FreshNetworks Blog

In Russia, there is a generation of people known locally as Generatsiia P (Generation P). These is the generation who grew up during a period of increasing openness to the West, when products like American soft drinks were available in shops. But there was still no choice - if you wanted a cola drink you could only buy Pepsi, not Coca-Cola. Your choice was restricted to what somebody else had decided for you. Whilst you could choose a cola based drink (and an imported one at that) over another type, your ability to choose stopped there.

I was thinking of this analogy early this week when we were talking at FreshNetworks about the benefits that social media and web 2.0 technologies bring to the way brands interact with customers. Whether for marketing, to engage them or for research, social media tools like online communities give the consumer real choice about what they interact with and when. They are in control.

With last.fm for instance, I can listen to music when I want and where, I don’t have to rely on the choice of a dj at a national station to predict what I listen to. I also don’t have to limit myself to music I personally own. I have much greater control of what I listen to, rather than relying on people to push out music at a time that suits them, I pull on this music when I want to. I have more control.

So it is also in online communities. In our communities we see people take part at a time that suits them. Some people may never use the forums but always read and comment on blog entries. Others may do neither of these things but will upload media and comment on that. When you are developing your strategy you need to recognise this and make sure you cater for the people you want to be in the community, and cater for the things they choose to do in it.

Of course this choice on the part of the community member can also be used as a benefit. In our online research communities, for example, this freedom to choose is a significant advantage over other research methods. When you expect people to answer a survey or be insightful when you call them or at the time you run a focus group, it may not be at a time that they have the insight you want. They may need time to reflect, their first answer may not be their fullest, they may work better if they get to read other responses then spend time thinking about this. Traditional research works by recognising and dealing with this. Online research communities can really capitalise upon the choice you give the respondent over when they say. They are very much in control of their responses as they can come back at any time and add to them or change them as they see fit.

This kind of choice is empowering. I can contribute to discussions when I want to. I can watch videos at a time that suits me. I can listen to the music I want, when I want to. I can chat to my friends when we’re both online. Social media allows me real choice and as such I think you get a better quality of interaction with people. By giving us the choice to take part when we want, and the means to take part how we want to, you give me all the tools I need to engage with you. You don’t decide how or why I take part, I do. You don’t just offer me Pepsi, you give me a choice of soft drinks and I choose the one I want when I want it.

Some more reading

• The Paradigm Shift of Social Media and Time Management
• Requirements for a social media network
• The Tactical Road To Enterprise 2.0
• Your own branded online community vs advertising on Facebook
• Miss Manners We Need You
• Do we really need a Facebook magazine?

Advertising Age has today reported on an interview with Mike Murphy, VP-media sales at Facebook. Mike is talking about their newest mechanism for brands to connect to Facebook users.

An aside:
Some people have a go at Facebook for trying so many different ad models. I certainly don’t hold this against them. Right now, they:

1. have advertisers reporting poor returns when using current Facebook ad services
2. are burning cash at a rate of around $150M this year to keep the party going
3. are in a social networking marketplace which is changing very quickly, for which no one has yet figured out the best way to sell users or their eyeballs to advertisers

As a result they need to innovate FAST. Throwing mud at the wall is not the most elegant solution (and as seen with Beacon, it can be dangerous) but it’s a perfectly credible strategy in Web2.0 world where users and advertisers are prepared to try out new things.

Now back to Mike Murphy. So apparently he’s said Facebook is attempting to solve the demand-creation side (i.e. “this is HOT, get one”) of the online advertising equation as opposed to the demand-fulfilment side (i.e. search ads and text links). So that means Facebook hopes to be great at getting you to want a Nike track top because your friend just bought one, commented on one or became a “friend of Nike”. I can totally see how Facebook is well suited to this and why it can work. It’s ironic that a company leading an online revolution is reverting to old-style PUSH advertising: “getting people to buy things they don’t need with money they don’t have” but he makes a good point, saying: “the web as a whole hasn’t done a good job creating value on the demand-generation side,”

Facebook has no choice but to veer in this direction because it is a pure social network. Users visit to chat with friends and extend their off-line social lives. Users do not spend time on Facebook when they are tying to decide what car to buy or which hotel to stay at. And that’s exactly why Facebook adverts tend to get poor response and clickthroughs.

It’s a great shame for Facebook and marketeers alike that the site is not a good platform for supporting demand-fulfilment. But that’s because people are simply in a different mindset when looking for something they know they want vs chatting to friends about who they hooked up with last night. Jeremiah Owyang makes this point here using some research from Forester.

This debate goes to the heart of why we, at FreshNetworks, often advocate branded online communities over Facebook advertising campaigns. An online community is not the same as a social network and people do visit online communities when in the demand-fulfilment mind-set. For example they visit Amazon to read book reviews, Tripadvisor to read hotel reviews and thousands of other communities where comments have been posted on every product from nail clippers to luxury yachts.

Demand-creation is very important for growing any business. I do hope that Facebook’s new propositions successfully help marketeers achieve it. I am sure they will. However FriendFeed and Open Social will in time provide a replication of the benefits of this new Facebook model across a broader audience. As a result, it is far better for brands to focus on an online community that can provide the basis for both demand-fulfilment and demand-creation activities. For me that’s why a branded online community beats a Facebook advertising campaign in the majority of cases.

Some more reading

• Facebook Proposes ‘Engagement Ads,’ Educates Marketers
• What Facebook’s New ‘Engagement Advertising’ Means to Brands
• Do Privacy and Advertising Mesh?
• FriendFeed Adds Widgets; Its Path to Mainstream?

You may remember a post where I highlighted a video that demonstrated what Web 2.0 was in a very visual form (see here). Well, I came across another great video from the guys at Kansas State University. Michael Wesch, Assistant Professor of Cultural Anthropology at Kansas State University and head of the Digital Ethnography Working Group, presents a view of YouTube from an anthropological perspective.

From exploring the fact that more content has been added to YouTube in the past six months than in a lifetime of network TV in the US, through a catagorisation of YouTube videos, this is a really informative video. It’s long (just shy of an hour) but I think time spent watching this is time well spent. Michael is a captivating speaker and manages to express things we think we know in different ways. From social media to online communities and social networks; you’ll learn something new and understand better why people are motivated to take part and contribute online.

Some more reading

• Web 2.0 …The Machine is Us/ing Us
• Serious about Social Media: Are We Losing the of Context of Our Lives?
• YouTube through an anthropologist’s eyes
• Wesch on YouTube
• Michael Wesch and the Future of Education

I own quite a few books. They’re on bookcases as you walk into my flat, on a table in the corner of the living room, and some are still in boxes waiting to be unpacked. Today I got a new book and this one was free.

A few weeks ago, I accepted an invite on Facebook for I wouldn’t say no to a free book from Faber. The premise is that each month they will give away a few copies of a book (or books) to the first people to email them after they put up the details on Facebook. One evening I was working late, saw a Facebook update and emailed them. I wasn’t expecting anything until I was told today that I was getting a copy of Churchill’s Wizards sent to me this week. Great stuff.

Of course what Faber are doing here is using Facebook to spread word of mouth for their new releases, and using free product to seed discussions. I’m contributing to it here and in fact doing exactly what they want me to do by writing about it. I may even write about the book itself when it arrives and I read it - not sure it’s exactly my thing but I tend to read anything I have so looking forward to finding out something new and, with luck, being impressed.

A look at the product page shows them seeding conversations about other products - telling us about the new Paul Auster novel and giving us an extract. The page is succeeding in building a group of fans, possibly drawn by the free book offers, and then seeding them with content and ideas to take elsewhere.

A nice tactic in Facebook and a good way of starting and seeding product-based word of mouth. Of course Faber can still only use this as a medium through which to push their messging and alert people to new content and new product. It’s difficult to really engage people in Facebook, they rely on people like me to get the book and then, hopefully blog about it or spread the word through our other online and offline networks. They don’t know anything about me nor are they able to gather profiling data to market to me. They don’t provide means for me to talk with the other people who got the book and share ideas - possibly in an online reading group.

This is because, great as Facebook is, it really isn’t designed for this kind of engagement and interaction. For that you really need to build an online community or add community elements into your site, rather than capitalising upon the reach of social networks. You need to provide a space for these kind of conversations, amplifying the word of mouth and building ongoing advocacy, rather than achieving the valuable but potentially limited word of mouth buzz that you can achieve in a social network.

Of course, I’m chuffed that I’m getting a free book, so no complaints from me!

Some more reading

• Communities = more than the sum of their social media parts
• Review: Man in the Dark by Paul Auster
• Guidelines For Brands Using Twitter
• Eight Considerations to Help Branded Communities Succeed

Over the past few days we have posted five types of co-creation. From those which involve only the customer and their own product to those which don’t involve the brand at all. These types can be seen as on a spectrum of co-creation with the following characteristics and variables:

1. Who controls the process - brand or customer?
2. Who is involved - only customers or a range of external stakeholders?
3. Who benefits - does the co-creation impact upon the customer’s personal experience or the broader experience of all customers?
4. What is the legacy - does the co-creation impact upon the customer’s version of the product alone or does it change the ultimate design?

This allows us to understand the five main types of co-creation highlighted in the series:

This is a typology we will be working on at FreshNetworks, but is one we use to analyse and understand innovation and co-creation in the social media and online community sites we see and work on.

A full list of the case studies for the five types we have show are below:

• Co-creation 1: Mass customisation
• Co-creation 2: Real-time self-service
• Co-creation 3: Service redesign
• Co-creation 4: New product co-creation
• Co-creation 5: Community product design

Some more reading

• Co-creation and Innovation - the ‘We’ Experience

The previous examples we have looked at in this short series on co-creation have involved the brand as the primary instigator and driver of change and innovation. They may allow the user to customise the product they receive (mass customisation), customise the experience right up to the point of delivery (real-time self-service), innovate and co-create the way they experience the product (service redesign) or work on new product development (new product co-creation). The final stage in our spectrum sees the consumer have more of a driving influence and more responsibility. Rather then helping the brand to co-create the product they as a community are co-creating it for the brand: community product design.

There are a number of organisations who have made this kind of co-creation the very essence of their business model, and others who use it to solve particularly tricky problems or ones they just don’t have time to deal with right now.

Threadless is perhaps one of the most well-known of the former - an organisation who have built their business model on community product design. The concept is simple but effective. You can upload your T-shirt designs, the community votes on the designs and comments on them and every couple of weeks ten of the most popular designs are chosen and printed. You can then buy these t-shirts. The concept is simple and the execution effective. By involving the community fully in the product design process, and in fact letting them take the lead, Threadless is able to build loyalty for its designs and concepts and to some extent guarantee a market for the T-shirts it produces. A relatively high proportion of those who comment on or vote for a design may want to purchase it when it is printed.

This is a great example of allowing co-creation at the heart of your business model - letting the community take control of product design and develop products for and on behalf of themselves and others. Another example of community product design is for a firm to co-create in this way on just one specific problem or area. This is where online communities such as Innocentive come to the fore. They allow companies to ask the community to solve a specific problem or issue and reward them (in this case financially). Community product design is used in such cases to provide extra support and input either when internal resources don’t have  the time or the ability to solve the problem.

Customer product design is a very deep level of co-creation. Unlike the other examples we looked at in this series, it fully delegates responsibility for an area of business to a community. These may or may not be customers, more important is that they are people who can work together to solve the problem in hand. To embark upon such a deep level of co-creation requires a brand to change and adapt its internal processes but also its ways of interacting with external stakeholders and the wider community. Bringing them inside the brand is a big step but one that can both bring new ideas and be an effective way of innovating. As somebody once said to me: “the cleverest people don’t work for you”.

Some more reading

• Threadless Gets Its Own Place
• Co-creation 1: Mass Customisation
• Co-creation 2: Real-time Self-service
• Co-creation 3: Service redesign
• Co-creation 4: New product Co-creation

So far we have looked at two examples of co-creation that change only the customer’s own experience of the product (mass customisation and real-time self-service), and one example where the customer helps to change the way a product is delivered (service redesign). But when many of us talk about co-creation and innovation we think rather of new product development.

Getting insight from customers to develop new products is not new - doing market research to identify needs and trends in the market, conducting focus groups to test reactions to concepts and ideas, or asking for feedback on existing product to identify areas for development. But all of these approaches to innovation are very much held and driven by the brand. They watch what the customer does, or asks them what they think, and then go away and develop a new product that they think meets these needs.

Co-creation is very much customer-led. Brands and customers work together to develop and design new products. The results can be very powerful and brands from Lego to Xerox have worked with customers in this way to create new products. You can read the story of Lego Mindstorms here.

Involving customers in this way involves some significant changes of process and attitude at the brand. Traditionally the customer sits outside the firm - they purchase the product and their only relationship with the firm is, essentially, a transactional one. Where new product co-creation is concerned, customers are involved on a much deeper level. Working with the brand to develop and design products which they may not even want.

Herein lies the significant difference between the types of co-creation we have seen so far. In each of the previous three types, the customer’s motivation for co-creating was that their own particular product or experience would be improved. In new-product co-creation, customers are working to improve the product overall, and to improve the offering the brand has to make to all customers. This works for three reasons:

1. customers want to help and work with brands they know are listening to them
2. customers want to solve problems
3. all to often the solution or idea you need will be really simple to somebody else

These motivations are common to anybody working in customer-led innovation and co-creation. They’re also the same motivations we see at FreshNetworks for participation in online communities. In fact, online communities are a great way to co-create new products with your customers - they allow you to work together on a problem with people who care about your brand and in a space where they can easily share and evolve ideas.

Some more reading

• Co-creation 1: Mass Customisation
• Co-creation 2: Real-time Self-service
• Co-creation 3: Service redesign
• Co-creation and Innovation - the ‘We’ Experience
• Open Innovation

The two examples of co-creation that we have looked at so far in this series have shown how customer and brand can work together to improve the customer’s own experience of the product. Neither mass customisation nor real-time self-service impact on the product experience of other customers. They change the product one time only and don’t input into the broader design and development of this product.

Whilst many companies may not want to involve customers directly in product design, one type of co-creation can see them working with customers on how the product is delivered - on the service. You’ll often find that the customer doesn’t distinguish between product and service and so involving them in this can be a great way of bringing them inside the company.

From Amazon to FedEx, many firms have taken ideas from their customers to develop the way in which they deliver their products to them. The co-creation site MyStarbucksIdea is positioned more to services than to products and seeks to get customer input into the way they enjoy the product rather than into the product themselves. In fact this is a great area for using online communities - exploring and understanding how customers use your product and then taking and seeking their ideas on how to deliver them to you better.

Focusing on service has the advantage of directing customer efforts to how the product is delivered rather than to the product itself. It is a way of the brand improving the customer’s experience without impacting upon the product itself. It is also a way to bring the customer inside the business. Helping them work with the brand on a part of the experience that matters to them most.

Co-creating service redesign lets customers work with the brand and change the experience without changing the product itself. It goes beyond the types of co-creation that focus only on the customer’s own product or experience but does not cause lasting change to the product itself.

The next example we’ll look at in the co-creation series will look at a type that does just that.

Some more reading

• Co-creation 2: Real-time Self-service
• Co-creation 1: Mass Customisation
• Customer Satisfaction: Time Is Precious

Last time we looked at mass customisation as a type of co-creation. Allowing people some control over how the product they buy looks or is, often choosing variants from a list of options that let the customer and brand co-create during the final stages of manufacture. A related area of customer co-creation is real-time self-service.

Manufacturing and services industries that use e-commerce and / or online platforms for deliveries are able to offer customers a deeper level of involvement. Whereas mass customisation allows co-creation only prior to the final stage of production, real-time self-service allows the customer to be involved right up to the point that they receive the product.

A typical example of this level of co-creation would be a delivery firm, like FedEx, who allow their customers to select and change their delivery times right up to the point of delivery. Many airlines also allow real-time self-service for their customers, allowing you to choose and change your seat, meal and even your departure time right up to (and in the latter case sometimes after) departure.

This level of co-creation is still short of the deep co-creation where the customer changes the experience for others. It is still very much about working with the brand to refine and change my own experience. And like mass-customisation, it is often used as a differentiators or a value-add by brands. The airline industry is a prime example of this differentiation. If you fly on a low-cost airline, like Ryanair or Easyjet in Europe), you are unlikely to have any level of real-time self-service with your ticket (although you may find you can buy this right for an additional fee). And for full-cost airlines, even though many offer some level of real-time self-service with all tickets, the amount typically increases with the cost of the ticket - fully-flexible tickets being more expensive and offering the greatest opportunities for this type of co-creation.

Both of the cases of co-creation we have looked at so far have highlighted areas where the customer works with the brand to improve their own personal experience. Their co-creations have limited or no impact on the experiences of other customers and, critically, it has no lasting effect on the product itself. The next few examples in the co-creation series will show how customers can work with the brands on a deeper level of engagement.

Some more reading

• Co-creation 1: Mass customisation

Mass customisation is at one end of the co-creation spectrum - each product is customised for the particular customer who is purchasing it. Unlike what we often think of as co-creation, the individual customer does not influence the product for others. But they co-create their own product with the brand to deliver a customised version.

There has often been an element of mass customisation in higher-value products (such as cars or houses). But the internet has allowed mass customisation on a broader scale and for a wider-range of products. Brands can work with customers to co-create certain elements of their product or sometimes more fundamental aspects of the product itself.

Dell allows customers to customise every single product it sells. This is co-creation on a very individual stage - each customer choosing from a set of options to customise and create their own perfect machine. Whilst this approach doesn’t mean that every computer is different it does dramatically increase the options and configurations open to the consumer. And it allows the consumer to work with the brand on the final design and assembly stage of the product to create something that is right for them. Levis on the other hand does allow a customisation process by which, in theory, no two pairs of jeans need ever be the same.

Mass customisation has only become a viable means of co-creating with consumers once the process can essentially become self-serve. The design of the manufacturing process is such that the customer can guide and control the final assembly stages and influence what their product looks like. They can work with the suggestions and process that the brand has laid out to achieve this.

Of course, this is really ‘co-creation lite’. Whilst it allows for customers to work with brands to tailor and refine their own product it does not input into product design of the brand experience of others. Whatever great combinations and suggestions that people have to customise their own product there is usually no overt and direct mechanism for this design to be replicated across the brand and made available to others.

There are examples of organisations that do this. Allow people to customise their own product but then work with others to decide which are appropriate for a wider production and a wider audience. This is stronger co-creation and will be the focus of our next installment in the Co-Creation Series.

Some more reading

• Guide on Niche Product Creation
• Distributed Mass Customization: Is Etsy the Next eBay?
• Guidelines: One size fits all or eventual move to mass customization?