Today we are beginning a new ‘semi-frequent’ feature on the Propelling Brands blog. In addition to the regular features and ‘who’s propelling’ profiles of individuals and companies, we will periodically feature Q&As with individuals that are true forward thinkers on brands, marketing, innovation and technology.
Professor Aric Rindfleisch is just such a forward thinker and marketing researcher, who works to fuse insights from the front lines of business and marketing with cutting-edge academic research. In addition to his extensive academic background, he has worked for both ad agency J. Walter Thompson in Japan and marketing research firm Millward Brown. Rindfleisch is currently the Associate Dean for Research & PhD Programs and a Professor of Marketing at the University of Wisconsin-Madison. He teaches graduate-level courses for the Wisconsin School of Business on new product development and marketing strategy; his academic research focuses on understanding inter-organizational relationships, consumption values, and new product development; and he is developing a new blog for the school, titled WisconsInnovation which seeks to bring together the ‘co-created’ insights of both faculty and students on innovation in business.
Rindfleisch has recently authored a groundbreaking paper, titled “Customer Co-creation: A Typology and Research Agenda,” which we are fortunate to be able to share on this blog. His co-author is Matthew S. O’Hern, a lecturer and doctoral student in marketing at Wisconsin. The paper is slated to be published in an upcoming volume of the academic journal Review of Marketing Research. And it is the focus of our Q&A here.
So what does co-creation really mean? What is the impact of co-creation research on businesses, and how can marketers embrace co-creation as a strategy for improving the customer-brand relationship?
We’ve touched on co-creation in a past blog piece on this site that looked at Marketing Personalization 3.0, but it’s a topic that in many ways is revolutionizing marketing organizations’ approaches to developing and delivering products and services to their customers, so it deserves a more in-depth look. (And … well … Rindfleisch is one of the foremost experts on the topic, so we thought we’d go straight to him on this one.)
So here is our Q&A with Rindfleisch on co-creation and his new paper:
PB: How would you describe co-creation to someone in 200 words or less?
Rindfleisch: In its purest essence, co-creation is a managerial paradigm. Specifically, co-creation is the realization that one’s customers can lend value beyond the traditional means of simply choosing and using your product and/or service. This realization, in turn, enacts a set of changes in business practice (e.g., new product development) that empowers customers to play a more active role in creating a product and/or service. This empowerment can take a variety of different forms, ranging from asking customers to share their ideas to providing them with the tools to do their own development. Regardless of the specific form chosen, successful co-creation requires managers to be both humble enough to realize that they don’t have all the answers and trusting enough to allow customers to take increased control.
How is co-creation different from mass customization? And from traditional ‘stage-gate’ innovation?
Co-creation essentially involves three steps: (1) obtaining contributions by customers, (2) selecting the best of these contributions, and (3) incorporating these selected contributions into products, processes, or services. In contrast, mass customization focuses largely on just obtaining contributions and entails little selection or incorporation.
In contrast to traditional ‘stage-gate models,’ which by definition seek to carefully control and systematize the new product development process from the top-down, co-creation is considerably more bottoms-up, uncertain, and requires a release of control. Also, co-creation differs from stage-gate models in terms of its paradigmatic assumptions of why new products succeed or fail. While the stage-gate approach largely assumes that new products fail because the process of developing new product solutions is faulty, co-creation focuses on the faults inherent in the traditional manner in which firms seek to ‘sense’ customer needs.
Your upcoming paper in the academic journal Review of Marketing Research talks about the ‘asymmetry’ of traditional new product/service development. Can you explain what this is and how it points to an opportunity for co-creation?
By ‘asymmetry,’ we are referring to the gap between the wants that customers actually desire versus the manner I in which these desires are sensed by marketers and embodied into the new product solutions that they deliver to these customers. Many, is not most, new products fail due to this asymmetry between the translation from sensing to solution.
Your paper also sets out a ‘typology’ for co-creation. Briefly, what are the different types of co-creation, and how mature is each as an approach?
In our paper, we identify and describe four forms of customer co-creation:
- Collaborating: In this form, customers have the power to collectively develop and improve a new product’s core components and underlying structure. We conceptualize collaborating as the form of co-creation that offers customers the greatest power to contribute their own ideas and to select the components that should be incorporated into a new product offering. A good example of collaborating is open-source software, such as Linux or Mozilla.
- Tinkering: In this form, customers make modifications to a commercially-available product and some of these modifications are incorporated into subsequent product releases. Tinkering is similar to collaborating in terms of allowing customers a relatively high (but somewhat lower) degree of autonomy over new product development (NPD) contributions. However, firms that employ tinkering usually retain a considerable degree of control over the selection of these contributions. A good example of tinkering is video games that allow customers to make changes to the basic offering, such as The Sims or Little Big Planet.
- Co-Designing: In this form, a relatively small group of customers provides a firm with most of its new product content or designs, while a larger group of customers helps select which content or designs should be adopted by the firm. Co-designing is characterized by a relatively fixed contribution approach but a high degree of customer autonomy over the selection of these contributions. A good example of co-designing is the t-shirt manufacturer Threadless.
- Sharing: In this form, customers directly communicate ideas for new product offerings to a firm. This form of co-creation is characterized by the least amount of customer autonomy in terms of both NPD contribution and selection. Although submitting resembles co-designing (i.e., both types of co-creation allow customers to directly contribute their own novel ideas and solutions), it differs from co-designing because in submitting, the firm retains full control over the NPD selection process. A good example of sharing is Electrolux’s annual DesignLab challenge.
Of these four types, sharing probably has the longest history. For example, General Mills has allowed customers to share ideas via Betty Crocker bake-offs dating back to our grandparents.
What are some good examples of companies that successfully co-create in a B2B context? How about in a B2C context?
My favorite B2B example is the Italian controller board manufacturer Ardunio.
My favorite B2C example is the Chicago t-shirt firm Threadless (cited above).
What are some of the key implications of co-creation for marketers and their go-to-market strategy?
Here are two: (1) Think of your customers as not just passive choosers and users who are the targets of your value creation process, but also as active co-creators of your value proposition. (2) Open-up! Replace secrecy with transparency. After all, your customers can’t co-create unless you provide them with sufficient information about your objectives and desires. Several big-name firms, including IBM and P&G, have made this transformation and are reaping the rewards.
How can co-creation improve the customer-brand bond?
We know that customers connect not only to a brand but to other users (i.e., brand communities). Most forms of co-creation allow customers to connect with others, and thus, should strengthen the customer-brand bond by enhancing their sense of communal ties.
Does co-creation necessarily impact margins in a negative way?
Good question. I think co-creation could jeopardize margins and profitability in at least two different ways: (1) Some firms may be reduced to simply manufacturers of designs developed by their customers, and hence, may lose the margin-boosting value of being a well respected brand; (2) By empowering customers, firms may find that their co-creation efforts may actually be the birthing ground for a new class of “competitors,” who challenge the firm and restrict its ability to take potentially margin-boosting actions.
How is technology enabling co-creation today?
The big enabler of current co-creation is, of course, the Internet. The Internet has enabled co-creation by providing customers with both a means of easily accessing information and also connecting with not only firms but also other potential co-creators. However, this is just the tip of the iceberg. Many forms of co-creation are also enabled by a broad array of consumer electronics, including laptops, cell phones, software (e.g., Photoshop), etc. These devices and programs provide are tools for co-creation.
Where does technology still need to go to make co-creation more viable?
Thus far, co-creation has made limited in-roads in the manufacturing sector. In my view, this limitation is primarily due to a lack of appropriate tools. Most of the tools I mentioned above are great for co-creating digital products, such as software and designs. However, their ability to co-create physical products is limited. This limitation may be overcome within the coming decade or so by the advent of customer-friendly manufacturing tools, such as 3D printers.