Co-Creation

= The participation and involvement of consumers in the creation process formerly dominated by businesses.

(from http://www.co-creators.co.uk/?page_id=16)

Typology

From the co-creation blog at http://www.co-creators.co.uk/?page_id=10

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)

History

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

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)

How Co-creation is related to Corporate Social Responsibility

"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." (http://www.co-creators.co.uk/?p=39)

More Information

Blogs

1. The Co-creation blog is at http://www.co-creators.co.uk/
2. Openeur Open Innovation blog at http://www.openeur.com/blog/
3. Empty Whitecoat, blog on customer innovation and co-creation, http://chrislawer.blogs.com/chris_lawer/

Consultancies

Co-creation consultancies:

1. Brainreations.com - pro brainstorming and co-creation with creative young consumers
2. Brainreations.net - online brainstorming rooms and brainstorming platform allowing creation of customer communities online