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CO- CreatiOn A IDeA WITH BIG MA IMPlICATIONS32 july 2011 • VISIONS
C ompanies are co-creating new ads, products, services, and features with customers, aided by social interaction technologies and a more participative, increasingly social consumer. But does co-creation simply represent customer engagement on steroids or a fundamental shift in the front end of innovation? If you’re like most new product development because it sounds so terribly one-sided. I now (NPD) practitioners, you have heard of the see value as resulting from the experience term co-creation, and if asked you would of a “dance” among many stakeholders, and probably say it has to do with crowdsourc- innovation as a process of providing newH ing ideas and designs for new products and “dance floors,” and then participating in that services from customers. It’s all about using experience. Would you simply sell to your social media to democratize design, especially customers when they’re expecting to dance in businesses such as apparel and fast-moving with you and your products? Will good pro- consumer goods, right? Or perhaps you view cess choreography alone beat a competitor co-creation as a form of open innovation or that’s a great dancer? Can you engineer a new mass customization. experience of value, or can you only orches- For many, co-creation doesn’t seem like trate it so your stakeholders will interact with a revolutionary concept, just good, solid you and each other? customer engagement pumped up with in- To see why co-creation is so revolutionary, ternet connectivity. I believe, however, that let’s look at two examples: one consumer-ori-MAjOR co-creation is a big idea, with even bigger ented (Nike+) and one industrial (AgChem). implications for NPD and innovation man- By now, many people have heard the story agement that are only now beginning to be of how Nike partnered with Apple to create apparent in the market. a new innovation, Nike+, and many see it as The originators of the term, Venkat Ramas- a great example of open innovation. Neither wamy and the late C.K. Prahalad, discussed company could have provided this innova- co-creation in their 2004 book, The Future tion alone, but by opening up its offering to of Competition: Co-Creating Unique Value include the technology of Apple, Nike engi- with Customers.1 But in Ramaswamy’s latest neered new value for its customers. book, with co-author Francis Gouillart, the concept is significantly broadened to include all enterprise stakeholders and their com- CO-CreatiOn with CustOmers: nike+ munities. The Power of Co-Creation: Build Now let’s look at the Nike+ example through It With Them to Boost Growth, Productivity, the lens of the co-creative enterprise. What and Profits (2010)2 defines a much more was actually at work that improved Nike’s revolutionary vision – the “co-creative en- U.S. running market share by a sustained 10 By Mark J. Deck, PRTM share points over three years, worth over $500 terprise” – a company that systematically Enterprise Co-Creation enables value creation through interactions million? The answer is that Nike had found Practice with customers, suppliers, employees, agen- its way to a completely new dimension of the cies, and their communities instead of trying runner’s experience, one it had never partici- to engineer value in a one-way fashion for pated in previously. Before Nike+, Nike could these stakeholders. engage in the shoe-buying experience, the As a student of NPD and innovation man- shoe-finding or researching experience, and agement for more than 30 years, these new perhaps the “shoe showing-off” experience, concepts have rocked my world. I can no lon- but not the running experience. The runner’s ger bring myself to talk about value creation “process” was closed to Nike. Nike+ allowed ❯ VISIONS • july 2011 33
Nike to participate in many new parts of the ‘‘running process, including tracking runs,monitoring performance, challenging otherrunners (friends and strangers) to runninggoals, setting workout targets, and sharingworkout mixes. The Nike+ system is essentially an engage-ment platform that allows runners to enjoy Employee co-creation increasesnew interactions of value with Nike and with engagement, energy, and ’’each other, all while providing Nike with anongoing stream of immensely valuable infor- innovativeness; a superior employeemation about their running habits. Nike hasused that engagement platform to improve experience almost always precedesand strengthen its offering (for example, in a superior customer experience.the way it joined forces with Google Maps tomap runs, after seeing how Nike+ users hadstarted to do this on their own). Nike hasalso introduced Nike iD and more recentlyNike iD Nation, an engagement platform thatworks the other way around, allowing run-ners to connect with Nike’s shoe design anddevelopment processes. Nike+ illustrates three key lessons of en-terprise co-creation. First, there is incredibleuntapped “experience value” in engaging incustomer (stakeholder) processes you previ-ously have not participated in. Second, thereis untapped experience value in letting thecustomer (stakeholder) engage with you inyour own processes. Third, the way to openup these new interactions is by creatingengagement platforms – physical or virtual –that enable them. exhibit 1: the Four powers of Co-Creation exhibit 2: Outside-in and inside-Out Co-Creation The Nike+ example is B2C, mainly focusedon co-creation with consumers. But the co-creation “effect” also applies to B2B situationsand to non-customer stakeholders, includingsuppliers, employees, regulators, dealers, andcommunities. The next example, AgChem (areal company, but with its name disguisedon request of confidentiality), illustrateswhat can happen when a company opensup a highly technical and regulated researchand development process to farmers andtheir ecosystem. Source: ECC PartnershipCO-CreatiOn in a b2beCOsystem: aGChem series of workshops that began stakeholder dealers, and other related players in selectedIn many industrial companies, the need for interaction in the form of a dialogue that was farming communities. The workshop seriesgrowth outpaces the ability of technological then continued online via a private YouTube was repeated in several countries.innovation alone to keep up. To fill a growth channel to scale the interactions beyond the Unlike a more traditional create-it-for-yougap, AgChem decided to co-create solu- initial workshops. approach in which expert researchers mighttions to crop management with its farmer AgChem started on the inside first, with visit a sample of farmers across communitiesecosystem. To do this, it had to create an workshops among corporate executives to search for unmet needs, the idea in theseengagement platform to allow its crop sci- and regional managers. These workshops co-creation workshops is to pick an existingence, technical services, sales, and marketing helped these internal stakeholders open up microcosm of the market where the interac-employees to interact directly with commu- their processes to each other and prepare for tions and experiences of all stakeholdersnities of farmers, their equipment handlers, co-creating with external stakeholders. The can be opened up. They provide a way forfarm supply dealers, and local regulators. In next series of workshops included external the company’s internal ecosystem to engagethis case, the engagement platform was a stakeholders such as farmers, farm supply directly with the external ecosystem. During34 july 2011 • VISIONS
AgChem’s workshops, co-creation techniques closed processes to them. The cases furtherwere used to probe existing interactions and show that these new interactions enable con-experiences and provide ways for the vari- nections to stakeholders’ important end goals.ous stakeholders to identify new interactions Nike+ was a way for Nike to shift fromof value. This included not only people-to-people interactions, but also people-to- selling only shoes and shoe functional- ity – leaving the workout outcomes to the Five Key Principles equipment and people-to-insect interactions. consumer – to selling a complete workout of Co-Creation AgChem’s co-creative engagement with its solution that helped customers achieve their Here are five vital co-creation principles I havestakeholders resulted in powerful innova- running goals. The expanded customer expe- drawn from the examples in this article andtions on many levels producing hundreds of rience became an opportunity for differentia- other cases I have studied:millions of dollars in growth. At a workshop tion. When AgChem enabled farmer schedule 1. Value is defined by individual experience, andin Europe, the open discussion led the envi- collaboration, this led to a more valuable end is created through interactions. outcome (crop yield) than the intermediate • If your innovation process assumes thatronmental regulators in attendance to change all value comes only from your company’spesticide regulations because of a new in- functional product outcome traditionally sold activities, you’re sharply limiting yoursect threat that could not be managed with by AgChem (insect kill). In both cases, these potential value space and opportunitiesexisting means. This was co-creation among engagement platforms enabled more value, for differentiation.AgChem, regulators, and farmers. A second differentiated the company, created stickiness • Individual experiences and solutioninnovation was the recognition that farmers for customer loyalty, and built “strategic capi- outcomes are often more valuable tal” in the form of deeper, fact-based insight than functional outcomes, especiallyin a community should manage their crop when functional outcomes aretreatment schedules collaboratively for maxi- into the practices of their stakeholders. commoditized and offer little opportunitymum impact. AgChem created an engagement So what does all this mean for NPD and for differentiation.platform for these farmers to connect their innovation management? Why is enterprise 2. You can’t create new experiences alone,treatment schedules (and to learn more about co-creation more revolutionary than evo- but you can create engagement platformshow they manage them). lutionary? Take a look at the short sidebar that enable new interactions that generate Another epiphany from the workshops article at right to review what I believe are valuable new experiences. the five key principles drawn from above • View the front end of innovation as thewas that, regardless of directions on the examples and others I have studied. management of engagement platforms.packaging, farmers mix various pesticides • Your products can become engagementto achieve the most cost-effective outcome platforms creating even more value, afrom their perspective. Rather than ignore the next step deeper level of engagement, and a richthis reality, AgChem recognized the oppor- So, are you ready to start dancing? Can you source of systematic stakeholder inputtunity to establish yet another engagement to drive innovation. Can you focus your see the NPD process giving way to New Ex- company’s product development on thisplatform, a way for farmers to interact with perience Orchestration (NEO)? Can you shift “co-creation squared” effect?AgChem and each other to know what they gears from engineering product extensions to 3. It’s not only the end-customer experiencescould safely mix and when, balanced by cost, engineering engagement platforms? and outcomes that matter.to achieve their goals. Finally, the co-creation If innovation and growth have stalled, if • To broaden the value space for innovation,workshops resulted in several ideas for new you feel you’re not engaging well with your look beyond the end customer to theformulations of pesticides. Interestingly, the customers, if your employees aren’t engaged experiences of other stakeholders, such asnew formulation ideas represented only a broadly in innovation, if you see ecosystem suppliers, partners, employees, agencies, and their communities.fraction of the total growth value of the business opportunities but can’t seem to tap • Employee co-creation increasesco-creation initiatives that sprang from this them, if there seem to be no opportunities for engagement, energy, and innovativeness;initial effort. differentiation in your market, or if you struggle a superior employee experience AgChem’s example illustrates several ad- to move from product performance to solution almost always precedes a superiorditional lessons for co-creation. First is the outcomes, you should consider a broader use customer experience.rule of co-creating inside as a prelude to co- of co-creation across the enterprise. V 4. Engaging networks of stakeholderscreating outside. Second, rather than simply multiplies value.setting up social media platforms that might endnOtes • No business is self-contained; you will grow by enabling an ever-richer experiencego unvisited, enterprises should start with 1. Venkat Ramaswamy and C.K. Prahalad, The Fu- across your ecosystemengagement platforms in the form of work- ture of Competition: Co-Creating Unique Value • Think B2B2C2C and “win-more win-shops, and then scale them up with IT as with Customers, Watertown, MA: Harvard Busi- more.” Ecosystem value will accrue to the ness Press, 2004.AgChem did. Third, rather than researching orchestrator as individuals derive value 2. Venkat Ramaswamy and Francis Gouillart, Thethe current processes of a cross-section of from new interactions. Power of Co-Creation: Build It With Them to Boostcustomers, companies should focus on the Growth, Productivity, and Profits, New York: 5. You get to co-creation through co-creation.experiences and interactions of the stakehold- Free Press, 2010. • If you start on the inside and build newers in a given microcosm as representative of interactions from the inside out, change will be a by-product, not a barrier.an ecosystem. • You can’t know the new ways in which Mark J. Deck is a past president of stakeholders will want to interact until youkey takeaways PDMa and director of the PRtM Enterprise provide them the way to find out.These two cases show that focusing on ex- Co-Creation Practice. Contact him atperience can help companies access hidden firstname.lastname@example.org of stakeholders and open their own VISIONS • july 2011 35