Firstly, what is co-creation?
Co-creation is a different way of looking at new product development where the customer is empowered to play a more active role in creating a product and/or service. Co-creation essentially involves three steps:
(1) obtaining contributions by customers
(2) selecting the best of these contributions
(3) incorporating these selected contributions into products, processes, or services.
Why do it?
- Enhanced Brand Experience by creating unique customer experiences that increases customer satisfaction and loyalty
- Accelerates Innovation Cycles – co-creation improves effectiveness of products
- Reduces Risk of Producing a Market Flop – through the customer involvement there is a closer fit to consumer needs and higher commercial potential.
- Decreases Costs of new product development – cost saving can be gained by minimal cost to gain consumer ideas and reducing the need for inputs from traditional market research and employees.
- Differentiation – by encouraging collaboration with customers you are putting them at the core of your business and demonstrates your customer-centric thinking both internally and externally.
Three Great Examples:
Jay Rogers, CEO of Local Motors wanted to change the automotive industry.
Local Motors started off with a car design competition with the winning design voted and refined collectively by a community of enthusiasts. The winning design was from Sangho Kim, a Korean-born design student in Pasadena, California. The raw design was then iterated by—and refined with feedback from—the entire community.
Winning contributions are rewarded financial as well as receiving public recognition – the students name is on the body of the vehicle. Once the design was adopted, the company accepted pre-orders and invited future owners to participate in the production of their vehicle.
It is a component vehicle where the components are easy to access, meet regulations and carry warranties. It is a vehicle made in America and safety is a high priority in its design – can’t be rolled, Grade A components, well balanced and while it is an off-road vehicle it is also street legal.
Local Motors share all of its designs, components and plans on its website and blogs and encourages its customer to tinker with them and modifications may be then incorporated into future product releases. Customers share assembling tips and troubleshoot potential problems enabling Rally Fighter owners get a car that is tailored to their needs.
Benefits to Local Motors included taking just 18 months to go from a 2-D drawing to a vehicle ready for pick-up. That compares to the industry standard of 3 to 5 years. With the unique experience of customers helping to build their car this has resulted with increased brand loyalty.
LEGO Ideas allows customers to create new designs. The website was set up for LEGO enthusiasts who can both create, vote and give feedback on new projects. The projects that receive over 10,000 votes go into a review phase where senior LEGO employees decide if the product is viable for production. If the product is approved, the creator is featured in set materials, receive a royalty on sales, and are recognized as the product creator.
Consumer insights are now a core part of the LEGO strategy that enables staff to make consumer led decisions. The ‘LEGO Friends’ play set was designed through the process of co-creation, and came from the insight that young girls prefer designs with bright colours and environments that have emotional connection. This was one of biggest commercial successes in LEGO history, with a new product range that attracted new customers that they had previously not been able to connect with.
Threadless makes and sells unique T-shirts where co-creation is an essential part of its business plan. Threadless gives its social network creative control over the products it sells. Anyone in the network can submit T-shirt designs that site members vote on, with winners printed and sold by Threadless. The process is:
1. Upload an original T-shirt design to threadless.com. (About 2,000 to 3,000 are uploaded each week.)
2. Anyone in the Threadless community, two million strong, can rate the designs on a scale from zero to five.
3. Once a week, Threadless staffers check out that week’s best-rated designs and pick five to 15 winners. About 1% of all designs are selected for printing.
4. Threadless typically produces an edition of 500 shirts for each design, selling them on threadless.com for USD$25 each.
5. In return, each designer receives 20% of the profits of their design.
Learn about one of the Threadless contributors: Threadless Designer Katie Campbell
There are risks and costs to consider when adopting a co-creation model such as reduced control and potentially investing in technology to ensure the interaction is a positive experience for the customer . However on the upside customers are better-informed and actively take interest in the companies that they desire to connect with. They are no longer passive consumers and have become active creators of content and opinions. With the popularity of social media and the increasing number of websites with feedback mechanisms, customer’s voices can be heard louder and clearer than ever before.
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