you will encounter these reactions in your team. If this is the case, remember that whatever you do, never increase the pressure, or put even more emphasis on the fact that people need to change, this will only diminish their motivation and increase fear, which again will stimulate inertia.
Lack of motivation
- Can you create a sense of urgency? Motivate your team to change towards an open innovation approach?
We know by now that motivation is one of the pillars of change. Without it, no change. So let’s look at how to motivate people. There are two ways of motivating people: extrinsic (by rewards or ‘carrot-and-stick’ methods) and intrinsic motivation, the latter coming from within.
As you might have guessed, the best way to motivate people is by intrinsic motivation. People have to feel it. Extrinsic motivation will not lead to true motivation nor change and could even increase fear of change (“If I don’t do this right, I won’t get my promised bonus!”). Intrinsic motivation will last and outperform extrinsic.
In his book ‘Drive’, Daniel Pink offers a tripod for intrinsic motivation: Autonomy, Mastery and Purpose. All three should be stimulated in order to motivate people.
Autonomy: Doing things your way, taking your own responsibility and feeling trusted in doing it. Autonomy increases creativity and leads to engagement, which in turn will lead to mastery.
Mastery: The desire to get better and better. Mastery is about being in ‘flow’: challenged in the right amount, your goals are clear, ‘has to do’ becomes ‘could do’.
Purpose: A greater objective that makes people feel good about participating. Purpose is bigger than you, your team or your specific challenge.
Trust & interdependence
- Can you embrace cooperation with external teams, be open and share ideas? Can you depend on each other and do you trust each other’s abilities?
Trust is the tricky one, as you can’t order people to trust someone. Trust is personal and trust takes time. What you can do is give direction and create an environment for building trust. Trust is a complicated, yet important factor to address. Without it, it can become difficult to embrace cooperation with people from other departments and people from outside your company.
We often depend on other people to help us obtain the outcomes we value (and they on us). Trust is about fulfilling (other’s) expectations of certain behaviour. It is associated with interdependence, opening up, cooperation, information sharing, and problem solving. These all happen to be factors needed in cocreation.
Lewicki & Tomlinson say trusting another person is grounded in the evaluation of three characteristics: ability, integrity, and benevolence. The more we observe these qualities in another person, the more likely our level of trust in that person is to grow. Ability and integrity are the most influential early in a relationship (like when working with a new team), understanding one's benevolence takes more time.
Ability refers to an assessment of another person’s knowledge, skill, or competency. Trust requires some sense that the other is able to perform in a manner that meets your expectations. Integrity leads to trust based on consistency of past actions, credibility of communication, commitment to standards of fairness, and the agreement with the other's principles, word and deed.
In the beginning of a relationship, trust is mostly cognitivelydriven. This means you have to find a way to build trust by managing your reputation and making sure that there is stability in your behaviour, e.g. by being consistent, doing what you say you will do and keep your promises.
The “Not invented here” syndrome”
- Are you able and willing to accept and integrate ideas and innovations from ‘outside’? Are you open to and can you adopt new ways of working?
The trust-issue is very closely related to the ‘Not Invented Here- Syndrome’. Often, when ideas and innovations are created outside the company walls, it is hard to get people who weren’t part of the process excited about the new ideas: the ‘Not Invented Here’ syndrome. It’s often difficult to except and execute a new solution when it didn’t originate from you, your team or your company. The NIH syndrome finds its origin in the software development world, but can be encountered in other areas as well.
Most psychological & social barriers have to do with change and changing into a new mindset. As said earlier, most people that successfully changed had three things in common: clear direction, strong motivation and a supportive environment. Based on these three aspects and our own experience, we will now provide 9 possible ways that will help you overcome the barriers to cocreation mentioned above. Which one to use largely depends on your own situation and team. Some people need clear direction, others lack motivation and sometimes it is ‘just’ a situation problem." (http://www.fronteerstrategy.com/uploads/files/FS_Whitepaper-9_Ways_to_get_your_team_ready_for_co-creation-February_2011.pdf)
Source: Fronteer Strategy white-paper III - FEBRUARY 2011: 9 WAYS TO GET YOUR TEAM READY FOR CO-CREATION [5]
Introductory Citation
"A quick search on Google Scholar confirms the pattern: from only 23 articles citing ‘co-creation’ in the 1970s, the 1980s delivered a paltry 102, the 1990s a more substantial 658, while the first 9 and a bit years of the 21st Century has already spawned an impressive 3,660." (http://www.promisecorp.com/blog/?p=116)Definition
1."Co-creation is a very broad term with a broad range of applications. We define co-creation as any act of collective creativity that is experienced jointly by two or more people. How is co-creation different from collaboration? It is a special case of collaboration where the intent is to create something that is not known in advance." (http://www.osbr.ca/ojs/index.php/osbr/article/view/1012/973)
2.
From the Wikipedia:
"Co-creation is the practice of developing systems, products, or services through the collaborative execution of developers and stakeholders, companies and customers, or managers and employees. Isaac Newton said that in his great work, he stood on the shoulders of giants. Co-creation could be seen as creating great work by standing together with those for whom the project is intended." (http://en.wikipedia.org/wiki/Co-creation)
Co-Creation is under-defined!
"The literature review itself threw up two related observations:1. The wide range of contexts, interpretations and applications of co-creation in the literature. Co-creation is used to describe versions of highly focused crowdsourcing (e.g. one-off collaborative naming using a site like Kluster’s NameThis), but also large-scale, ongoing, innovation programmes that engage customers in communities of innovators or developers with powerful application in the public sector, e.g. the co-creation of health services.
2. The term co-creation is often used fairly synonymously with related ideas such as open innovation, collaborative innovation, customer-led innovation and so on. Mass customisation – such as NikeID (trainers), Threadless (t-shirts) or even customisable M&Ms. Working out which is a subset of which and identifying the ‘distinctions’ that allow us to identify the co-creative is a challenge." (http://www.promisecorp.com/blog/?p=116)
Description
Non-market Co-creation
Chris Lawer:"there is also a form of co-creation that is largely independent of markets, where individuals willingly come together to create and share self-generated information, knowledge and content independent of any mechanisms of market exchange. In The Wealth of Networks, Yochai Benkler explores the dimensions and potential of such non-market co-creation / collaboration in some depth.
Making the distinction between the two types of co-creation primarily depends on how we define a market… Put simply, i would suggest that a market is where there is some kind of economic mechanism or price for the value exchanged between two parties and where the value is proprietary, that is, it is produced and owned by one party who expects some value in return for its exchange.
But in a non-market context, there is no economic mechanism or price for exchange and no ownership of information or goods. In a co-creation sense, such environments are characterised by the collaborative creation and sharing of knowledge and information by individuals in decentralised communities. The “value” derived by individuals in such communities is not moderated by an economic price but by social factors, experiential elements, meaning, learning, attention and shared values. Importantly, the co-creation that occurs here is independent of any market mechanism or desire for ownership by any party. We can see these forms of co-creation in open source software, media, journalism, blogging, entertainment, gaming and other digital environments. e.g Wikipedia.." (http://chrislawer.blogs.com/chris_lawer/2009/04/market-and-nonmarket-cocreation.html)
Examples
Characteristics
Chris Lawer:"In the following twelve statements, I develop a logic that concludes in a concise definition of “co-creation” and how firms may derive competitive advantage by facilitating co-created value.
1. Traditionally, customer value has been defined and differentiated by product quality (Features, Attributes and Benefits - the old Kotlerist FAB of 1950-1990s marketing textbooks).
2. Open source product innovation (or “co-production” not co-creation) emphasises the technical co-production of new and improved products, their features and attributes with customer's direct involvement in the idea-generation, concept development stages of the innovation process; it is limited to the design, development and testing of enhanced functional “things”, “objects” or “technologies” with individuals or in communities of users.
3. Increasingly though, value is migrating from products to experiences as customers seek out personalised value to satisfy their situational needs. (Drivers: demand for better experiences, technology enablers, enhanced cognition, new sources of knowledge, increased socialisation, product functional similarity, etc.)
4. Customers are therefore placing increased value on the quality of the experiences they have when they interact with firms and their products (and services).
5. The quality of an experience is determined by how relevant or personalised the experience is for an individual customer; Experience quality is a combination of the functional and emotional elements specific to the situational and temporal context of each customer or context.
6. The locus of value-creation therefore shifts from product quality and design innovation to experience design and quality innovation, or service design.
7. As value-creation is “innovation”, traditional firm-centric innovation processes are becoming distributed in order to provide the means to deliver ongoing, adaptable, personalised, unique experiences for individual customers in unique space – time – event contexts (or “experience environments”).
8. Therefore, the locus of innovation is shifting towards the individual in distributed experience environments.
9. In distributed experience environments, the firm and customers come together to create value; value in the form of personalised unique experiences for customers; knowledge, capability for both and revenues and profits for the firm; the by-product of which is know-what and know-how to continue to deliver and shape that value.
10. Therefore, co-creation defines the processes of distributed value-creation between firms and customers or between customers directly, to create personalised experience value and knowledge, or enhanced cognition defined in the broadest sense and goes beyond “rational inference, know-what and know-how, to include perception, interpretation, value judgments, morality, emotions and feelings” (after Nooteboom’s Cognitive Theory of the Firm, 2009).
11. Markets are therefore forums for the co-creation of personalised experiences; value is differentiated according to the quality and relevance of personalised experiences for customers (as in Prahalad and Ramaswamy, The Future of Competition, 2004).
12. To facilitate co-creation, firms must therefore develop platforms that bear capabilities for the creation and release of heterogeneous, personalised customer experiences or distinctive, unique value. These platforms provide the foundation for deriving competitive advantage arising from enhanced service and experience quality, knowledge capability, and novel learning mechanisms for developing dynamic capabilities for ongoing innovation performance." (http://chrislawer.blogs.com/chris_lawer/2010/03/developing-a-concise-definition-of-cocreation-as-a-foundation-for-innovation-and-competitive-advanta.html)
Typology
1.
From the co-creation blog at http://www.co-creators.co.uk/?page_id=101. Value Co-creation:
ATM Cash Machine, Airport Check-In
More Complex Value Co-creation:
"Truffle-tree.co.uk allows customers to adopt a truffle tree in France. Customers who adopt a tree (annual price £145 / $239 / €219 plus an annual maintenance fee) will either receive the truffles from “their” tree or can choose to pool their “harvest” with others to spread the risk of a low harvest. The experience of adopting, and being able to visit, your tree adds value, in comparison to otherwise just buying truffles, but does not provide for co-creating further, for example by planting the tree or actually harvesting your own truffles.
Other, similar, examples are http://www.kuhleasing.ch/ or http://www.nudo-italia.com/ where you “adopt” a cow for cheese or an olive tree for olive oil."
2. Item/Product Co-Creation:
"At CrushPad customers can participate in the decision making process in order to get to the end result of your own bottled wine. Customers can define the type of grape, the recipe and many other factors making the item/product a personal creation. In comparison to the Category “V” businesses CrushPad does not only have an adoption scheme, but involves and educates the customer beyond the initial and superficial level.
At Threadless.com customers can send in their own t-shirt designs, which are subsequently voted on by the other customers and visitors to the site. The winning design is then printed and sold as a newly created item/product. Again, consumers have a direct participation in and influence on the final outcome of the product development process. By the way, the winning design is rewarded with a cash prize as well as other benefits."
3. Process/Business Co-creation
"the Process/Business Co-creation level requires an almost completely new business structure that is fully supported by the management, its structure and its processes."
Example:
"At Ladybank members can collectively make decisions on business decisions by a majority vote. Once in production, members will be able to influence the style of whisky produced at the distillery. Through committees members could also influence other decisions to make it a business driven by its customers." (http://www.co-creators.co.uk/?p=10)
2.
"The four types of co-creation
- Club of experts: A very specific challenge is needing expertise and breakthrough ideas. Contributors are found through a selection process. Quality of input is what counts (e.g. Nokia)
- Crowd of people: Also known as Crowdsourcing. For any given challenge, there might be a person out there having a genial idea that should be given a podium. It’s the Rule of the big numbers (e.g.Threadless)
- Coalition of parties: In complex situations parties team up to share ideas and investments. Technical breakthroughs and standards often happen when multiple parties collaborate (e.g. IBM)
- Community of kindred spirits: When developing something for the greater good, a group of people with similar interests and goals can come together and create (e.g. Linux)"
The above report is downloadable in pdf form via http://www.fronteerstrategy.com/downloads_files/Fronteer%20Strategy%205%20Guiding%20Principles%20in%20Co-creation%20White%20Paper%20April%202009.pdf
3.
There is a graphic outlining six different ways that corporations are using Co-Creation at http://coinnovative.com/blog/wp-content/uploads/2010/04/Screen-shot-2010-04-17-at-12.58.40-PM.jpg [2]See: the Co-Creation Landscape, by Jess Charlesworth [3]
Full entry has nice graphs and is accompanied by a link to a white paper.
1. Large corporations who engage with a community of advocates to co-create on an ongoing basis. (Lego Mindstorms)
2. Large corporations who call for agencies to submit ideas to then partner with or broker a deal. (P&G with NESTA)
3. Consultancies or agencies who set up and facilitate the whole co-creation project to act as a bridge between a network of collaborators and a corporation. (Companies such as us – Sense Worldwide!)
4. Large corporations who call for ideas by offering a one-off contest with prize money or a manufacturing run. (Muji Design Award)
5. Large corporations who outsource briefs to communities that are fostered online. (Innocentive, Kluster, Crowdspirit)
6. Large corporations that host an online platform where individuals submit ideas or requests based on the brand, which that business can then select for development. (Cuusoo with Muji)
The Types of Value in Co-creation
See also: Typology of Areas of Value in Co-CreationLiz Sanders & George Simons:
"There are at least three types of value in co-creative activities and relationships: monetary, use/experience and social. We will describe them as separate entities.
Monetary Value
In The Brand Gap: How to Bridge the Distance Between Business Strategy and Design, Tom Peters was quoted by Marty Neumeier as saying: "There is an old saying in business, what gets measured, gets done". The monetary value of co-creation is the one that usually receives the most attention in business circles. Co-creation that results in monetary value is fueled by the desire to make money in new ways, more efficient ways, or in ways that provide sustainable revenues over longer periods of time. Economic value is a quantitative proposition and based on relatively short-term needs. Further, it is mostly based on transactional metrics of exchange between what the company offers and what the customer consumes and/or experiences.
Co-creation associated with monetary value may not require direct contact between the company and its customers because the conversation can be mediated by tools of information and communication. This can be seen in web-based surveys that ask consumers to select features of choice or the crowd-sourcing of large numbers of respondents.
Use or Experience Value
In Co-creation experiences: The next practice in value creation, C.K. Prahalad and V. Ramaswamy noted that ”The meaning of value and the process of value creation are rapidly shifting from a product- and firm-centric view to personalized consumer experiences”. The Dornbirn Manifesto states that “The users-producers-participants are creating direct use value, videos in YouTube, knowledge and software in the case of commons-oriented projects. This use value is put in the common pool, freely usable, and therefore, does not consist of scarce products for which pricing can be demanded. The sharing platforms live from selling the derivative attention created, not the use value itself”.
The use/experience value of co-creation is fueled by companies’ desires to transform consumers into users so that the products and services they design, produce and sell will better meet people’s wants and needs. One could argue that this is directly related to monetary value, this value extends beyond monetary gain.
The experience value of co-creation applies not only to products and services, but also to brands and branded environments. There is a new attitude that a brand is really an emotional connection, built fundamentally on trust, and a gauge of how invested a customer feels about a company’s product/service. A charismatic brand develops an allegiance whereby followers are concerned and invested in not only the brand's survival but also its growth. Followers are willing to get involved in making these brands stable and successful.
Social Value
Eero Saarinen reminds us to “Always design a thing by considering its next larger context — a chair in a room, a room in a house, a house in an environment, an environment in a city plan”.
The social value of co-creation is fueled by aspirations for longer term, humanistic, and more sustainable ways of living. It supports the exploration of open-ended questions such as “how can we improve the quality of life for people living with a chronic illness?” When working within this context one does not generally have preconceived notions of the outcome since determination of the form of the outcome is part of the challenge. Co-creation of this type involves the integration of experts and everyday people working closely together. Rapid prototyping and collective visualization of ideas and opportunities can enhance their collective creativity. Direct personal involvement between people is needed for this type of co-creation. Multiple divergent points of view need to be expressed, listened to and discussed. Empathy between co-creators is essential. Although social networks may be used to help identify and locate the participants, the real work in this form of co-creation favours more personal interactions and conversations.
All three types of value in co-creation are important to understand and develop, and are at times inextricably linked. Social value can provide use/experience value as well as financial reward." (http://www.osbr.ca/ojs/index.php/osbr/article/view/1012/973)
Stages in Co-Creation
"The dimensions we found crucial to differentiate between co-creation methods of companies are:- The stage in the innovation process: Are customers being integrated in the early stages like ideation and concept development ("Frühe Phase") or the later stages like product development, testing, or launching the new product ("Späte Phase").
- The relationship of the companies with its customers: Is the company focuing on interacting with single customers which are not connected with each others, or is the company addressing a community of users?
- The scope of the task that is demanded from customers: Are companies offering large degrees of freedom for customers to participate, or are they integrating them into a clearly defined, rather narrow task?"
More Information
See: Idea and Suggestion Management, typologyHistory
The economic phases up to co-creation, summarized by the Co-Creation blog.1. Small Scale (Bespoke) Production
Before the industrial revolution and the emergence of mass production in the mid 1800s production was small scale. Depending on the type of product, it would be made on a small scale or bespoke.
2. Mass production / Transactional Marketing
During the first half of the 19th century the industrial revolution started in the UK and spread throughout the world. With it came mass production, making many products available to the masses that had been previously been the privilege of the rich. Mass production first popularized by Henry Ford’s Model T in the early 20th century continued to develop and dominate for much of the century. With increasing labour and production prices in Western Europe and North America, production was shifted to the Far East and later Eastern Europe in an attempt to maintain low production costs for mass produced products. With mass production came mass standardization and uniform products.
3. Mass Customization / Customer relationship marketing (customer retention)
With continued development standardized products lost their original appeal and a movement towards customization started. Mass customization only went mainstream in the 1980s and 1990s. Consumers, driven by the desire for choice and personalized products, demanded more than just one model or type of product. The company that could best satisfy consumers’ demand would remain ahead of the game and benefit financially. Still, companies seemed unable to satisfy their customers, who were unable to find products that they really wanted.
4. Co-created Products
Unsatisfied with mass customized products, consumers are looking for more input into the products they buy. With the development of the internet’s communication channels they are able to communicate these desires not only with their fellow consumers, but also with the companies they expect to make these products. What was true for mass customization also applies to co-created products – companies that can better satisfy their customers will stay ahead of the game. However, the step from mass production to mass customization was infinitely smaller than the step from mass customization to co-created products. The reason for this lies in the fact that this step requires not only business processes to change (considerably), but also for the managers’ mindsets to change who lead this change.
5. The Co-created Business
The co-created business follows on logically from co-created products. And indeed, why stop at products, if you can co-create the entire business. Let consumers have a say in creating the business that will be creating “their” products.
Example: he Ladybank Company of Distillers Club
6. Post co-creation = Small scale production?? (http://www.co-creators.co.uk/?page_id=25)
Discussion
Some Issues with Co-Creation
"Being an emergent discipline co-creation is not only under-defined, it’s also fraught with self-promotion and unproven claims. We think that thinking about co-creation requires a greater focus on the processes, not just outputs. Our analysis highlights the following:1. The over-reliance on technology platforms as the means of co-creative production. Offline and hybrid techniques receive less attention and are probably underutilised.
2. The centrality of the facilitator / facilitating organisation. Skilled moderation techniques are a feature of the co-creation approach that differentiate it from, say mass customisation.
3. The importance of fostering a transitional space and ‘play’ as a constituent ingredient in the innovation / co-creation process.
4. The potential of co-creation to reduce risk and increase speed to market (for new product development) but also the impact on word-of-mouth advocacy (among participants) and, internally, the potential for co-creation to increase belief and focus.
5. A current lack of measures or frameworks for understanding success." (http://www.promisecorp.com/blog/?p=116)
The Five Guiding Principles of a Co-creation strategy
"The five guiding principles in co-creation
- Inspire participation: Trigger people to join your challenge: open up and show what’s in it for them (e.g. P&G Connect & Develop)
- Select the very best: You need the best ideas and the best people to deal with today’s complex issues (e.g. Innocentive)
- Connect creative minds: You have to enable bright people to build on each others ideas, both on- and off-line (e.g. Lego)
- Share results: Giving back to people - and finding the right way to do it - is crucial (e.g. Apple iPhone App store)
- Continue development: Co-creation is a longer-term engagement, in- and outside your company. Only then it will deliver results (e.g. Dell Ideastorm)"
Details in Whitepaper [4]
Towards Customer-Centric Strategies
C.K. Prahalad and Venkatram Ramaswamy (essay: The Co-Creation Connection:"The balance of power in value creation is tipping in favor of consumers. How do companies co-create valuable experiences with consumers?
The traditional company-centric view says:
(1) the consumer is outside the domain of the value chain; (2) the enterprise controls where, when, and how value is added in the value chain; (3) value is created in a series of activities controlled by the enterprise before the point of purchase; (4) there is a single point of exchange where value is extracted from the customer for the enterprise.
The consumer-centric view says:
(1) the consumer is an integral part of the system for value creation; (2) the consumer can influence where, when, and how value is generated; (3) the consumer need not respect industry boundaries in the search for value; (4) the consumer can compete with companies for value extraction; (5) there are multiple points of exchange where the consumer and the company can co-create value." (http://www.amazon.com/Co-Creation-Connection-C-K-Prahalad/dp/B00006L5AZ)
Alan Moore further summarizes the insights of the above authors:
"The 5 Powers of the connected consumer
- 1. Information Access: the end of information feudalism
- 2. Global View: the collapse of space and time
- 3. Networking: The wealth of networks and a We Media for a We Species
- 4. Experimentation: Consumers use the Internet to experiment with and develop products, especially digital ones
- 5. Activism: Psychological self-determination
Four building blocks for co-creating value say the authors.
1. Dialogue at every stage of the value chain encourages not just knowledge sharing, but, even more importantly, understanding between companies and customers. It also gives consumers more opportunity to interject their view of value into the creation process.
2. Access challenges the notion that ownership is the only way for the consumer to experience value. By focusing on access to value at multiple points of exchange, as opposed to simply ownership of products, companies can broaden their view of the business opportunities creating good experiences.
3. Risk reduction assumes that if consumers become co-creators of value with companies, they will demand more information about potential risks of goods and services; but they may also have to bear more responsibility for handling those risks.
4. Transparency of information is required to create the trust between institutions and individuals." (http://communities-dominate.blogs.com/brands/2008/02/the-wonderful-w.html)
Value and Co-Creation strategies
Chris Lawer:"I argue it is possible to identify two broad categories or styles of co-creation, 1) Value-Added within a Firm-Centric perspective and 2) a Customer-Centric Value-In-Use perspective (see the definition of Value)
1) Value-Added Co-Creation within a Firm-Centric Perspective
1. Product “Finishing”, The customer completes the product or service and is the final co-creator of value or actor in the business system or value chain, e.g. IKEA
2. New Product Design and Development (Lead User),
Here a limited number of expert customers are invited “into the firm” to share their knowledge and contribute to the development of new products and services. There is a good description of the Lego Mindstorms lead user project in February 2006’s Wired magazine. Other examples include Harley Davidson HOG events, Saturn Cars, Proctor and Gamble’s Connect & Develop programme and Silicon Graphics.
3. Existing Product Adaptation (Customer Feedback),
Here the company actively solicits expressed customer needs or feedback to improve its products, e.g. Cisco and Microsoft Knowledgebase
4. Mass Customisation,
This is the provision to the customer of a limited set of company-determined choices or options with which the customer can personalise a standard product or service template. Examples include Adidas custom shoes, Dell PC’s and BMW cars (plus most other manufacturers)
5. Open Community Ideation and Product Design and Development.
I differentiate the open-source movement because a) it is more distributed and b) firms cede more control to the community of users and creators. Also, open source tends to bias in digital environments, creating mods to games software for example as well as the well-known examples of Linux, Firefox and Sugar CRM. I also include Innocentive here because of its community basis for creating solutions to R&D problems.
6.
New Service Design, I distinguish new service design from new product design and development (Lead User) (2 above) because service tends to involve more consumers in the innovation process and are also easier to test in markets than products through experimentation, probe and learn approaches. Also, of course, service value is inherently more adaptable than tangible product value, involving more knowledge-rich interaction. Examples include Teliasonera’s testing and piloting of new mobile phone services and Alaris Medical Systems constant dialogue with customers to improve its advocacy offering.
2) Customer-Centric Value-In-Use Co-Creation
7. Real-Time Marketing & Service Adaptation,
Moving more to within markets and value-in-use with higher adaptability, this style of co-creation is characterised by high levels of customer dialogue and interaction, enabled by digital technology. This allows individual customers to change the value presented by the firm in real-time, so for example, Cemex allows its customers to modify the delivery time and quantity of cement to fit with their changing operational requirements, Fedex allows large corporate customers to change package transit times and destinations in real-time. These are enabled via an intelligent knowledge interface between the firm and the individual customer.
8. Personalised Experience Value and Knowledge Co-Creation.
Finally, this is where the firm and the customer interact within an experience environment to realise unique co-created value. The unit of value is not the product or the service but the individual experience and its interaction with a host or experience network partners. Examples here include those such as iPod / iTunes (facilitates a personalised music experience, it is less about the white box and more about the experience gateway it provides), Medtronics pacemakers (less about the pacemaker technology, more about the intelligent care network ), John Deere (less about the heavy agricultural machinery, more about the remote sensing capability and adapt-to-farm conditions value) and Amazon (especially in the US which is experimenting with all kinds of personalised interfaces and content).
Capabilities for 7 and 8 Value-in-Use Co-Creation
Traditional Voice of the Customer approaches to customer needs identification tend to emphasise the value-added concept at the expense of value-in-use in their assumptions about customer needs and value. For example, the House of Quality first defined a set of capabilities and a process for collecting customer needs. Since then, many methods have been developed for translating VoC data into inputs into the value-creation process. In each instance, the firm tries to identify known or latent needs/wants of customers through a variety of mechanisms such as interviews, surveys, observational techniques, and so on. In these approaches, the firm’s capabilities are designed to help it learn about customer needs that exist in the market, beyond the boundaries of the firm. The company does the asking, the listening, the observing, experimenting and learning; customer needs/wants are the object of the study. After the firm learns about customer needs and wants, it then develops and delivers the goods and services that it feels will provide value to customers.
Now however, co-creation demands an alternative process for “co-creating the voice of the customer”, one where the customer and the firm are engaged together in the asking, listening, observing and experimenting – that is, both are engaged in learning. Importantly, the subject of the value-creation process is both the firm’s needs and wants and the customers’ needs and wants. This will be the subject of some later posts." (http://chrislawer.blogs.com/chris_lawer/2007/05/value_value_val.html)
"of the many co-creation examples I have come across, a large percentage had a very responsible approach. Having thought about this I have come to two conclusions:
1. People practicing co-creation are more responsible 2. The concept of Co-creation facilitates CSR, because it is a more open process than R&D behind closed doors.
Conclusion number 1 operates bottom-up (i.e. from the consumer to the co-creative business), whereas conclusion number 2 operates top-down (i.e. from the co-creative business to the consumer). This allows for a third conclusion:
3. The increasing knowledge of social and environmental issues directly impacts on the creation of personal (conclusion 1) or corporate (conclusion 2) trends towards more CSR."
Co-Creation as a Business Strategy
Chris Lawer:"In my view, a firm-centred perspective on co-creation is more practically useful as it illuminates the power of the co-creation concept as a new form of market and competitive strategy.
I would stop short of saying that “all value is co-created” because whilst true in the sense that all products are value propositions to get a job done, which is done to a greater or lesser degree by the customer, such a holistic perspective may blind us to the opportunistic and pragmatic aspects of co-creation as a new form of market strategy. Instead, I prefer to think of co-creation as a distinctive form of competition that requires new dynamic capabilities and deliberate firm investments in new resources to achieve greater value for customers and superior returns for the firm. In other words, we should focus on the distinctive aspects of co-creation that embody its practical usefulness now in an age of hyper-competition and diminishing returns from product-centred propositions.
My final point is to ask “do customers always intentionally enter into a co-creation relationship with firms”? I would suggest not. The long and short of it is that customers just want to get a job done. They (we) always have. The only reason firms have stopped short of delivering superior value-in-use (getting a job done) is because in the past they fixated on the efficiencies of a product – make – sell – buy – consume – break economic system. Now, by stepping into a co-creation frame of mind, which at long last is aligned with how customers actually perceive and seek value, firms can move closer to supporting the customer to achieve their ultimate goals. Co-Creation is therefore just a natural way for organisations to help their customers meet their goals in the lifetime of use of their products. But they can only do so if they embrace a different view of value and start building back from the customer’s view of value, not the firm’s." (http://chrislawer.blogs.com/chris_lawer/2010/03/a-few-more-thoughts-on-cocreation.html)
Organisational and psychological/social Barriers to Co-Creation
URL = http://www.fronteerstrategy.com/uploads/files/FS_Whitepaper-9_Ways_to_get_your_team_ready_for_co-creation-February_2011.pdfFronteer Strategy:
Organisational barriers
Organisational barriers can be encountered with all activities that have to do with implementing co-creation throughout the organisation. We will mention the most important ones and give examples of how to deal with them when you want to implement co-creation successfully.Intellectual property
- Can you share all information and who will gain reward? Sharing your knowledge with the outside world can be scary. It is also new, and many don’t know how to deal with the IP issue. It’s hard to create an open and constructive framework for sharing and creating knowledge. You want to open up as much as possible, hoping to get the same in return from external stakeholders, but you have to know your limits.
Complex governance
- Can you manage the process of open innovation with internal and external stakeholders?
You need the right person or people in place to consistently guide co-creation within the company. Co-creation means working together with different teams and/or departments. This more complex way of working should be managed the right way for it to be of value. Next to that, you have to find a way to get higher management behind the idea of co-creation. Otherwise, employees will not easily spend time on a new approach when their priorities lay elsewhere.
Short-term focus
- Can you appreciate that co-creation is a process and see its long-term value?
Especially when starting co-creation, it can take a while before the value of a project or the whole new approach becomes apparent or can be measured. It can be a challenge to both take the time to let co-creation become of value for your company, but in order to keep the motivation alive, to also make sure there are some ‘quick wins’ to show for your efforts.
Rewarding decision structure
- Can you make sure people will spend time on this and how will they be rewarded?
When you want people to dedicate themselves to co-creation, it has to be clear to them what their incentive is or what the rewarding structure will be. Not everyone who is involved in a cocreation project will be rewarded for the same goal.
Operations
- Do we have infrastructure and processes in order to guide open innovation? To facilitate knowledge and creative sharing? There are a lot of operational factors to think about in co-creation processes. For example to facilitate knowledge and creative sharing and to attract and motivate external participants.
Psychological & Social barriers
Below are the four most important psychological & social barriers, meaning the ones on which you have the highest chance to encounter within your team when starting a co-creation approach or project. These are also the issues that are the hardest to solve, as it involves people and their personal feelings.Inertia & fear of unknown
- Are you brave enough to take the ‘risk’, without knowing what the rewards can be? Can you steer or follow into the unknown and be open to new ways of working?
Inertia - the resistance to change from a current state of motion - is often driven by fear. Fear of changing your course into the unknown. When not handling it, fear can can even build up inertia against change.
When changing towards a co-creation approach, people don’t know what to expect. It raises many understandable questions:
“Can I do this?”, How should I do this? How can I combine it with my regular work? What if the others are better at it then me? What if we don’t succeed? Can I still make my targets if I have to do it a different way or have to spend time on this? Why should we do it differently anyway? etc.
Originating from the neuropsychology, fear often results in three instinctive reactions: Fight (active resistance),flight (escape) or freeze (cramp up). Chances are you will encounter these reactions in your team. If this is the case, remember that whatever you do, never increase the pressure, or put even more emphasis on the fact that people need to change, this will only diminish their motivation and increase fear, which again will stimulate inertia.
Lack of motivation
- Can you create a sense of urgency? Motivate your team to change towards an open innovation approach?
We know by now that motivation is one of the pillars of change. Without it, no change. So let’s look at how to motivate people. There are two ways of motivating people: extrinsic (by rewards or ‘carrot-and-stick’ methods) and intrinsic motivation, the latter coming from within.
As you might have guessed, the best way to motivate people is by intrinsic motivation. People have to feel it. Extrinsic motivation will not lead to true motivation nor change and could even increase fear of change (“If I don’t do this right, I won’t get my promised bonus!”). Intrinsic motivation will last and outperform extrinsic.
In his book ‘Drive’, Daniel Pink offers a tripod for intrinsic motivation: Autonomy, Mastery and Purpose. All three should be stimulated in order to motivate people.
Autonomy: Doing things your way, taking your own responsibility and feeling trusted in doing it. Autonomy increases creativity and leads to engagement, which in turn will lead to mastery.
Mastery: The desire to get better and better. Mastery is about being in ‘flow’: challenged in the right amount, your goals are clear, ‘has to do’ becomes ‘could do’.
Purpose: A greater objective that makes people feel good about participating. Purpose is bigger than you, your team or your specific challenge.
Trust & interdependence
- Can you embrace cooperation with external teams, be open and share ideas? Can you depend on each other and do you trust each other’s abilities?
Trust is the tricky one, as you can’t order people to trust someone. Trust is personal and trust takes time. What you can do is give direction and create an environment for building trust. Trust is a complicated, yet important factor to address. Without it, it can become difficult to embrace cooperation with people from other departments and people from outside your company.
We often depend on other people to help us obtain the outcomes we value (and they on us). Trust is about fulfilling (other’s) expectations of certain behaviour. It is associated with interdependence, opening up, cooperation, information sharing, and problem solving. These all happen to be factors needed in cocreation.
Lewicki & Tomlinson say trusting another person is grounded in the evaluation of three characteristics: ability, integrity, and benevolence. The more we observe these qualities in another person, the more likely our level of trust in that person is to grow. Ability and integrity are the most influential early in a relationship (like when working with a new team), understanding one's benevolence takes more time.
Ability refers to an assessment of another person’s knowledge, skill, or competency. Trust requires some sense that the other is able to perform in a manner that meets your expectations. Integrity leads to trust based on consistency of past actions, credibility of communication, commitment to standards of fairness, and the agreement with the other's principles, word and deed.
In the beginning of a relationship, trust is mostly cognitivelydriven. This means you have to find a way to build trust by managing your reputation and making sure that there is stability in your behaviour, e.g. by being consistent, doing what you say you will do and keep your promises.
The “Not invented here” syndrome”
- Are you able and willing to accept and integrate ideas and innovations from ‘outside’? Are you open to and can you adopt new ways of working?
The trust-issue is very closely related to the ‘Not Invented Here- Syndrome’. Often, when ideas and innovations are created outside the company walls, it is hard to get people who weren’t part of the process excited about the new ideas: the ‘Not Invented Here’ syndrome. It’s often difficult to except and execute a new solution when it didn’t originate from you, your team or your company. The NIH syndrome finds its origin in the software development world, but can be encountered in other areas as well.
Most psychological & social barriers have to do with change and changing into a new mindset. As said earlier, most people that successfully changed had three things in common: clear direction, strong motivation and a supportive environment. Based on these three aspects and our own experience, we will now provide 9 possible ways that will help you overcome the barriers to cocreation mentioned above. Which one to use largely depends on your own situation and team. Some people need clear direction, others lack motivation and sometimes it is ‘just’ a situation problem." (http://www.fronteerstrategy.com/uploads/files/FS_Whitepaper-9_Ways_to_get_your_team_ready_for_co-creation-February_2011.pdf)
Source: Fronteer Strategy white-paper III - FEBRUARY 2011: 9 WAYS TO GET YOUR TEAM READY FOR CO-CREATION [5]
Key Books to Read
- Yochai Benkler, The Wealth of Networks: How Social Production Transforms Markets and Freedom, Cambridge, MA: Yale University Press, 2006.
- Henry Chesbrough, Open Innovation: The New Imperative for Creating and Profiting from Technology, Boston: Harvard Business School Press, 2003.
- James Surowiecki, The Wisdom of Crowds: Why the Many Are Smarter than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations, New York: Doubleday, 2004.
- Eric von Hippel, Democratizing Innovation, Cambridge, MA: MIT Press, 2005.
- C. K. Prahalad and Venkat Ramaswamy, The Future of Competition: Co-Creating Unique Value with Customers, Boston: Harvard Business School Press, 2004.
- Don Tapscott and Anthony D. Williams, Wikinomics: How Mass Collaboration Changes Everything, New York: Portfolio Hardcover, 2006.
More Information
Articles
- Where in the Design Process does Co-creation Happen?
- Piller, F. T., Ihl, C., and Vossen, A. (2010) A Typology of Customer Co-Creation in the Innovation Process, SSRN eLibrary.
- Zwass, V. (2010) Co-Creation: Toward a Taxonomy and an Integrated Research Perspective, International Journal of Electronic Commerce, 15, 1, 11-48.
Blogs
- The Co-creation blog is at http://www.co-creators.co.uk/
- Openeur Open Innovation blog at http://www.openeur.com/blog/
- Empty Whitecoat, blog on customer innovation and co-creation, http://chrislawer.blogs.com/chris_lawer/
Consultancies
Co-creation consultancies:- Brainreations.com - pro brainstorming and co-creation with creative young consumers
- Brainreations.net - online brainstorming rooms and brainstorming platform allowing creation of customer communities online
Reports
- New pathways to Value through Co-Creation: " a review of what the peer-reviewed journal sources have to say about co-creation (and its sister concepts). We've focused on articles with evaluative content and case studies." [6]
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