Do you remember that ugly sweater that your Grandma sewed for you (I’m being honest. It was ugly!)? Well do you think that you would of liked it better if you had some say in it? I mean if you had helped pick the color, the style, the fabric. I can’t speak for you but I can admit that the sweater wouldn’t of collected as much dust if I had some kind of input in it. Think about your Grandma as a business and you as the consumer and, in a nutshell, you have co-creation.
You have probably heard the term co-creation, and perhaps you have heard of crowd surfing…. but what’s the difference? Let me explain.
Crowd surfing is:
- Open forum
- One-to-many activity
- People creating a good idea for you
- Making the assumption the crowd is capable of the total answer
- Winning is the award
- Crowd is working independently of the internal creative team
- Winning ideas are accepted
- Participation is limited to diverse crowd which can include industry experts
- One-to-one activity – there is a commitment to between parties to co-innovate, or co-produce
- People working with you to create a good idea
- Making the assumption the crowd is capable of inspiring the total answer
- The process of engaging the customer is the reward
- Internal and External teams work together
- Consistent issues become the inspiration for further development
Co-creation is much more of a collaboration, as the consumers help play a role in the value creation. Value can be defined as the interaction of the following three variables: specific customer needs, the attributes of a product or service, and the overall cost. The needs, attributes, and costs should be across all the five processes that customers take part in: buying, using, selling, integrating multiple products, and co-creation. So why is co-creation such an attractive approach? Well….
- Ideas will better represent the customers’ needs
- Product development will then meet those needs
- Increase likelihood of new product success
- Gain a competitive edge
- Improve product quality
- Reduce risk
- Increase market acceptance
- Efficiency and effectiveness
There is one company called Quirky who uses co-creation to generate customers ideas into products to be sold on the market. The way that Quirky works is at first people submit their ideas to Quirky. Quirky roughly receives 2,000 ideas a week. Out of the 2,000 ideas, Quirky sends a few hundred to design and has a design meeting every week. From the designs they then pick a few products to build. All community members give their input along the way such as price point, and color. When a community members idea is used they get a percent of the sales. Quirky’s products are sold to 35 countries and in 3,500 retail locations. To those who come up with the original idea, Quirky gives a lifetime royalty of 30% of online sales, and 10% retail sales.
I don’t know what you are thinking, but I’m starting to wonder how expensive this is for Quirky. I mean sifting through all the ideas, on top of paying all the community members for the pieces of the idea, not to mention paying for the main idea sounds ridiculously expensive. I never would have thought that this business model would of worked but it sure as heck did. Quirky doesn’t have to have a large research and design department because its community members do that for them. The team at Quirky can make money as long as tens of thousands of items are sold. The question is: how likely is that? Well that brings us right back to square one in which I talk about the fact that you have designed the product through your customers input and therefore you have a leg up on what your customers needs are and how to meet them. This is sounded good, isn’t it?
Some of the best inventions by Quirky include: a bendable power strip, rubber bands with hooks to fasten around things, and a product called the Pluck, which separates the egg yolk from the egg white (If you are still eating the whole yolk, c’mon people, it’s 2013, you might want to look into how much healthier egg whites are).
I guess I feel like co-creation is really getting into your customer’s heads. I did not mean that in a sketchy way either. Clearly, your customers are the answer to everything, so why not start that process from the very beginning? Social media has made communication with consumers painless and inexpensive.
You are probably thinking so then why don’t more companies use co-creation if it is all that it is cracked up to be. Well…
- Co-creation involves transparency from the firm. Ideas that may of been secret become public information to consumers but also competitors.
- Co-creation can raise questions about the ownership of intellectual property.
- Co-creation can lead to information overload.
- Co-creation may provide ideas that the firm is unable to use.
Hijacking is one of the main challenges customers face. For example, Henkel, a detergent manufacturer ran a contest in which consumers could submit innovative packaging ideas. However; instead of receiving valuable ideas and information; Henkel was bombarded with negative ideas. McDonald’s set up a twitter campaign to promote word of mouth but became a way for consumers to bash the chain. This can be very rough on companies especially McDonald’s in which everything submitted was for the public to view. Although, I have strong opinions on McDonald’s and haven’t eaten there in over 10 years, I still have sympathy for them. The tweets included tweets about being hospitalized after eating the food, and the food being made out of the same thing as yoga mats; and I think its pretty obvious how much of negative effect something like this could have on a company.
With co-creation there are some main things to keep in mind:
1. Brand Reputation-Strong brands need to protect themselves as allowing consumers to play a role in value-creation can actually have a quite negative consequences. Companies should weigh the the potential for misbehaving customers to undo previous efforts of the company to create a strong brand reputation.
2. Demand Uncertainty-Companies usually ask for customer input when conditions are shifting. However; during this time consumers are more likely to have no idea about what they want. For example, Porsche had lots of negative feedback when it announced it was going to release an SUV but still released the SUV, which ended up being a success. Customer feedback can be inaccurate and therefore companies can make the wrong decision.
3. Too Many Initiatives- Many people will submit ideas repeatedly giving the company a false idea of what the consumers as a whole really want.
The truth is we can sit here and talk about all the possible downfalls of co-creation but there are downfalls to nearly all different methods. In my opinion co-creation has some of the larger payoffs. Co-creation puts customers in the drivers seat and after all isn’t that what the customer wants. Keeping the customer happy is what is going to give companies higher sales and thus keep companies happier.
Vision critical has just recently launched a co-creation tool called IdeaHub. Clients are able to use this to tap into customers brains to get ideas for new product development. Members can submit ideas via text (which if you have followed my posts is important these days), email, audio, or video. Others are catching on, the question is: are you?
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