July 2011 article by Mark Deck that appeared in PDMA's Visions publication that describes why co-creation represents a fundamental shift in the front end of innovation.

1. CO-
CreatiOn
A
IDeA WITH
BIG
MA
IMPlICATIONS
32 july 2011 • VISIONS

2. C
ompanies are co-creating new ads,
products, services, and features with
customers, aided by social interaction
technologies and a more participative,
increasingly social consumer. But does
co-creation simply represent customer engagement
on steroids or a fundamental shift in the front end
of innovation?
If you’re like most new product development because it sounds so terribly one-sided. I now
(NPD) practitioners, you have heard of the see value as resulting from the experience
term co-creation, and if asked you would of a “dance” among many stakeholders, and
probably say it has to do with crowdsourc- innovation as a process of providing new
H
ing ideas and designs for new products and “dance floors,” and then participating in that
services from customers. It’s all about using experience. Would you simply sell to your
social media to democratize design, especially customers when they’re expecting to dance
in businesses such as apparel and fast-moving with you and your products? Will good pro-
consumer goods, right? Or perhaps you view cess choreography alone beat a competitor
co-creation as a form of open innovation or that’s a great dancer? Can you engineer a new
mass customization. experience of value, or can you only orches-
For many, co-creation doesn’t seem like trate it so your stakeholders will interact with
a revolutionary concept, just good, solid you and each other?
customer engagement pumped up with in- To see why co-creation is so revolutionary,
ternet connectivity. I believe, however, that let’s look at two examples: one consumer-ori-
MAjOR
co-creation is a big idea, with even bigger ented (Nike+) and one industrial (AgChem).
implications for NPD and innovation man- By now, many people have heard the story
agement that are only now beginning to be of how Nike partnered with Apple to create
apparent in the market. a new innovation, Nike+, and many see it as
The originators of the term, Venkat Ramas- a great example of open innovation. Neither
wamy and the late C.K. Prahalad, discussed company could have provided this innova-
co-creation in their 2004 book, The Future tion alone, but by opening up its offering to
of Competition: Co-Creating Unique Value include the technology of Apple, Nike engi-
with Customers.1 But in Ramaswamy’s latest neered new value for its customers.
book, with co-author Francis Gouillart, the
concept is significantly broadened to include
all enterprise stakeholders and their com- CO-CreatiOn with CustOmers: nike+
munities. The Power of Co-Creation: Build Now let’s look at the Nike+ example through
It With Them to Boost Growth, Productivity, the lens of the co-creative enterprise. What
and Profits (2010)2 defines a much more was actually at work that improved Nike’s
revolutionary vision – the “co-creative en- U.S. running market share by a sustained 10
By Mark J. Deck, PRTM share points over three years, worth over $500
terprise” – a company that systematically
Enterprise Co-Creation
enables value creation through interactions million? The answer is that Nike had found
Practice
with customers, suppliers, employees, agen- its way to a completely new dimension of the
cies, and their communities instead of trying runner’s experience, one it had never partici-
to engineer value in a one-way fashion for pated in previously. Before Nike+, Nike could
these stakeholders. engage in the shoe-buying experience, the
As a student of NPD and innovation man- shoe-finding or researching experience, and
agement for more than 30 years, these new perhaps the “shoe showing-off” experience,
concepts have rocked my world. I can no lon- but not the running experience. The runner’s
ger bring myself to talk about value creation “process” was closed to Nike. Nike+ allowed ❯
VISIONS • july 2011 33

3. Nike to participate in many new parts of the
‘‘
running process, including tracking runs,
monitoring performance, challenging other
runners (friends and strangers) to running
goals, setting workout targets, and sharing
workout mixes.
The Nike+ system is essentially an engage-
ment platform that allows runners to enjoy
Employee co-creation increases
new interactions of value with Nike and with engagement, energy, and
’’
each other, all while providing Nike with an
ongoing stream of immensely valuable infor- innovativeness; a superior employee
mation about their running habits. Nike has
used that engagement platform to improve
experience almost always precedes
and strengthen its offering (for example, in a superior customer experience.
the way it joined forces with Google Maps to
map runs, after seeing how Nike+ users had
started to do this on their own). Nike has
also introduced Nike iD and more recently
Nike iD Nation, an engagement platform that
works the other way around, allowing run-
ners to connect with Nike’s shoe design and
development processes.
Nike+ illustrates three key lessons of en-
terprise co-creation. First, there is incredible
untapped “experience value” in engaging in
customer (stakeholder) processes you previ-
ously have not participated in. Second, there
is untapped experience value in letting the
customer (stakeholder) engage with you in
your own processes. Third, the way to open
up these new interactions is by creating
engagement platforms – physical or virtual –
that enable them. exhibit 1: the Four powers of Co-Creation exhibit 2: Outside-in and inside-Out Co-Creation
The Nike+ example is B2C, mainly focused
on co-creation with consumers. But the co-
creation “effect” also applies to B2B situations
and to non-customer stakeholders, including
suppliers, employees, regulators, dealers, and
communities. The next example, AgChem (a
real company, but with its name disguised
on request of confidentiality), illustrates
what can happen when a company opens
up a highly technical and regulated research
and development process to farmers and
their ecosystem. Source: ECC Partnership
CO-CreatiOn in a b2b
eCOsystem: aGChem series of workshops that began stakeholder dealers, and other related players in selected
In many industrial companies, the need for interaction in the form of a dialogue that was farming communities. The workshop series
growth outpaces the ability of technological then continued online via a private YouTube was repeated in several countries.
innovation alone to keep up. To fill a growth channel to scale the interactions beyond the Unlike a more traditional create-it-for-you
gap, AgChem decided to co-create solu- initial workshops. approach in which expert researchers might
tions to crop management with its farmer AgChem started on the inside first, with visit a sample of farmers across communities
ecosystem. To do this, it had to create an workshops among corporate executives to search for unmet needs, the idea in these
engagement platform to allow its crop sci- and regional managers. These workshops co-creation workshops is to pick an existing
ence, technical services, sales, and marketing helped these internal stakeholders open up microcosm of the market where the interac-
employees to interact directly with commu- their processes to each other and prepare for tions and experiences of all stakeholders
nities of farmers, their equipment handlers, co-creating with external stakeholders. The can be opened up. They provide a way for
farm supply dealers, and local regulators. In next series of workshops included external the company’s internal ecosystem to engage
this case, the engagement platform was a stakeholders such as farmers, farm supply directly with the external ecosystem. During
34 july 2011 • VISIONS

4. AgChem’s workshops, co-creation techniques closed processes to them. The cases further
were used to probe existing interactions and show that these new interactions enable con-
experiences and provide ways for the vari- nections to stakeholders’ important end goals.
ous stakeholders to identify new interactions Nike+ was a way for Nike to shift from
of value. This included not only people-
to-people interactions, but also people-to-
selling only shoes and shoe functional-
ity – leaving the workout outcomes to the
Five Key Principles
equipment and people-to-insect interactions. consumer – to selling a complete workout of Co-Creation
AgChem’s co-creative engagement with its solution that helped customers achieve their Here are five vital co-creation principles I have
stakeholders resulted in powerful innova- running goals. The expanded customer expe- drawn from the examples in this article and
tions on many levels producing hundreds of rience became an opportunity for differentia- other cases I have studied:
millions of dollars in growth. At a workshop tion. When AgChem enabled farmer schedule 1. Value is defined by individual experience, and
in Europe, the open discussion led the envi- collaboration, this led to a more valuable end is created through interactions.
outcome (crop yield) than the intermediate • If your innovation process assumes that
ronmental regulators in attendance to change
all value comes only from your company’s
pesticide regulations because of a new in- functional product outcome traditionally sold
activities, you’re sharply limiting your
sect threat that could not be managed with by AgChem (insect kill). In both cases, these potential value space and opportunities
existing means. This was co-creation among engagement platforms enabled more value, for differentiation.
AgChem, regulators, and farmers. A second differentiated the company, created stickiness • Individual experiences and solution
innovation was the recognition that farmers for customer loyalty, and built “strategic capi- outcomes are often more valuable
tal” in the form of deeper, fact-based insight than functional outcomes, especially
in a community should manage their crop
when functional outcomes are
treatment schedules collaboratively for maxi- into the practices of their stakeholders.
commoditized and offer little opportunity
mum impact. AgChem created an engagement So what does all this mean for NPD and for differentiation.
platform for these farmers to connect their innovation management? Why is enterprise
2. You can’t create new experiences alone,
treatment schedules (and to learn more about co-creation more revolutionary than evo-
but you can create engagement platforms
how they manage them). lutionary? Take a look at the short sidebar that enable new interactions that generate
Another epiphany from the workshops article at right to review what I believe are valuable new experiences.
the five key principles drawn from above • View the front end of innovation as the
was that, regardless of directions on the
examples and others I have studied. management of engagement platforms.
packaging, farmers mix various pesticides
• Your products can become engagement
to achieve the most cost-effective outcome platforms creating even more value, a
from their perspective. Rather than ignore the next step deeper level of engagement, and a rich
this reality, AgChem recognized the oppor- So, are you ready to start dancing? Can you source of systematic stakeholder input
tunity to establish yet another engagement to drive innovation. Can you focus your
see the NPD process giving way to New Ex-
company’s product development on this
platform, a way for farmers to interact with perience Orchestration (NEO)? Can you shift “co-creation squared” effect?
AgChem and each other to know what they gears from engineering product extensions to
3. It’s not only the end-customer experiences
could safely mix and when, balanced by cost, engineering engagement platforms?
and outcomes that matter.
to achieve their goals. Finally, the co-creation If innovation and growth have stalled, if • To broaden the value space for innovation,
workshops resulted in several ideas for new you feel you’re not engaging well with your look beyond the end customer to the
formulations of pesticides. Interestingly, the customers, if your employees aren’t engaged experiences of other stakeholders, such as
new formulation ideas represented only a broadly in innovation, if you see ecosystem suppliers, partners, employees, agencies,
and their communities.
fraction of the total growth value of the business opportunities but can’t seem to tap
• Employee co-creation increases
co-creation initiatives that sprang from this them, if there seem to be no opportunities for
engagement, energy, and innovativeness;
initial effort. differentiation in your market, or if you struggle a superior employee experience
AgChem’s example illustrates several ad- to move from product performance to solution almost always precedes a superior
ditional lessons for co-creation. First is the outcomes, you should consider a broader use customer experience.
rule of co-creating inside as a prelude to co- of co-creation across the enterprise. V 4. Engaging networks of stakeholders
creating outside. Second, rather than simply multiplies value.
setting up social media platforms that might endnOtes • No business is self-contained; you will
grow by enabling an ever-richer experience
go unvisited, enterprises should start with 1. Venkat Ramaswamy and C.K. Prahalad, The Fu- across your ecosystem
engagement platforms in the form of work- ture of Competition: Co-Creating Unique Value
• Think B2B2C2C and “win-more win-
shops, and then scale them up with IT as with Customers, Watertown, MA: Harvard Busi-
more.” Ecosystem value will accrue to the
ness Press, 2004.
AgChem did. Third, rather than researching orchestrator as individuals derive value
2. Venkat Ramaswamy and Francis Gouillart, The
the current processes of a cross-section of from new interactions.
Power of Co-Creation: Build It With Them to Boost
customers, companies should focus on the Growth, Productivity, and Profits, New York: 5. You get to co-creation through co-creation.
experiences and interactions of the stakehold- Free Press, 2010. • If you start on the inside and build new
ers in a given microcosm as representative of interactions from the inside out, change
will be a by-product, not a barrier.
an ecosystem.
• You can’t know the new ways in which
Mark J. Deck is a past president of stakeholders will want to interact until you
key takeaways PDMa and director of the PRtM Enterprise provide them the way to find out.
These two cases show that focusing on ex- Co-Creation Practice. Contact him at
perience can help companies access hidden mdeck@prtm.com.
processes of stakeholders and open their own
VISIONS • july 2011 35