In 2008 McKinsey Quarterly published the article “The next step in open innovation,” mentioning distributed co-creation for the first time but concluded it was to early to predict what the outcome of this new business strategy would be. Then last week McKinsey Quarterly published an article about ‘Ten tech-enabled business trends to watch’. The first business trend they described was ‘Distributed co-creation moves into the mainstream’.This got me thinking how much has happened over the last couple of years. I first got interested in co-creation while writing my thesis for my MBA. My focus was how new technologies were changing the cost structure of innovation and thus enabling ‘the long tail of innovation’. The fundamental premise was how new technologies were enabling companies to collaborate with their customers in a completely new way: Co-creation. At the time there were only very few successful examples of co-creation. LEGO’s Mindstorms, the social T-shirt company Threadless where mentioned over again and again and creating value together with customers was certainly not on the agenda of most CEOs
Compare that to today where 70 percent of the executives McKinsey surveyed said that their companies regularly created value through Web communities. Yesterday I discussed social dynamics of online idea communities with a civil servant in the health care sector of a small Danish region – they were setting up an online platform where patients, personnel and companies could discuss and evaluate ideas together. So there is no doubt that co-creation is much more prevalent today.
However I would say we still have some way to go before we can call co-creation ‘mainstream’. First, we still face a host of challenges that have not been resolved – this includes IP management, reward systems and brand management. Second, for some areas of co-creation (e.g. support communities and viral branding campaigns) we are pretty good in calculating return on investment, but for the areas of co-creation where the pay-offs the largest potential (such as front-end idea generation), it is still difficult to estimate return on investment. Third, while examples such as Nike ID, P&G’s Vocalpoint and Microsoft’s MiBuSo are outstanding successes many co-creation initiatives fall short of expectations and in the current economic crisis many executives are going with what is tried and tested.
There is no doubt that a companies’ ability to engage their customers in value creation is going to be a key competitive parameter in the future, and it is great to see the movement. The next steps are to develop structured approaches and strategies to co-creation so it becomes a field at the same level of importance as ‘branding’ and ‘online presence’.
- David
Tags: branding, co-creation, health sector
