Co-creation

I wrote a series of posts over a year ago on Corante's Brandshift on co-creation. Since that group blog has slowly died out (replaced by Corante's Marketing Hub), I'd like to salvage these posts and bring them back for discussion. Co-creation is one of those trends that will have a major impact on businesses in the coming months and years... it's a result of the emerging networked economy: a grassroots, bottom-up, self-organizing way of living and doing business. More on self-organizing systems later; for now, here's the first in a series of 7 or 8 posts on the subject of co-creation. I unfortunately can't bring over all the insightful comments, but hopefully we can generate a new discussion.

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We're getting into some juicy conversation in John Winsor's recent post. There's a comment that I'd like to bring to the forefront because it's an oft-misunderstood idea: co-creation.

"...good products are good products, they don't need transparency or co-creation. Co-creation is what people on the outside want when they want to associate themselves with cool products. You don't let the slimy masses in to medocritate the product, you keep them striving to be a part of the clique."

There are different levels of co-creation; how far you take it depends on your product and industry. Here are a few terrific examples of deep co-creation:

1. Open-source software. No explanation needed.

2. Google's new API for online ads. An article in eWeek reports:

"There are a lot of things Google hasn't thought of that people could do with their ad campaigns," said Nelson Minar, a Google software engineer. "One of goals is to enable advertisers and third parties to create tools for their own purposes."

3. Lego's Lego Factory, where kids design new Lego models using a Digital Designer and submit them to competitions. This is a primary source of ideas for new Lego products.

In each of these cases, no one made assumptions about what customers wanted. Customers were brought directly into the process. In shallower levels of co-creation, customers aren't directly involved in designing products... but companies still seek to understand customers' mindsets, desires and unmet needs.

Apple is one of those anomalies where one man had an aesthetic vision, created a company and products in his own image, and everyone jumped on the bandwagon. If you think you can replicate Apple's success in this fashion, go for it; but I'd suggest that some form of co-creation is infinitely easier. BTW, I do believe that Apple's brand is a form of co-creation: the "in-crowd" that formed around the Apple brand was created by customers, not by Apple.

Companies who view customers as "slimy masses" can never be successful in the long run; it is those customers who make corporate existence possible. Customers smell arrogance like a dog smells fear. Microsoft is a great example of a company who became incredibly successful based on following their own vision... which ultimately resulted in customer resentment. Now with over 1200 Microsoft employees participating in the blogosphere, the company has actively, publicly entered into dialogues with customers. Robert Scoble gets a ton of suggestions from customers and passes them on to the right folks internally. Microsoft is beginning to co-create.

Does this mean we should always do what customers say? Of course not. But we should always be listening to them to ensure that our products and services maintain relevance in today's rapidly changing environment. We design products and services that people will buy... and we find out what people will buy by listening, observing and participating in dialogues. There's a terrific example of this in the book "Hardball" that discusses how Whirlpool co-created their new line of appliances by deeply understanding the life of a woman named Gail.

If anyone has other examples of co-created products and services, I'd love to hear about them. This is a tidal-wave trend; customers want to be heard, and they will buy from those companies who demonstrate a willingness to listen. Sure, we could say that co-creation is just pig lipstick for customer research... at the shallower end, perhaps. But the concept of co-creation goes much deeper and farther than the traditional idea of research. In co-creation, customers truly feel like they are a part of the company (family, ecosystem, etc.) and that their voice is heard.

Comments

[Oliver]

I stumbled upon your blog when I was looking for articles on co-creation and I really enjoyed your thoughts on the subject. It’s been about 3 years since you wrote the entry and it’s interesting to note that the adoption of co-creation and crowd-sourcing seems to have finally taken root. We’ve now seen what happens with community development of applications built on top of social platforms such as Apple and Facebook but we haven’t seen the adoption of co-creation in tangible products yet.

I am a firm believer of the power of co-creation and we’ve built a platform to facilitate co-creation from our members in the community. One of the most amazing things is the effects of a brand on consumer loyalty and behavior. Case in point are the product designs for wearable items suggested and made by fans of products that are viral marketing items in of themselves.

Miller Chill Beer:
http://www.tapsmack.com/guest/idea/designs/157#DR

Southwest Airlines:
http://www.tapsmack.com/vkapila/idea/designs/478

I’d love to get thoughts on adoption of co-creation in the corporate world. My impression is that the corporate world is still very conservative in this regards and I wonder how long it would take to see this put into practice.

[lolu mogaji]

I love the way you breakdown the concept of co-creation, quite educative.Keep it up!
lolu.

[raul ray]

I frequently shop my kids toys at Lego store at discounted prices....

[Deidre Sullivan]

Bhagi, I love your reality show example.

Regarding the extent of co-creation in the future....

We think co-creation is in its infancy and it will stay in "baby" stage for a while---as so many legacy brands are slow to embrace the Web and the implications of consumer activity. They are sitting on the sidelines.

Our sense is that this has a lot to with a lack of understanding about the implications of Web 2.0.

The "kids" get it. They live it. They intuitively understand co-creation. But so many senior executives at large companies do not deeply understand or at all "live" what's going on.

That's a huge problem--one senior execs bring right to work and to their marketing plans.

The thing is: customers are co-creating value about brands, whether brands recognize it or not. Just look at what's happening with product recommendations. Most people pre-shop on the net before a big purchase. They seek advice and insight---usually from other consumers.

There's a profound shift in the balance of power from brand to consumer. From mono directional marketing (ads) to a more conversational/co-creational model of doing business.

Customers, as they continue to express themselves and dialogue on their own, are going to make their influence felt.

So when sales rise or drop in a big way or a company is embarrassed publicly, there's a hopefully a wake up call to the power of the Web 2.0-enabled consumer.

[bhagi]

hi,
there are a lot of firms out there who are co-creating experiences. examples are toyota, microsoft which provide beta versions to the customers, banks which do not want the customers to visit them at their branches but be a part of the process through internet, reality shows where the audience becomes a part of the running of the show, the florist who allows you to design on your own on their website. i am interested in understanding what will be the extent of co creation in the future? any comments.

[Drew Hendricks]

Jennifer, at the risk of running this Starbucks comparison in the ground, I don’t understand your Lego clarification. You write, “In this instance, the Kit is the product, not the brick.” This explanation does not distinguish it from a custom Latte. The finished Latte is the product, not the milk, espresso, syrup etc.

OK. Enough of Starbucks.

I really like your dividing line. Namely, when customers make something that the company then formally makes into a product, that would qualify as co-creation.

This serves as a great top-down delineation of co-creation. However, I have always looked at co-creation from the bottom-up customer oriented standpoint. From my standpoint, bottom-up co-creation is something that the company can use to cycle back to that individual customer so that she might have a better experience in the future. An example would be the Ritz-Carlton hotel chain. The Ritz custom tailors each stay to individual customer experiences. The more the customer stays and expresses her preferences the better her experiences gets. Another example would be the predictive analytics of Netflix and Amazon. In both of these instances the customers work hand in hand with the company by rating movies and book to have a better experience the next time they visit.

[Drew Hendricks]

That's it! David, thank you. The cycled back factor was the element I was trying to pinpoint, but could not. That definitely serves as a clear dividing line between the two.

[David Foster]

Co-creation, as opposed to simple customization, should mean that the creativity of the customer gets cycled back in a way that makes it available to other prospects & customers. The Lego Factory would fit that definition, to the extent that users upload their designs to the site where others can take advantage of them.

[James Thomson]

Jennifers point re "Deep co-creation, on the other hand, allows customers to work collaboratively with companies" rings a bell. What we're experiencing at http://whisky.co.uk is that the deepest co-creation is when you work with customers to actually create the firm.

It does require splitting some IP areas up a bit - so you can give away more of the emotive and fulfilling aspects of both creating and experiencing the business - and the analysis, to us, seems to be so much greater than the sum of the parts.

James

[jennifer rice]

Lego Factory's a bit of an odd one. Lego creates "kits" that allow people to build a specific object (a car, a building, a spaceship, etc.). In this instance, the Kit is the product, not the brick. So by allowing customers to create Kits and upload them to the site where other customers can buy it as well, Lego is putting product (kit) design into the customers' hands. Before Lego Factory, the product designers would have to guess at what might make a best-selling kit. Now they don't have to guess... customers are creating the kits themselves. Top-selling kits from Lego Factory can then be created for sale in the retail environment.

You bring up a good point: where's the line between customization and co-creation? I suppose that if customers make something that the company then formally makes into a product, that would qualify as co-creation. If customers assemble something for their own personal use (that is not made available to other customers) that would be customization.

Thoughts?

[Drew Hendricks]

I'm sorry Jennifer, but at a base level I do not see the difference between the Lego Factory which you offer as a valid example of co-creation and the Starbucks Experience which you claim to be merely customization.

In your words, customization is "allowing customers to combine pre-made elements into a product or service."

You say that for Starbucks to be a truly co-created experience it would have to allow customers to vote on the types of beans, flavors, store locations, etc.

However, in the Lego Factory customers cannot design a new Lego brick. Customers must in your words, "combine pre-made elements into a product or service. It appears that the Lego factory is just customization of pre-defined ingredients just like Starbucks.

However, Lego is making strides towards Jennifer’s vision of co-creation. Up until a week ago customers could not even purchase the exact Lego's they needed. They were forced to buy pre-defined packages to assemble their designs. Now they are allow to buy only the bricks they need. If Starbuck's had allowed Lego's previous level "co-creation" a customer would have to buy the whole bottle of Vanilla Syrup if they wanted a Vanilla Latte.

My point is this - For me, it is impossible to draw the line between co-creation and customization. All co-creation involves customization of a previous set of elements. In Google’s API, one has to work with the tools that exist. In Starbucks, one has to work with the pre-defined beans, flavors etc. In the Lego factory, one is forced to use pre-defined Lego bricks.

For me, co-creation is directly correlated to customization. To the extent that the company and the customer share in the production is the extent that it is co-created. If the customer were allowed complete freedom to design independently of the company, then is would no longer be co-creation but simply creation.

[Drew Hendricks]

Thanks Jennifer for the clarification. I now understand David's point. Much of my latest work involves helping companies create an environment where customers can individualize their experience. I often use the work "co-create" when I describe the relationship I foster between companies and their customers. I still think that customization is an important side of co-creation, but I now definitely see the semantic differences between the two.

Thanks again for rekindling the topic and I want to thank this discussion for expanding my view.

[jennifer rice]

Wow, great discussion here. I think we're getting into the nuances between co-creation and customization (which probably merits a separate post). In my mind, customization is allowing customers to combine pre-made elements into a product or service... pre-made being the operative word here. Starbucks and restaurants unilaterally decide what is going to be on the menu, what the decor will look like, what type of beans will be used, etc.

Deep co-creation, on the other hand, allows customers to work collaboratively with companies to determine what goes on the menu, what the decor looks like, etc.

Think of co-creation as bringing customers into the product development process. So a half-caf mocha latte is customization... being able to vote on types of beans, flavors, store locations, etc. would be co-creation.

[David Foster]

Drew...my point was that predefined packages like the "sunrise special" tend to *discourage* altering the menu to get what you want. Say I want eggs over medium, country ham, grits, and a biscuit (yum!). Why should I have to search through the menu to see if that comes closest to being a "sunrise special" or a "delicious delight"? Why can't I just order the stuff I want? Wouldn't that come closer to customization or co-creation?

[GrahamHill]

Hi Jennifer

Another good post, this time on customer co-creation.

This is an interesting and rapidly-expanding area. There is a ton of great stuff out there on the Internet and also a few good books. Take a look at the "Customer Made" posting at http://www.trendwatching.com/trends/CUSTOMER-MADE.htm for literally dozens of examples of customer-co-creation in action.

Most of the examples of customer-co-creation today involve products. But there is no reason why co-creation shouldn't be extended to services, experiences, business processes or even business models. The Open Source movement is a good example of the latter.

Two of the leading-edge thinkers in this area are James Cherkoff of Collaborate Marketing who runs the Modern Marketing blog http://www.collaboratemarketing.com/ and Chris Lawer of OMC who runs the Creating Positive Context blog http://chrislawer.blogs.com/. James' Change This Manifesto on "What is Open Source Marketing" is well worth reading at http://www.changethis.com/14.OpenSourceMktg. Chris is currently doing his PhD at Cranfield (the UK Kellogg) in Customer Co-creation and has created a number of interesting white papers setting out his thoughts.

There are also many good books about different facets of customer co-creation including:

Prahalad & Ramaswamy
"The Future of Competition: Co-Creating Unique Value with Customers "

John Winsor
"Spark: Be More Innovative Through Co-creation "

Eric von Hippel
"Decocratizing Innovation"
Available as a free download from von Hippel's website at http://web.mit.edu/evhippel/www/democ.htm

Let me know if you want more background stuff.

[Drew Hendricks]

David, I see your point. Many would argue that the Starbucks case is an example of customization and not an example of co-creation, but I disagree. In the B2C arena the product is often the experience. People do not go to Starbuck's because the coffee is so darn awesome. They go because Starbucks has allowed each individual to create their own product and experience. Many of the standard mixed items on the menu came about because a great number of like minded consumers ordered their coffee that way.

I feel that restaurants package meals like the sunrise special together because it helps set the stage for a positive dining experience. Most people like to go to places where they can get things just the way the want. When they are allowed to alter the menu, they feel the restaurant went out of their way to make their dining experience better.

[David Foster]

Drew...if the Starbucks case is an example of co-creation, I'd put it at a fairly low level of same. How is it different from going into a diner and ordering "two eggs, over easy, with the bacon crisp but not burned?"

Which raises an interesting point: why do so many restaurants feel impelled to *package* things that have no inherent need to be packaged...ie, why do I have to order a "Super Sunrise Special" but "hold the pancakes" instead of just telling them what I want? Isn't this antithetical to the whole idea of co-creation?

[Drew Hendricks]

Jennifer - Excellent topic, one that is very close to my heart.

David - I disagree about B2B being easier. A prime example of a B2C company serving millions through co-creation is Starbucks. Rarely does someone walk into Starbucks and just order a coffee. Everyone has their own twist on that caffeinated drink. Whether it be a half-caf black or a triple, venti, fat-free, no whip vanilla mocha each customer develops a coffee drink to their own specifications.

A custom mocha might not be as exciting as the Google API, but it is co-creation none-the-less.

[David Foster]

Co-creation is probably easiest when you're selling business-to-business via a direct sales force. In that situation, you know your customers pretty well. It gets harder when you're selling through an indirect channel or when you're selling to millions of consumers..in the latter case, it's very hard to avoid thinking of customers in terms of abstractions.

I haven't read the "Hardball" book--is Gail an actual person, or an iconic figure for a category of people?