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:
customers want to help and work with brands they know are listening to them
customers want to solve problems
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.
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.
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.
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.
Over the next few days I’m going to be posting some great examples of co-creation that we’ve come across at FreshNetworks and some thoughts on what makes for good co-creation: Co-creation Series:
The real prompt for this is that we’ve been talking a lot about ‘we’ at FreshNetworks over the last few weeks. Across the team we seem to be helping quite a few client with co-creation and innovation at the moment - getting their customers to input into or lead innovations in everything from the position and marketing of a B2B telecommunications product to improving and tailoring experiences for a leisure client.
The concept of ‘we’ is one that intrigues me. There is an undoubted power to ‘I’. People like hearing personal stories and experiences, and we see in our online communities that such stories can get better reactions and greater responses. However, the power of ‘we’ is greater - people collaborating on an idea or innovation, working with each other to further improve and advance the previous thought.
Iterating and refining an idea is one of the best ways of bring in different view-points and peer reviewing the concept as it develops. We find that getting brands involved in this process can be illuminating - for the consumer, the brand and the idea. Good innovation and co-creation comes from getting people with different skills, experiences and understanding of the product or brand together. They each add something to the process and can bring their expertise and experience to the subject.
One of the best introductions to the ‘we’ experience that I’ve seen comes from Marieke Schoenmaker. The slides below are a great introduction to the subject, and the case studies at the end of the deck (including Nike+ and Zopa) are world-leading examples of the power of we.
I read in today’s Financial Times how the New York Times has struck a deal with LinkedIn. This is just a further example of the New York Times becoming more social (see our previous post here), and for the FT this is a sign of a significant change in the traditional media industry:
The deal, between the New York Times and LinkedIn, the largest online social network for professionals, is one of most far-reaching attempts yet by a traditional media company to tap into the booming popularity of online networks to super-charge its own services.
The deal means that personal profile data entered into LinkedIn will be used to make the content and advertising an individual sees on the New York Times site targeted to their industry, country, interests of profession.
This is a really interesting example for two reasons:
It shows how traditional media and publishing firms are having to adapt to the challenges and opportunities presented by social media and social networks. They need to change the way that they offer their content and be prepared for people wanting to interact with it in different ways. The barriers between the social and the editorial are blurring.
It highlights a significant benefit of social networks - the depth and richness of data that is gathered and kept by these sites. That the New York Times has struck a deal to use LinkedIn profile data to target advertising shows just how detailed this data is. With people adding and contributing to their social networks on an increasingly regular basis, the quality of this data will only heighten.
I expect us to see similar arrangements and innovations that build on these two reasons in the future. Social networks will seek to monetise the depth and quality of data they have gathered and traditional media and publishing firms are looking for new ways to target their readers. It would seem that a pairing of the two is a good solution and maybe the New York Times and LinkedIn will show us how good it could be.
A few weeks ago, I posted about a social media initiative from Downing Street: Ask the PM. The idea is great - anybody can video themselves asking a question, post it on YouTube for others to comment on and vote for. And then the most popular questions are answered by Gordon Brown and posted online. I was interested to see how this initiative was going to work in practice. The terms and conditions suggested that party political and other questions might not be allowed and I hoped that the experience wouldn’t result in simple and non-meaningful questions being asked. The results of the first wave of questions suggests this is not the case at all.
A total of 229 questions were posted and eight were answered by Gordon Brown. These do appear to have been the most commented on and voted for questions and the range of topics covered is wide-ranging and detailed. From knife crime and the voting age, to the tax on petrol and 42 day detention, the questions that were asked really were a mirror of the big political and social issues that have been debated in Parliament and the country recently.
This is really heartening. I have always thought that reaching out to people via YouTube and responding to their questions could be an exciting innovation for the Prime Minister and the UK Government. Talking to real people about real issues. And it seems that this is exactly what’s happening.
Take a look at Rob’s question and Gordon Brown’s answer below on knife crime, something that has been discussed extensively in the last few weeks after a spate of serious knife crime and murders in London.
Rob’s question
Gordon Brown’s answer
This round of questions has been great and if this initiative continues a large and vibrant community could build, both asking questions, commenting on them and voting, or just watching the questions and responses.
This month, Gordon Brown is asking for questions again. And rather than every time asking for any questions and risking getting the same types of topics covered, there is a theme. This month it’s health. If you want to submit your question, you have until 21st July, and from the 14th you will be able to view and vote for your favourite questions. Submit your videos here.
I think the use of YouTube in this way is truly innovative. Until now there was no way for people like Rob to ask a question directly to and get an answer directly from the Prime Minister. Now there is.
An article in the current edition of the McKinsey Quarterly looks at Open Innovation, the way that some companies conduct their innovation externally, rather than it being a proprietary and internal process.
The article highlights two trends in innovation across firms that mirror trends that we see with our clients:
A move to get suppliers and partners to do much of the innovation for a firm. Getting them to help cocreate products down the supply chain. This has the benefit that products are developed that a firm can easily produce and you bring your suppliers and partners into a closer and more permanent relationship.
A trend in customer-innovation. Getting customers to help cocreate products. Working with each other, or with a mix of experts and employees to develop new products, services, processes or marketing. This trend is being witnessed more and more, and not just in the FMCG firms where this kind of innovation has been common for some time.
The McKinsey article talks a lot about this second kind of innovation, highlighting how companies are using customers either as an addition to or an integral part of the firm’s business model (citing LEGO as an example of the former and Threadless of the latter)
Increasing numbers of organizations are now taking that approach: distributed cocreation, to use its technical name. LEGO, for instance, famously invited customers to suggest new models interactively and then financially rewarded the people whose ideas proved marketable. The shirt retailer Threadless sells merchandise online-and now in a physical store, in Chicago-that is designed interactively with the company’s customer base.
I see a much broader range of firms engaging in customer innovation, often trying things at a small level or in a certain area first. We’re working with a large telecommunications firm at the moment, for example, getting customers to help innovate in a particular product area. Seeking their input to product design and positioning and also helping them to differentiate their offering from those of their competitors.
These developments are possible mainly because of the growth of community behaviours online. The McKinsey report shows that around 25% of Europe’s internet users now post comments online. This is a significant proportion, and shows that people want to discuss and be involved online. Another strong indicator of this activity is that whilst traditional sites are seeing growth in number of visitors of 20%-30% each year, growth on sites with UGC are growing at more than 100% each year.
People are more willing to share their thoughts and opinions online. Companies can really take advantage of this by putting all of this activity to good use. Taking the growing number of people who contribute online and using their enthusiasm and ideas to help brands with their own innovation.
The greatest brains don’t work for your company. The are online though and may be willing to talk to you and talk about you. Putting this to use can be a force-multiplier for your innovation. And that’s where online communities can help.
At the E-consultancy Future of Digital Media conference last week the focus was on two magic words “relevance” and “engagement”. In Ian Jindal’s stimulating and lively talk he correctly pointed out that marketing hasn’t actually changed much, even though where we choose to communicate our messages may have. Consumers are at saturation point so the only thing left is for companies to get better at attracting customers from their competitors. The ‘How’ was the focus of the day. There were three themes:
engaging customers around content using publishing techniques
how to add a layer of social discovery around your brand
finding ways to manipulate data to do our marketing for us
Many Intermediaries, product manufacturers and retailers are developing strategies around multimedia content to engage customers. Thomas Cook showed a particularly impressive video of their new 360 degree marketing strategy, complete with store front touch screens, co-browsing between customer and agent and every conceivable video clip you could imagine to show you what your resort will be like when you get there (which somehow I felt took the discovery out of it). The issue for most companies with this approach is the sheer cost of it and the skill sets needed to become programmers and publishers, as well as focus on your core business. The other issue was that there was one viewpoint that appeared to be missing from the strategy – the customer’s! Thomas Cook is still in broadcast mode.
The jury was out when it comes to engaging customers effectively using social network sites like Facebook. Brands are just not managing to attract the levels of fans they would like and I believe that it’s because people are, well, hanging out with friends and simply not in buying mode. Companies that have developed non intrusive, useful and engaging tools like Mydeco’s Roomshare seem to be having more success. Considering 56% people go to a brands home page to check out information first, it might be better to find a way to encourage people to stay there. For sectors like Insurance, where aggregator sites like Confused.com and cashback sites like Quidco.com have contributed to a reduction of customer lifetime value from 3-5yrs to 1-2yrs, the focus has to be on finding better ways of retaining their customers once they are delivered to their door.
Understanding data is essential to running any business and more importantly what action you take from looking at it. The new kid on the block is APML or attention profiling markup language. It is a common standard to describe your interests, likes and dislikes and how much each means to you (weighting). The idea is that your attention profile is owned by you and is portable so you can decide which websites you want to share it with for more relevant surfing. Currently Amazon is the only company doing a good job of recommending to us what we’re interested in but they own your profile and the process isn’t transparent. In theory it’s a great way to reduce information overload but it feels like a very long way off, if at all feasible. When I think about how I tag my del.icio.us bookmarks with words like ‘cop’ (which to me means community of practice, not policeman) and when I think about how often I change my likes and dislikes, it feels like someone is going to have to do a lot of work to maintain this profile (either me or a very clever programmer). I would love to hear your thoughts on this whole area!
Don’t get me wrong, as data fragments into smaller, accessible pieces, there are many innovative ways to play it back to your customers in really useful ways. Some good examples that add a valuable social layer for customers include the new AMEX Members Know community where members can see the most popular hotels and restaurants based on anonymous purchase data and Flickr’s use of the Exif data hidden in your digital photos about which camera was used to take a photograph which is the served up as a league table of the best digital cameras. We’re going to see a lot more of this.
I tend to agree with Simon Waldman of the Guardian who commented that sometimes qualitative measures like “Why are you on our site and did you get what you came for?” are equally important. Having conversations with your customers might just reveal what they actually want from you!
From today, some of our posts are being republished by Futurelab as part of their Marketing & Strategy Innovation Blog. They bring together a small collection of bloggers who, in their words are
…the world’s sharpest minds in marketing and strategy innovation. People who spark exceptional insights in their field of expertise and inspire their readers to action.
It’s a great collection of people on the site and fantastic to be part of the team. You can read our posts and those from others on the Futurelab team over on the blog (and you can see my profile here).
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.
Mass customisation is at one end of the 
I read in today’s 