Co-creation is one of the buzzwords of the moment. But what does it really mean? A report from LSE Enterprise suggests that there’s quite a lot of confusion, and tries to create some clarity about the concept.
Five key aspects to co-creation
The reports starts by emphasising five aspects of co-creation. It is:
- Creative, initiated by firms, driving innovation by involving their customers. It’s very much not a passive process for the customers concerned.
- A rich mix, drawing on a wide range of managerial and business disciplines, from marketing, through organisational development and psychoanalysis, to innovation, knowledge development and group decision-making.
- Facilitated. The process needs to allow for play and creativity for maximum benefit, but it’s still carefully facilitated to ensure that it runs smoothly and effectively.
- All about relationships, and focusing on the quality of interactions between the people involved. It may use technologies but only to facilitate the relationships.
- A learning process, in which knowledge and process are combined to create a framework for co-creation activity, so that the end result has wider organisational impact.
What’s driving co-creation?
The biggest driver behind co-creation is simply the changes in the market place. Everything moves faster; markets change quicker, customers are faster to adopt new technologies, and there is increasing standardisation. All this means that businesses have to move fast to keep up. But at the same time, there has been an explosion in technology that enables collaboration and sharing of information and ideas.
Customers want to be involved in creating their own value from companies. They offer unsolicited feedback via social media, and work with other customers online to find solutions to problems. It’s both a massive challenge and a huge opportunity for companies, because it means that they can actively involve customers in creating value.
In a way, perhaps co-creation is just the natural evolution of old-fashioned market research. Instead of developing an idea in-house, then going out and testing it on consumers, companies can now ‘cut out the middleman’, as it were, and develop the idea with consumers from the start. What’s interesting is that the process works throughout the old ‘product development cycle’, because consumer input can be at the start, in innovating, or in refining and improving an older, more established product, or even just tweaking a new one.
But if you look on co-creation as a product development process, you will miss much of its essence. Co-creation can happen every time a customer interacts with a brand or product, because when they do so, they start to shape their own experience. And when they do that, they also shape and create perceptions of value.
This adds up to the need for a change in thinking. The process of co-creation is customer- not product-centric. Instead of being about the features of a product, it has to be about meeting customer needs and satisfying desires. Effectively, customers must be seen not as buying goods or services, but instead buying products that deliver value depending on customer experience. This needs a big change in mindset for many companies.
A series of questions
The report suggests that any company considering co-creation needs to answer six questions:
1) Who will be involved? Your existing customers? Potential new customers? Certain types of customers? It will be different for different processes and/or products.
2) What is the purpose? You need to know what is the focus of the innovation and input.
3) Where in the product development cycle does it occur? Customers may be interested in being involved at every stage, but most companies will find co-creation easier to start with a defined entry point for customer involvement.
4) How much involvement? Openness and honesty are crucial but there are issues about transparency, confidentiality and even intellectual property, and you need at least to consider them.
5) For how long? Co-creation initiatives may be one-off, ad hoc, or even continuous. It’s helpful to set out expectations at the start.
6) How do you incentivise involvement? Intrinsic motivation is best, but flagging enthusiasm may be boosted by a small extrinsic reward at a crucial moment.
The quality of relationships
Perhaps one of the most interesting conclusions of the report is that co-creation must be as disruptive as necessary, and as non-disruptive as possible. Fundamentally, that is going to depend on the quality of the relationships between customers and companies. Fortunately, both sides have an incentive to build good relationships, because both will benefit from the value created. However, this is clearly not a route for the faint-hearted or uncommitted.
Image credit: Livorno, Italy by Thorbjørn Riise Haagensen