Innovation Management/ lecture 5: Co-Creation to build more value

Bryan Cassady Guest Professor, Bryan@fast-bridge.com
Class Update 5
Nomadesk 15
Co-creation 60
Break 10
A great video plus talk 60
Attitude / Skills / Process… Debate 5
Next week's assignment 5

Student Presentation
Nomadesk… what now ?

19 million
search results for Dell Hell

Consumers don’t just buy M&Ms,
they customize them with messages and colors
Consumers don’t just buy a teddy bear,
they Build-A-Bear
Consumers don’t just buy shoes,
they personalize them

What Co-creation IS NOT What Co-creation IS
Customer focus
Customer is king or customer is
always right
Co-creation is about joint
creation of value by the
company and the
customer. It is not the firm
trying to please the
customer
Delivering good customer
service or pampering the
customer with lavish customer
service
Allowing the customer to
co-construct the service
experience to suit their
context (the result can be
more or less service)

What Co-creation IS NOT What Co-creation IS
Meticulous market research Experiencing the business as
consumers do in real time
Transfer of activities from the
firm to the customer as in self-
service
Creating an experience
environment in which
consumers can have active
dialogue and co-construct
personalized experiences;
product may be the same, but
customers can construct
different experiences

STANDARD
CUSTOMER VALUE
WITHIN THE
FIRM
(4) Mass
Customisation
ADIDAS, DELL, CAR
MANUFACTURERS
(8) Personalised
Experience Value
and Knowledge
Co-Creation
IPOD, AMAZON (US),
MEDTRONICS, JOHN DEERE,
ON STAR
(1) Product
“Finishing”
IKEA
(2) New Product
Design and
Development
(Lead User)
P&G, SILICON GRAPHICS,
VOLVO XC90, HARLEY
DAVIDSON, SATURN
(6) New
Service
Design
TELIASONERA, ALARIS
MEDICAL SYSTEMS
(7) Real-Time
Marketing & Service
Adaptation
CONTACT CENTRE DIALOGUE,
CEMEX and FEDEX TRACKING
SYSTEMS
PERSONALISED or
UNIQUE CUSTOMER
VALUE
Value Creation
Pre-Use
(Fixed attribute
products)
Value
Creation
In-Use
(unique
experiences)
Customization
Experience
Innovation
(5) Open Community
Ideation and Product
Design and
Development COMPUTER
GAMES MODS, LINUX, LEGO
MINDSTORMS, FIRFOX,
INNOCENTIVE(3) Existing Product
Adaptation
(Customer Feedback
SONY ANTENNA SHOPS, CISCO
KNOWLEDGE CENTRE,
MICROSOFT KNOWLEDGEBASE
THEOMCGROUP
WITHIN
MARKET and
COMMUNITY

Realizing co-creation

N = 1

R = G

1. Make meaning

• Increase the quality of life

• Right a wrong

• Right a wrong
• Prevent the end of something good

“The mission of Wendy’s is to deliver
superior quality products and services
for our customers and communities
through leadership, innovation, and
partnerships.”

• Wendy’s “Healthy fast food”

• FedEx “Peace of mind”

• Nike “Authentic athletic performance”

• Nike “Authentic athletic performance”
• Target “Democratize design”

“We exist to professionally build long-
term high-impact sources so that we
may endeavor to synergistically
leverage existing effective deliverables
to stay competitive in tomorrow’s
world.”
Dilbert Mission Statement Generator

• Think different •
Polarize people

• Think different •
Polarize people
• Find a few soul mates

• Be specific
• Keep it simple

• Be specific
• Keep it simple
• Ask women

5. Weave a MAT (milestones,
assumptions, tasks)

• Milestone “Finish design”

• Assumption “Sales calls/day”

• Assumption “Sales calls/day”
• Task “Rent an office”

Ability
to provide
unique
product or
service
Value to customer

Ability
to provide
unique
product or
Priceservice
Value to customer

Stupid
Ability
to provide
unique
product or
Price
service
Value to customer

Stupid
Ability to
provide
unique
product or
Dotcom Priceservice
Value to customer

Stupid X
Ability
to provide
unique
product or
Dotcom Priceservice
Value to customer

10 slides
Title Marketing and sales
Problem Competition
Solution Team
Business model Projections
Underlying magic Status and timeline

30 point font
This is 20 points
This is 14 points
This is 12 points and what you’re using now

• Ignore the irrelevant
• Hire better than yourself

• Ignore the irrelevant
• Hire better than yourself
• Apply the shopping center test

9. Lower the barriers to adoption

• Flatten the learning curve

• Don’t ask people to do something that
you wouldn’t

• Don’t ask people to do something that
you wouldn’t
• Embrace your evangelists

• Let a hundred flowers blossom

• Enable test drives

• Enable test drives
• Find the influencers

11. Don’t let the bozos grind
you down

“I think there is a world market for maybe five
computers.”
Thomas Watson
Chairman, IBM
1943

“This telephone has too many shortcomings
to be seriously considered as a means of
communication. The device is inherently of
no value to us.”
Western Union internal memo
(1876)

“There is no reason why anyone would want a
computer in their home.”
Ken Olsen
Founder, Digital Equipment Corp.
1977

“It’s too far to drive, and I don’t see how it can
be a business.”
Guy Kawasaki
Bozo

Income available
To spend

Yahoo Answers,
Lego Mindstorm
Firm gains revenue by
providing platform from user,
advertisement, etc
User mainly enjoys benefits
for free
Innocentive,
iTMS+iPod, Ebay
Firm gains revenue by
providing platform
User economically benefited
by playing on this platform
Wikipedia, Linux, (Delicious)
Everybody takes part
voluntarily. Value incentive is
often personal.
Craigslist
Firm acts like NPO and
supports users to gain
revenue.
Firm
UserNo Profit Profit
No Profit
Profit

Firm
UserNo Profit Profit
No Profit
Profit
Craigslist

Incentives for Participation
 Reputation management and recognition through
leaderboards
 Sharing of information and experience without
endlessly searching through the Internet
 Pay-per-click advertising when using the search
option
 Bundling with del.icio.us and Flickr into fan sites
 Channeling to other Yahoo! services
Users Company
Developing the
value network
Word of Mouth
Channeling through other Yahoo! services
 Yahoo! could try a hybrid method encompassing
elements of Google Answers. It could form a pool of
experts which the users would have to pay in order
for them to answer his question.
 More banner advertising
Suggestions for Remuneration
Advertised
through the
search engine
Business model

 Anti-eBay architecture
 No advertisement banners
 Public service culture attracts a fanatic base
 Sense of community
 Philanthropic purpose
 “serving customers come first and worrying about
revenues comes second”
Users Company
Developing the
value network
Word of Mouth
Indirect promotion through Craig’s personal interviews
 If Craigslist were to change philosophy and become
more commercial it could use the following revenue
mechanisms:
– Posting fee
– Transaction fee
– Subscription fee
– Advertisements
Business model

 Solvers – Recognition, Monetary rewards, Possible
Relationship with seeker company
 Seekers – Benefit to Cost Ratio = 20:1 for R&D
 Posting fee for “seeker” company
 Annual fee for “seeker” company in order to access
specialized scientific staff
 Success commission when a solution is chosen
User “Solvers” & “Seekers” Company
Developing the
value network
Sponsorship
of Relevant
Events
Present in
Conferences
Where Solvers
attended
Posted selected challenges in scientific publications
 Instead of basing the remuneration on the “seeker”
companies it could be based on the 110,000
scientists and scientific organizations that make up
the solver community:
– Subscription fee (Versioning based on usage
of system)
– Fee for access to the detailed problem
statement
Business model

 Status, reputation
 Heritage to the world (through Wikipedia users are
`immortalized`)
 There is tracking system to highlight contribution
 NPO
 Based on donations and fundraising efforts
Users Company
Developing the
value network
Word of Mouth
Bundling other Wiki projects
Business model

Business model
• Users more interested in
non-economical benefit
• Company benefited
economically from value of
network
• Users have solid economical
incentive to participate
• Philanthropic interests attract
users quickly
• Philanthropic policy attracts
users by Anti-eBay style
• Users trade solid products
for profit
Firm
UserNo Profit Earn profit
No Profit
Earn profit

• Users / Posting Questions
• Advertisers
• ISPs
• Browsers
• PC
• Users / Answering
• Other Yahoo Services
(del.icio.us, Flickr etc)
• Yedda
• Oyogi
• Askville (by Amazon)
• Live QnA
• Brainboost
• Wondir
• Answerbug
• Answers.com
Competitors
Customers
Complementors
• Hardware
• Power Companies
• Employees
• Bandwidth
Suppliers
Business model
User
Firm
No proft Proft
No proft
Proft

• Users / Sellers
• ISPs
• Browsers
• PC
• Users / Buyers
• Evite
• Friendster
• Lavalife
• LinkedIn
• Meetup
• Monster
• MySpace
• Spring Street
• Tickle
• Tribe Networks
• Yahoo!
Competitors
Customers
Complementors
• Hardware
• Power Companies
• Employees
• Bandwidth
Suppliers
Business model
User
Firm
No proft Proft
No proft
Proft

• Pharmaceutical Companies
• Consumer product firms
• Industrial chemical organizations
• Rockefeller Foundation
• Advertisers
• ISPs
• Browsers
• PC
• Solvers / Users
• yet2.com
• Nine Sigma Inc.
• InnovationXchange
• R&D labs
Competitors
Customers
Complementors
• Hardware
• Power Companies
• Employees
• Bandwidth
Suppliers
Business model
User
Firm
No proft Proft
No proft
Proft

• General public
• ISPs
• Browsers
• PC
• Users / Posting
• Other Wiki projects
• Britannica.com
• Columbia Encyclopedia
• Encyclopedia Drammatica
• Encyclopedia.com
• Information Please
•How Stuff Works
•Encarta Online
• Citizendium
• xrefer
Competitors
Customers
Complementors
• Hardware
• Power Companies
• Employees
• Bandwidth
Suppliers
Business model
User
Firm
No proft Proft
No proft
Proft

Innovation Management/ lecture 5: Co-Creation to build more value

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Innovation Management/ lecture 5: Co-Creation to build more value