The Power of Co-Creation: Build It with Them to Boost Growth, Productivity, and Profits - Hardcover

Über die Autorinnen und Autoren

Venkat Ramaswamy is the Hallman Fellow of Electronic Business and Professor of Marketing at the Ross School of Business, University of Michigan, Ann Arbor. He is a globally recognized thought leader, idea practitioner, and an eclectic scholar with wide-ranging interests in innovation, strategy, marketing, branding, IT, operations, and the human side of the organization. His award-winning book, The Future of Competition: Co-Creating Unique Value With Customers (with C. K. Prahalad), introduced co-creation as a revolutionary business concept. 
 

Francis Gouillart is president and cofounder of the Experience Co-Creation Partnership (ECC Partnership), a consulting firm that helps client companies build co-creative management and organizational capabilities. He is an authoritative figure in the consulting world and, prior to joining Venkat Ramaswamy in cofounding ECC Partnership, was closely associated with the theoretical development and consulting-based implementation of major business methodologies, including Blue Ocean Strategy/Value Innovation and the Balanced Scorecard. He previously co-authored the bestselling book Transforming the Organization (with James Kelly).

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The Power of Co-Creation

Chapter 1
Becoming a Co-Creative Enterprise

All around the globe, the expectations of informed and connected people have dramatically changed in recent years. Whether as customers, employees, or citizens, people demand more engagement with providers of goods and services, with their employers, and with their governments. People today are highly connected and networked, sharing their experiences of using products and services. They want to help design the value of the products and services they use; they want an ongoing conversation with the organizations they do business with and with each other; and they want their voices heard. Yet, in spite of their best efforts, many organizations are locked into a firm-centric paradigm of value and its creation. They fail to engage people in generating better products and services that the organization can deliver. Technology gives innovators and marketers more and more options in designing and delivering products and services, yet they struggle to connect with what people value, and this further frustrates people. As a result, satisfaction ratings are declining or flat across many industries, and loyalty is increasingly a thing of the past.

During 2000 to 2004, Venkat Ramaswamy (together with C. K. Prahalad) wrote a series of articles on the implications for business and society of the more connected and empowered customer. They detailed the shifting of competencies toward a network of customer communities and global talent outside the firm on one hand, and the emergence of global resource networks of firms on the other. The authors suggested that customer experience is central to enterprise value creation, innovation, strategy, and executive leadership.1 These broad changes in business and society, they argued, called for co-creation—the practice of developing systems, products, or services through collaboration with customers, managers, employees, and other company stakeholders. Their book, The Future of Competition (Harvard Business School Press, 2004), offered a series of compelling examples showing that value is being increasingly created jointly by the firm and the customer, rather than created entirely inside the firm. The authors held that customers seek the freedom of choice to interact with firms through a range of experiences. Customers want to define choices in a manner that reflects their view of value, and they want to interact and transact in their preferred language and style. The Future of Competition provided a new frame of reference for jointly creating value through experiences.2 Just three years after its publication, a number of businesses had capitalized on opportunities anticipated by the book—whether start-ups such as Crushpad, which made winemaking a more democratic process using Web 2.0 technologies, or established businesses such as Brother, which breathed new life into a century-old product, the sewing machine, by networking the product and nurturing active user communities.

In many ways The Future of Competition portrayed the digital and consumer universe we know today. It also commenced an ongoing journey for Venkat Ramaswamy. In 2005 Francis Gouillart joined the journey, and the authors started developing a transformational framework for co-creation. Through their interactions with thousands of managers globally who had begun experimenting with co-creation, they discovered that enterprises were building platforms that engaged not only the firm and its customers, but also the entire network of suppliers, partners, and employees in a continuous development of new experiences with individuals. In some cases, they found that organizations had gone further in extending their resource base through practices such as crowdsourcing, mass collaboration, and open innovation. In other cases, they were tapping into user communities and social networking among customers. Some organizations had also begun allowing their customers to personalize products. Others were engaging suppliers in new forms of vendor relationships. Still others had developed new ways of interacting with their employees and were able to mobilize their workforce to unheard-of levels of performance through co-creation. In all these cases, companies were succeeding by paying attention to how they engaged people. Managers had to make the fundamental shift to go beyond their conventional goods-services mind-set to an experience mind-set—defining value based on human experiences rather than features and processes, whether downstream or upstream, in the value chain. They further observed that success lies in using people’s engagement experiences to generate insights to improve the nature of interactions as a result, including inside the enterprise. Interactions among people inside and outside the firm became the connective tissue where new insights, learning, and innovation were generated.

As shown in Figure 1-1, the activity chain of the enterprise no longer solely creates value, nor is its value proposition unilaterally defined by the organization. The activity chain remains key in creating goods and services, but customers, suppliers, partners, and employees are no longer limiting their experience to just “receiving” what is being offered by the enterprise’s activity chain. They increasingly want to insert themselves into that activity chain, and also open up to the possibility of enhancing value in their own activities. In other words, people want to be personally engaged in co-creating value through human experiences. In doing so, the traditional distinction between production and consumption gets blurred.

Figure 1-1: Becoming a Co-Creative Enterprise



Although the co-creation principle applies equally for suppliers, partners, and employees, let us start by illustrating how value co-creation works with customers. In the conventional enterprise, customers are largely passive in the process of value creation. They are researched, observed, segmented, targeted, marketed at, and sold to by people in the organization, but they are not engaged in any meaningful interaction with the organization, on their terms. To use common business terminology, the organization has established “touch points” for them, but these touch points are scarce and brief, and they are all staged from the perspective of the organization. The organization decides what those touch points are and how the relationship with the individual is defined. Individuals do not get to decide what they are to share with the enterprise, but instead answer the questions asked of them at the focus group. They do not participate in the design of the product or service or program, but are only presented with an offering designed for them by the organization. They do not participate in the marketing of the offering, but only get to see the campaign aimed at them. They do not sell the offering to each other; the organization sells it to them. They are left with a yes-or-no decision, a modern capitalistic equivalent of Shakespeare’s Hamlet: “to buy or not to buy.” Throughout, the organization views value as a function of its activities, ignoring the role of individuals and their activities in the shaping of value. This firm-centric paradigm of the conventional enterprise has served us well for many years, but it is rapidly...