What are the benefits of co-creation?

How can global businesses prevent themselves from running out of ideas? Even companies at the top of the food chain can only rely on their own success for so long. How can they continue to approach problems from fresh angles, and consistently present products that consumers actually want?

It requires innovation. And more than that, it requires input from outside the business. We call this co-creation.

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:

And it’s true – most of the time we think of co-creation between a company and consumers. But co-creation can also include:

  • 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.

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 technology makes it easier to involve customers earlier in the process. 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 build a web portal where users can suggest ideas, give feedback to one another, and stay connected to all co-creation projects.

This is a great way to build an endless stream of new product ideas. But it also builds brand loyalty and will increase customer satisfaction in the long run.

When buyers feel that they’re being heard, they naturally become more invested in the success of your business.

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. It may take a little more energy than simply updating last year’s range, but the reward can be far more significant.

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. 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.

That’s exactly what P&G has done, developing dozens of new products thanks to help from alumni and customers who just want to be involved. 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. Removes 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. But you have to explain to the stakeholders or at least give a reason if you are not embarking on their idea. 

While crowdsourcing feedback on social media or a company website can provide valuable input, co-creation involves more of a commitment. Successful co-creation involves community, which means you need to build one around your brand or product. A variety of platforms exist for community building, and if you have a strong social media presence, you can start there and encourage users to sign up for a forum, portal or other tool where you plan to handle online co-creation tasks.

Once you start building a tribe, it’s time to listen. Many entrepreneurs and business teams are almost drowning in their own ideas, so it’s hard to step back and listen to others. To co-create value, though, you have to let others do some of the work.

Check out my related post: How to fail at everything and still win big?


Interesting reads:

https://www.telegraph.co.uk/business/social-innovation/benefits-of-co-creation/

https://www.klcommunications.com/benefits-of-co-creation/

https://www.ideasforleaders.com/ideas/co-creating-with-customers-more-pros-than-cons

https://blog.chaordix.com/the-benefits-of-customer-co-creation

https://www.12manage.com/methods_prahalad_co-creation.html

https://www.braineet.com/blog/co-creation/

https://www.business2community.com/social-business/co-creation-how-your-business-can-benefit-from-it-0290766

https://www.emeraldgrouppublishing.com/promo/what-is-co-creation-and-how-can-it-help-your-business.htm

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