According to C.K. Prahalad and Venkatram Ramaswamy, deregulation, emerging
markets, new forms of regulation, convergence of technologies and industries,
and ubiquitous connectivity have changed many facets of the business world.
And are still causing further changes.
These factors have changed the nature of consumers. Today consumers
are informed, networked, active and global.
These factors have also changed the nature of companies. Today firms
can fragment their value chain in ways that were not possible before. Both
the physical and the non-physical part of corporations (business and management
processes) can be split up.
The above trends are enabling a new form of value creation: Co-Creation,
in which value is not created in the firm and then exchanged with the customer,
but in which value is co-created by the firm and the consumer. Value will
have to be jointly created by both the firm and the consumer. In the traditional
system, where firms decide on the products and services they will manufacture,
by implication they decide what is of value to the customer. In this system,
consumers have little or no role in value creation. During the last two decades,
managers have found ways to partition part of the work done by the firm and
pass it on to their consumers. Be it self-checkout, involvement of a subset
of customers in product development, or a range of variants in between. Note
that Co-Creation goes far beyond being merely customer oriented.
Connected to this trend of jointly creating products, according to Prahalad,
we are also moving away from a company- and product-centric view of value
creation towards an experience-centric view of Co-Creation of value.
High-quality interactions that enable an individual customer to co-create
unique experiences with the company are the key to unlocking new sources of
competitive advantage. Products are but an artifact around which compelling
individual experiences are created.
Origin of Co-Creation. History
Back in the 1990s, Prahalad and co-guru Gary Hamel published an influential
management theory: "Core Competence".
Core Competences are the unique capabilities and know-how that give a company
its competitive edge.
Steps in Co-Creation. Process
Typical steps involved in co-creating value include:
Defining clear objectives for the project.
Figuring out who are the right customers to involve in the process.
Compare: Kraljic Model. The customers
of today might be different than the customers of tomorrow.
Working with customers to find out what they really want to include
in a product or service.
Designing products or systems jointly to meet those customers' needs.
This includes selecting the partners to be included in your network.
Deciding how to share the value.
Overcoming internal resistance to change - within seller, buyer and
partner organizations. This is a critical step in ensuring that you control
the channel.
Limitations of Co-Creation. Disadvantages
Markets and industries and companies and systems and people do not change
quickly. So it may take quite some time before the whole world is co-creating.
Collaboration is a lot harder than competition.
The concept challenges many of the habits of managers. To change the
mind-set of people within a company into the way that an external customer
thinks, is not easy.
Accounting rules that are based on what a company "owns", are also challenged.
Accounting laws are also notoriously hard to change.
A final note on Co-Creation: Try it out. Here and now!
Forum discussions about Co-Creation. Below you can ask a question about this topic, share your experiences, report a new development, or explain something.
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Review of WIKINOMICS (Tapscott)
Why is it worthwhile to read this book?We're moving away from a closed, hierarchical structure focused on capital and physical goods. In this old system, you tried to be a good manager while you mov...
How to Start with Co-Creation?
We are a flour mill focused on high-end customers who use wheat flour. Our main strategy is tailor-made flour for the companies that have some particular requirement and are willing to pay for the req...
Value Co-creation in FMCG
Dear ladies and gentlemen, I am writing a research paper on 'Value co-creation in fast moving consumer goods (FMCG) and its impact in reducing product cannibalization'. Your contribution to this topic...
Internal and External Views and Values of Co-creation
Because the term creation is involved, it invokes parenthood or patent hood. Depending on the view and value of the perceived creator. If an organization were to ask their customers what product or se...
Open Innovation Strategy
According to Johan Saunders of Sara Lee (in 'Handboek Communities', 2009, p 32-34), companies can use an 'open innovation' strategy to interact with both customers and other relations (e.g. suppliers)...
Co-creation also in Health Care!
In services sector like health care, the patient's values and choice of treatment desired by him should be given due regard. The treatment plan should be discussed with him to ensure compliance and su...
Some Technical Tools for Co-creation
Using artificial intelligence languages like Lisp, Prolog one can build a database of an expert system in which users of service enter the problem to start a chain.
The others to add on to it would b...
How to Figure Out the Right Custormers?
Refering to the above steps in the Co-creation process, how should we select customers under Kraljic model, how should we define the factor of matrix?...
Co-creation in Services has Strategic Value
I work for a company in the service business. Only early last year we started to implement CEM (Customer Experience Management) methods. However the recession has hit us extremely hard and the company...
The best, top-rated topics about Co-Creation. Here you will find the most valuable ideas and practical suggestions.
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Co-creation is Real: Facebook Example
Co-creation is real and here now. Take Facebook: infrastructure supplied by company, content supplied by market. The key to successful co-creation is identifying and engaging the right customer group....
Implementing Co-creation Internally?
What would possibly happen if co-creation were implemented within the firm, looking at management as the provider of "products" - business directions, empowerment, etc. And the employees as the users ...
Building a Co-Creative Enterprise In their article “Building the Co-Creative Enterprise” (Harvard Business Review, October 2010), Venkat Ramaswamy and Fra...
Value Co-Creation, DART Model In Prahalad’s two recent books, The New Age of Innovation (2008) and The Future of Competition: Co-creating Unique Value...
Open innovation, User Innovation, Value Innovation, Bottom-up Innovation Roland Bel (2012) outlines and explains four types of innovations that have become more and more important since the las...
Customer Targeting, Customer Needs Identification, Customer Behavior In order to transform your customer’s experience and to better understand your customer’s needs, it is helpful to constr...
Innovation, Creativity, Organizational Innovativeness, Lateral Thinking, Out of the Box Thinking, Blue Ocean Strategy TWO CLASSES OF INNOVATION
Innovation can be triggered or enabled by two broad classes:
KNOWLEDGE PUSH: Innovation trig...
Design Thinking, Disruptive Innovation, Blue Ocean Strategy, Introducing Complex Systems, Co-Creation Today, organizations are increasingly developing and designing new and complex products or systems. In other words, the ...
Information Sources
Various sources of information regarding Co-Creation. Here you will find powerpoints, videos, news, etc. to use in your own lectures and workshops.
Service-Dominant Logic, Perspectives on Marketing Presentation about a service-dominant logic mindset in marketing, including the following sections:
1. Getting the logi...