Co-Creation may is considered as a logical outcome of open innovation. It’s a strategy that emphasizes the generation and ongoing realization of mutual firm-customer value through new forms of interaction and reduce the gap between companies and customers. The Wikipedia writes that Co-creation is the practice of developing systems, products, or services through the collaborative execution of developers and stakeholders, businesses and clients, or managers and employees. Co-creation could be seen as creating great work by standing together with those for whom the project is intended.
Here is the way that C.K. Prahalad and V. Ramaswamy contrast firm- vs. customer-centric approaches in their book the Co-Creation Connection:
- The consumer is an integral part of the system for value creation;
- The consumer can influence where, when, and how value is generated;
- The consumer need not respect industry boundaries in the search for value;
- The consumer can compete with companies for value extraction;
- There are multiple points of exchange where the consumer and the company can co-create value.
I. The 4 Types of Co-creation
We see many different types of co-creation happening today, A Fronteer Strategy report distinguishes four types of co-creation. Which type to choose is depending on the challenge at hand. There is always an initiator, i.e. the party that decides to start a Co-creation initiative. That can be a company or just a single person. One or (many!) more contributors will be joining the process. The initiator determines who can participate and under what conditions.
Hence, there are two main dimensions in Co-creation:
• Openness: Can anyone join in or is there a selection criterion somewhere in the process?
• Ownership: Is the outcome owned by just the initiator or by contributors as well?
These two dimensions lead to the four types of Co-creation:
The four types of Co-creation, Fronteer Strategy
Club of experts: The ‘‘Club of Experts” style of co-creation is best suitable for very particular, time-pressured challenges that demand expertise and breakthrough ideas. Contributors meet certain specific participation criteria and are found through an active selection process. The quality of input and chemistry between participants are key to success. ‘No-box’ thinkers are the ones you want to have in any project.
Example: Nokia organizes ‘lead user’ and ‘expert’ co-creation sessions to develop visionary new products and services. Fronteer Strategy is a partner of Nokia in these projects, where bold new steps have been designed.
A crowd of people: Also known as “Crowdsourcing”, this form is all about the Rule of Big Numbers: anyone can join. For any given challenge, there might be a person ‘out there’ with a brilliant idea that deserves considering. Using online platforms, people can rate and respond to each other’s suggestions. There is often a marketing and seeding component/objective attached to the process. Crowdsourcing ‘unleashes the power of the masses’, but often takes longer – and you’re not sure that the best people will (want to) contribute. For instance, Nokia is a frontrunner when it comes to using lead users, experts and beta testers.
Example: Threadless is a successful online t-shirt platform where contributors can send in and rate t-shirt designs. Profits on sold items are shared with the designer in question. Not bad: a full 30% profit margin selling t-shirts with no R&D cost, low investments (no stock or debtors) and hardly any employees.
A coalition of parties: In certain complex situations, a “Coalition” of parties team up to share ideas and investments (Co-branding is also an example of Coalition-style co-creation). Each of the parties brings a particular asset or skill to the party. Technical breakthroughs and the realization of standards often happen only when multiple parties collaborate – especially important when capital expenditures are high. Critical success factors include sharing knowledge and creating a standard competitive advantage.
Example: Heineken has successfully launched a home draft system called the ‘Beertender’ in co- operation with Krups. A development period of 10 years resulted in the first real packaging innovation in beer in a long time. Also, Heineken has worked with outsiders to develop for example its aluminium bottle range.
A community of kindred spirits: The “Community” form is most relevant when developing something for the greater good. Groups of people with similar interests and goals can come together and create. This model – so far – works mostly in software development and leverages the potential force of a large group of people with complementary areas of expertise.
Example: The Linux open source operating system software was developed by users and for users. The software code is free to use and owned by nobody. It started with one simple e-mail with a request for help.
II.The 5 Guiding Principles in Co-creation
So what do the successes in co-creation depends on? Fronter Strategy shares five common rules of value created requirements for successful co-creation processes:
The Five Guiding Principles of Co-Creation
1. Inspire participation:
Trigger people to join your challenge: open up and show what’s in it for them. People tend to be more involved than you might think, and most want to contribute! People care about the products, brands and companies around them, but there needs to be a ‘trigger’ for them to participate in collaborative development with you. To start with, the nature of the challenge should be interesting or challenging in some way. There could be direct personal benefits as well (e.g. when a product is being improved, or a monetary incentive involved). But most importantly. Inspire people by (a) showing who you are, (b) explaining why you need their help and (c) what will be done with the results. Then give access to anyone who might be beneficial to the process and create a level playing field where all opinions are treated equally – professionals, consumers and other stakeholders. Initiators and contributors to
2. Select the very best:
You need the best ideas and the best people to deal with today’s complex issues.
As in evolution, the selection process is crucial. In crowd-sourcing, you want the best ideas to surface & survive: screening is key especially when large numbers of ideas are generated. For any online idea generation initiative, the big challenge is filtering and finding breakthrough ideas that bring new value to the company. Both the online community (rating, commenting) and the moderators play a crucial role there. In the end, it is a competition for the best ideas. In lead user or expert co-creation the best people possible should participate – the whole point is to involve individuals whose backgrounds and experience somehow connect to the challenge at hand.
3. Connect creative minds:
In co-creation, it means sharing information, ideas, experiences, dreams, strategies, successes and failures to learn from each other. A physical meeting is very well suited to create such an atmosphere and conducive energy level.
Co-creation needs the best environment to create, share, respond to and improve on ideas. This ranges from online toolboxes to offline visualizers and great moderation in a brainstorming session. Clear rules and guidelines are needed in this process.
4. Share results:
Giving back’ is crucial – as well as ‘how’ you do it.
This compensation can be monetary, but more often, something less tangible can be considered a greater reward – in any case, it should be clear and fair. For example being recognised as a key contributor (status) or being invited to join more initiatives (recognition) are other ways to share or reward valuable contribution. Many co-creation initiatives forget even the most basic step: keeping participants informed of progress and developments. Ignoring contributors’ legitimate wishes in this way will eventually damage your ability to attract top members or partners- as well as meaning you miss out on valuable input further down the process. Ultimately, sharing intellectual property would be a next step in co-creation: co-ownership.
5. Continue development.
Co-creation only delivers when it is a longer-term engagement, preferably part of a structured process that involves parties in- and outside your company.
The co-creation output will become part of the company’s innovation process with all its key measures. It will go through the standard funnel steps, but with one difference: the link is made with the outside world. This link should be leveraged in all stages of the process, e.g., use contributors and their specific knowledge to get constant feedback. Internally, sponsors and connectors should drive the implementation forward and tackle the ‘not invented here’ syndrome if it rears its ugly head. One should learn from co-creation in the meantime and continuously adapt the process for the next time, thus forming a learning cycle.
From a contributors point of view, when you have created something, you want to see what happens to it. Open innovation involves an implicit promise to keep people in the loop. It’s a way of showing the respect you have for the time and effort they put into it: open communication and frequent status updates are very well received by anyone who has participated.