Typology of Areas of Value in Co-Creation

Source

Graphic via fig. 4 - 4 Areas of Value in Co-creation

Source: Five_Guiding_Principles of Co-Creation)

Typology

The process of Co-creation is a relatively new area of expertise, so we are often asked: “What are some concrete examples of return on investments in co-creation?”. Value is created in four areas:

Direct results

The starting point of any co-creation project is often the need to come up with new products and services. The direct result of a co-creation project, then, is the economic value generated by these new introductions.

Example: An example from our own practice. eBay in The Netherlands (Marktplaats) did a co-creation project involving ‘Large volume sellers’. One of the products developed in the project was a new feature that allowed people to put an ad for their product into an ‘other category’. This relatively simple product (turning something ‘not allowed’ into a ‘valuable service’) has so far generated revenues 10 times the investment that went into it.

Direct spinoffs

Some results cannot be measured in terms of profit, but create enormous value. Next to the direct results - the ones that correspond with the project goals that have been set - unexpected effects will take place. E.g., contacts made during a lead user cocreation project can be of value long after the session is over, sometimes even can lead to new collaborations. Also, participants can become brand ambassadors and the starting point of word-ofmouth marketing. Co-creation can trigger a lot of other things that one would not have imagined - or dreamt of.

Example: Amazon started out aiming to be the largest bookstore on the internet. By being highly customer-centric `from the start - more than anyone else - and letting readers create the content around the books, Amazon has become the largest book review site. On top of that, a small percentage of readers even have become semi-professional critics. The value of the reviews is hard to express in profit (you don’t earn money through it) but they are seen by Amazon as a corner stone to its success.

Future results

A successful new product introduction will be followed-up by new extensions or inspire others to introduce new products. It can generate a snowball effect within a category. It can create a new family of products. In co-creation the initiator can keep the contributors close in the entire process, all the way into the future, or choose to change partners. Nike for example has changed partners in their running and technology project, switching from Philips to Apple. The latter was seen as having a better fit with the brand and experience Nike wanted to deliver.

Example: The Senseo coffee machine collaboration by Philips and Sara Lee has created a revolution in the coffee category: easy individual home use of coffee. Since its launch in 2001, 25 million Senseo coffee makers have been sold worldwide. It has also resulted in pads being the main coffee packaging on shelf in some countries and it has also smoothened the path for Nespresso as the more premium system. Philips is now venturing out into adding more features (fresh milk) and Sara Lee adds tea and other drinks to its pads portfolio.

Amazon: Readers have turned the largest bookstore into the largest review database in the world

Philips and Sara Lee Senseo: it has changed the way we drink and buy coffee

Future spinoffs

Co-creation is a starting point of a process, which can have farreaching effects. Most of these you can predict as they are direct and obvious. However, some future spin-off effects are not so cut and dried. Who can predict what the side-effects will be of certain actions? These are often hard to oversee, but what we can say is that action taken now will have an effect sometime in the future. Example: The invention of the internet and its exponential growth has had direct results in terms of content sharing and consumption. A spinoff of this change was the way we experience music. The rituals around buying CDs and LPs, the design of cover art, music radio, etc. have changed dramatically. The fall of traditional business models in music was a logical result of all this.

An future spinoff that was harder to predict was the rise of the live performance of musicians. Today it has become - once again - very important for pop-stars to have a show on stage that attracts crowds and generates enough revenues." (http://www.fronteerstrategy.com/uploads/files/FS_Whitepaper-Co-creation_5_Guiding_Principles-April_2009.pdf)