Co-creating value with customers is a strategic marketing approach that

involves collaborating with them to design, deliver, and evaluate products

or services that meet their needs and preferences. By engaging
customers in the value creation process, marketers can gain insights,
feedback, loyalty, and advocacy from their target audience. However, co-
creation also entails some risks, such as loss of control, increased
complexity, ethical dilemmas, and customer dissatisfaction.

Benefits of co-creation: Co-creating value with customers can offer

several benefits for both marketers and customers. For marketers, co-
creation can help them understand their customers better, differentiate
their offerings from competitors, reduce costs and risks, and foster long-
term relationships. For customers, co-creation can enhance their
satisfaction, involvement, empowerment, and trust in the brand. Co-
creation can also generate positive word-of-mouth, referrals, and
recommendations, which can boost the brand's reputation and reach.

Risks of co-creation: Co-creating value with customers can also pose

some challenges and risks for marketers. One of the main risks is losing
control over the value proposition, as customers may have diverse,
conflicting, or unrealistic expectations and demands. Another risk is
increasing the complexity and uncertainty of the value creation process,
as marketers have to coordinate and integrate multiple inputs and
outputs from different stakeholders. A third risk is facing ethical issues,
such as privacy, fairness, transparency, and accountability, as co-creation
involves sharing sensitive information and resources with customers. A
fourth risk is dealing with customer dissatisfaction, as co-creation may
raise customer expectations and standards, which may not be met or
exceeded by the final outcome.

Managing co-creation: Marketers need to adopt a strategic and

systematic approach to reap the benefits and mitigate the risks of co-
creating value with customers. This includes identifying and segmenting
customers who are willing and able to co-create, as well as defining and
communicating goals, roles, and rules of co-creation clearly. Additionally,
marketers should provide platforms, tools, and incentives for co-creation,
such as online communities or gamification. It is also important to
monitor and evaluate the co-creation process and outcome using metrics
such as customer satisfaction. Finally, marketers should learn and
improve from the co-creation experience using feedback, data, and best
practices. Co-creating value with customers can be a powerful strategic
marketing technique but requires careful planning and management to
ensure mutual value for both parties.

Co-creation opens your innovation process up to a wide range of voices

that would normally never be involved. Chief among these is your
customers - the people who ultimately matter most.

But as we’ll see, co-creators can be a wide range of players, each bringing
something special to the table. The end results are products and services
that closely align to your buyers’ needs and solve problems.

We’re going to explore the what and the why of co-creation. And we’re
going to see some of the businesses you should look to emulate if you
want to end up on top.

So let’s begin with the classic definition.

What is co-creation?
Co-creation is when businesses include outsiders in the ideation and
development process. Most companies keep new products and processes
strictly internal; some even work hard to keep them secret.
But co-creation lets companies collaborate outside the business to gather
fresh ideas and break from their own status quo. They acknowledge that
they don’t have all the answers in-house, and they make it easy for others
to bring the answers to them.
This idea is nothing new. In fact, the term was popularized by a Harvard
Business Review article in 2000. In this article, the authors focused on the
relationship between a business and its customers:

“Thanks largely to the Internet, consumers have been increasingly

engaging themselves in an active and explicit dialogue with
manufacturers of products and services.”

And it’s true - most of the time we think of co-creation between a

company and consumers. But co-creation can also include:

 Employees
 Prospective buyers (not just current fans)
 Suppliers (working together to improve the chain)
 Competitors
 Industry influencers

The goal is to approach issues from a new perspective and come away
with better products and processes. And while most businesses will feel
more comfortable working with current customers, there may be more
opportunities available elsewhere.

How do you co-create?

As we’ll see shortly, there are plenty of different ways to make outsiders
part of your ideation and development processes. In fact, many “old
fashioned” research and development techniques - focus groups, surveys,
and polls - are co-creation efforts in their own right.

But modern software like Braineet Crowdsourcing makes it easier to

involve employees and customers earlier in the process and at scale.
Social media, internet forums, and online portals mean that co-creating
can occur at every stage of the development process - from the initial
idea, through to reviewing products once they hit the market.

Businesses need to find the most direct way to involve customers in

product innovation. In many cases, the simplest solution is to use a
platform where users can suggest ideas, give feedback to one another,
and stay connected to all co-creation projects.

What are the benefits of co-creation?

A well-designed co-creation process is a step towards creating value all
across the company.

Here are five clear ways that your business stands to gain value:

1. Better products based on customer desires

The most obvious (and likely best) reason to invest in co-creation is
to make something new. Every business wants to be unique, to blaze a
trail, and to disrupt. But with the same voices always pitching similar
ideas, you’re more likely to end up with variations of what you already
produce.

Co-creation brings in new viewpoints to help businesses disrupt

themselves. You don’t have to predict what consumers or influencers are
going to want - they’ll tell you themselves.

And the result is new products that reflect the way that real consumers
think.

In one study, 61% of businesses said that co-creation leads to more

successful products.
2. Better financial performance
This is probably all you need to hear: co-creation efforts are consistently
shown to be good for your bottom line.

51% of businesses say co-creation improves financial performance.

Companies save huge sums on research and development, marketing
costs, and see lower customer churn.

Take DHL for example. According to Forbes, executives were initially

sceptical that crowdsourcing ideas would bring any value. But “the result
has been well worth it. CSAT scores are over 80% and on-time delivery
performance is 97% or higher worldwide.

On top of pure revenue, 54% of businesses also say that co-creation

improves social impact. Customer co-creation helps to bring your
community closer to the business and builds stronger ties with fans and
buyers.

Which of course leads back to more revenue in the future.

3. New and unexpected ideas

One of the biggest inhibitors to corporate innovation is specialization. On
its face, it makes perfect sense that employees should be bona fide
experts in your company’s products and processes. That’s why companies
tend to hire staff who’ll fit right in.

But if one of your goals is to create new and exciting goods, or to

overhaul your current product development, your in-house experts may
be too accustomed to the way they’ve always worked.

By definition, co-creation brings new voices and ideas into the fold. These
may not be the kinds of people you’d normally hire. In fact, the best ideas
can come from totally alien industries, or from people with no subject
matter expertise at all.

Provided you’re open to their submissions and willing to consider each on

its own merit, you’ll be able to approach issues from a whole new
perspective.

4. Making the consumer part of the creation

process
From a purely bottom-line perspective, co-creators are truly valuable. You
essentially increase your workforce without adding to payroll.

And as McKinsey found, while some contributors are motivated by money

or prizes, more get involved out of curiosity (28%) or as a way to
entertain themselves (26%). If you can accentuate these aspects of your
co-creation strategy, you may not even need to offer monetary rewards.

The process is also a key way to increase customer loyalty. A user who
sees their ideas taken seriously and even pursued through to
development is now part of the decision-making force. They’re not just a
buyer; they’re a real stakeholder.

This is so important for companies who truly want to be customer-

centric, rather than just talking about it.

5. Removing barriers between industries

The “silo effect” is a popular concept in businesses all over the world.
Mostly we think of silos existing between different corporate teams - your
marketing team is siloed from sales or product, for example.

But the silo effect exists between industries as well. A software company
doesn’t think about the latest trends in retail or delivery. It hires staff
with a specific set of skills, which they narrow and refine until they’re
exceptional in their area of expertise.

Working with co-creators brings brand new skills into the company. You
may not even realize how a supply chain expert or mechanical engineer
could help you design the next great handbag, tea bag, or sleeping bag.

The beauty is, you have access to these skills with no risk. And if their
ideas are no good, you simply move on to the next one.

2 excellent examples of co-creation

Co-creation takes many forms, and works for all kinds of businesses. So to illustrate, we’ve
identified two companies that collaborate in different ways outside the business, each
having a positive effect on the business.

1. Sodexo
It shouldn’t be a surprise to see Sodexo on this list. The food services company was
relatively early to begin online co-creation & innovation management program, and
launched its own accelerators.
Sodexo’s online platform powered by Braineet, “Innovhub” lets employees and
clients submit their best suggestions and best practices that supports innovation
challenges and best practices catalogues at global and local scale.
To embrace this ambition, Sodexo built, with our crowdsourcing software, a global platform
to empower every Sodexo collaborator to share and realize innovative ideas and launch
crowdsourcing initiatives.
Tens of thousands of participants joined the Hub (digitally), leading to hundreds of distinct
product and service ideas. One of the most amazing innovations is a Robot food delivery on
campus and beyond.
The most interesting aspect of Sodexo’s co-creation Hub is not a single idea. Nor the
hundreds of new potential products that were also unearthed.
More importantly, a web community grew around the platform. Hundreds of comments
are posted on ideas from different countries, and a hundred idea evaluations are given. Web
users are not only submitting ideas, they also show Sodexo how to assess new creations.

2. IKEA
Swedish furniture empire IKEA has perhaps the clearest example of long-term, sustainable
co-creation on this list. It has developed a truly robust platform - Co-Create IKEA - through
which it can work directly with consumers on any project it chooses.
Activities always cover at least one of three main areas:
Exploring life at home. Polls, surveys, and other customer feedback to understand “the
emotional and functional needs” in normal people’s lives.
Ideas and prototypes. Based on the results of the first step, IKEA’s team develops working
models with the help of customers.
Voting and feedback. Platform users give direct feedback on both in-progress prototypes
and help choose the finished products.
The company opens submissions in areas that it’s particularly interested in. At the time of
writing, its next big focus is on scents:

Image source: https://ikeacocreation.com/

IKEA provides tools and resources to help users submit the best possible ideas. And winning
submissions are even eligible for cash rewards. So it’s no wonder that this co-creation
portal is enormously popular.
This is an excellent example of a company bringing the customer into the production
process by giving clear instructions and a framework through which to create. And the
occasional monetary prize can only sweeten the deal.

Leapfrogging - The main idea behind the concept of leapfrogging is that small and
incremental innovations lead a dominant firm to stay ahead.
Businesses especially startups use leapfrogging strategies to skip the traditional methods of
technology development and identify opportunities using proven technologies. For example,
a person who has never used a phone jumps directly to a mobile phone, skipping the
process of having a landline.
A frequently cited example is countries which move directly from having no telephones to
having cellular phones, skipping the stage of copper wire landline telephones altogether.
Another notable example is mobile payment. Popularity of mobile payment is much higher
in China than that in developed countries. In most parts of the developed world, credit
cards have been popular since the second half of 20th century. In China, however, credit
cards are not so popular. After 2013, Allpay and WeChat began to support mobile payment
using QR code on smart phones. Both of them have been extremely successful in China and
have expanded overseas now. Mobile payment gets success in China because the major
method of transactions before was cash. Cash has obvious disadvantages compared with
mobile phones and credit cards, but difference between mobile payment and credit cards is
not so great.
The adoption of solar energy technologies in developing countries are examples of where
countries do not repeat the mistakes of highly industrialized countries in creating an energy
infrastructure based on fossil fuels, but "jump" directly into the Solar Age.
Similarly, a country which has leadership can lose its hegemony and be leapfrogged by
another country. This has happened in history a few times. In the late eighteenth century,
the Netherlands was leapfrogged by the UK, which was the leader during the whole
nineteenth century, and in turn the US leapfrogged the UK, and became the hegemonic
power of the 20th century.