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.
Scholars C K Prahalad and Venkat Ramaswamy introduced the concept to the wider business community in their 2000 Harvard Business Review article, “Co-Opting Customer Competence”.[1] They developed their arguments further in their book published by Harvard Business School Press, The Future of Competition where they offered examples including Napster and Netflix showing that customers would no longer be satisfied with making yes or no decisions on what a company offers.[2] Value will be increasingly co-created by the firm and the customer, they argued, rather than being created entirely inside the firm. Co-creation in their view not only describes a trend of jointly creating products. It also describes a movement away from customers buying products and services as transactions, to those purchases being made as part of an experience. The authors held that consumers seek freedom of choice to interact with the firm through a range of experiences. Customers want to define choices in a manner that reflects their view of value, and they want to interact and transact in their preferred language and style.
In 2009 Promise Corporation published the results of a systematic review of co-creation evidence, Co-creation: new pathways to value[3] that was co-produced with LSE Enterprise. In it they attempted to distinguish co-creation from related concepts such as crowdsourcing, mass customisation and mass collaboration by insisting on the psychoanalytical, decision-making as well as innovation roots of the concept in its intellectual evolution. In so doing they produce a new definition of co-creation: "co-creation is an active, creative and social process, based on collaboration between producers and users, that is initiated by the firm to generate value for customers."
Early applications of co-creation
The introduction of enterprise social software may have functioned as an enabler of this change in how companies evolve to business networks, and how both large and small companies cooperate. But Prahalad and Ramaswamy stated in their published work, as other practitioners have affirmed, that co-creation is about far more than customers co-designing products and services.
Co-creation is at the heart of the open source software movement, where users have full access to the source code and are empowered to make their own changes and improvements to it.
In the early 2000s, consultants and companies deployed co-creation as a tool for engaging customers in product design. Examples include Nike giving customers online tools to design their own sneakers. At a MacWorld conference in 2007, Sam Lucente, the legendary design and innovation guru at HP, described his epiphany that designers can no longer design products alone, using their brilliance and magic. They are no longer in the business of product and service design, he stated; they are really in the business of customer co-creation.[4]
During the mid-2000s, co-creation became a driving concept in social media and marketing techniques, where companies such as Converse persuaded large numbers of its most passionate customers to create their own video advertisements for the product. The Web 2.0 phenomenon encompassed many forms of co-creation marketing, as social and consumer communities became ‘ambassadors,’ ‘buzz agents,’ ‘smart mobs’, and ‘participants’ transforming the product experience.
Co-creation and corporate management
After the publication of The Future of Competition, companies applied the principles of the Prahalad-Ramaswamy research to a broader range of business activities. Companies engaged customers in the delivery of their experience, including Harley Davidson (bikers riding together and customizing their motorcycles), Scion car dealerships (customization of cars at the dealer and dealer events) or Apple (exchange of play lists through iTunes). Co-creation played an even bigger role in at companies such as Cisco and Goldcorp where executives involved outside resources, such as researchers, academics, and customers, to actually change and redesign the ways things are done inside the firm. Customer-facing functions such as sales or customer service were also opened up to co-creation at companies including Starbucks and Dell Computer.
During the mid-2000s, these innovations in customer engagement and collaboration expanded and morphed into global economic trends including the co-created development of products and services. Authors published bestselling books developing theories influenced by ‘co-creation’ and customer collaboration. Major concepts included crowdsourcing, coined by Jeff Howe in a June 2006 Wired magazine article,[5] open innovation, promoted by Henry Chesbrough,[6] a professor and executive director at the Center for Open Innovation at Berkeley, and consultant Don Tapscott’s Wikinomics,[7] a book that popularized the concept of corporations using mass collaboration and open source innovation.
User innovation was coined by Eric Von Hippel, a Professor and head of the Innovation and Entrepreneurship Group at the MIT Sloan School of Management. He argued that in many industries, new product and service ideas come from lead users – that is, customers who utilize the product or service in extreme conditions and effectively help the company co-create new offerings as a result. After being recognized for his work on this customer-driven innovation, Von Hippel moved on to writing about communities jointly developing new products and services, in the Linux and Apache mode.
Co-creation became global, as practices reached senior managers at companies in Europe and Asia including Linux (open software), Procter & Gamble’s Connect & Develop (dramatically improved research productivity through reliance on global collaboration platform with people outside P&G), and Innocentive (research collective in the pharmaceutical industry).
Of this rapid morphing of co-creation, Ramaswamy writes: “The key learning, from thousands of executives the world over who had begun to explore value co-creation was this: Every organization needed a systematic approach to engage not only its customers, but also employees, partners and other stakeholders at large, to both unlock value co-creation opportunities and execute them.”[8]
The Third Stage of Co-Creation
Ramaswamy and Francis Gouillart now advise companies on a third stage of co-creation that seeks to improve how companies operate throughout their organizations, and in all their systems and processes. This “full theory of interactions” goes beyond the existing forms of co-creation of the customer experience and co-creation of products and services. Transforming traditional corporate practices such as training, performance management, and communications into co-creative interactions, sparks innovation, cuts costs, increases employee engagement, and generates value. Examples of companies at various stages of transformation through co-creation include Nike, Nokia, IBM and Credit Agricole.
References
^ "Co-Opting Customer Competence" Harvard Business Review January 2000.
^ Prahalad, CK and Ramaswamy, Venkat (2004)The Future of Competition Harvard Business School Press ISBN 1578519535
^ Co-creation: new pathways to value, Promise Corporation / LSE Enterprise (2009), at http://www.promisecorp.com/newpathways/
^ Nussbaum on Design, BusinessWeek.com http://www.businessweek.com/innovate/NussbaumOnDesign/archives/2006/01/ces--when_consu.html
^ Jeff Howe (June 2006). "The Rise of Crowdsourcing". Wired. http://www.wired.com/wired/archive/14.06/crowds.html.
Retrieved 2007-03-17.
^ Chesbrough, H.W. (2003). Open Innovation: The new imperative for creating and profiting from technology. Boston: Harvard Business School Press
^ Tapscott, Don and Williams, Anthony D. (2006,2008). Wikinomics: How Mass Collaboration Changes Everything. Portfolio
^ Ramaswamy, Venkat and Gouillart, Francis (2010) Draft manuscript, The Alchemy of Co-Creation, Simon & Schuster, FreePress
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