The Empty Whitecoat

The logic of Co-Creation

Following my talk at LIFT06, I have been thinking a lot about how to build up a simplified logic for explaining co-creation, as distinct from open-source product innovation (von Hippel etc).

Here is where I have gotten to in my logic, building upon each statement and justification as I go:

Tradtionally, customer value has been defined and differentiated by product quality (Features, Attributes and Benefits - the old Kotlerist FAB of 1950-1990s marketing textbooks)

Open source product innovation emphasises the technical co-production of new and improved products, their features and attributes (e.g. Lego Mindstorms, Linux, Sugar CRM) with customer's direct involvement in the innovation process; it is limited to the design, development and testing of enhanced functional “things” or “technologies” with individuals or in communities of users.

Increasingly though, value is migrating from products to experiences as customers seek out personalised value to satisfy their situational needs. (Drivers: demand for better experiences, technology enablers, emotional desired outcomes, increased socialisation, product functional similarity etc.)

Customers therefore place increasing value on the quality of the experiences they have when they interact with firms and their products (and services);

The quality of an experience is determined by how relevant or personalised the experience is for an individual customer; Experience quality is a combination of functional and emotional elements specific to the situational and temporal context of each customer

The locus of value-creation therefore shifts from product quality and design innovation to experience design and quality innovation

As value-creation is innovation, traditional firm-centric innovation processes are becoming distributed in order to provide the means to deliver ongoing, adaptable, personalised, unique experiences for individual customers

The locus of innovation is shifting towards the individual in distributed experience environments

In distributed experience environments, the firm and customers come together to create value; value in the form of personalised unique experiences for customers and revenues and profits for the firm;

Therefore, co-creation defines the processes of distributed value-creation between firms and customers or between customers directly, to create personalised experience value.

Markets becomes forums for the co-creation of personalised experiences; value is differentiated according to the quality of the personalised experience; firms focus on building a capability for the delivery of heterogeneous experiences. This defines competitive advantage.

OK that is the conceptual logic, next post - examples and practicalities

Avoid Creating "Innovation Scree"

Jim Maxmin and Shosanna Zuboff argue in The Support Economy that managerial capitalism has reached the end of its adaptive life. In the failure of the market to meet the needs of a "new society of individuals" shaped by self-determination and unfilled, intangible wants, Maxmin and Zuboff identify a widening chasm between new forms of individual value (and values) on one side and corporate objectives, behaviour and actions on the other - actions characterised by an "incremental tinkering" of, rather than a radical and discontinuous breakthrough in, the means to identify, create, design and deliver "consumer" value.

Gary Hamel in Leading the Revolution discusses such incrementalism at length. He pinpoints a failure of organisations to ...

"build a deep-capability for business concept innovation – a capability that continually spawns new business concepts and dramatically reinvents old ones. … Despite all the pro-innovation rhetoric that one encounters in annual reports and CEO speeches, most still hold the view that innovation is a rather dangerous diversion from the real work of wringing the last ounce of efficiency out of core business processes. Innovation is fine so long as it does not disrupt a company’s finely-honed operating model. … As change becomes ever less predictable, companies will pay an ever-escalating price for their lopsided love of incrementalism."

Using Zuboff and Maxmin's chasm analogy, we can view this lopsided incrementalism as generating the “innovation scree" that lies deep in the rift between commercial organisations and individuals. In marketing in particular, many new attempts or approaches to identify, predict, understand, reach and respond to the new individual are now being “lobbed off" the side of the chasm by a marketing profession desperately searching for the next breakthrough in efficiency.

Unfortunately, several just roll off the side of the chasm, fall into the abyss, and end up only a few feet ahead of the previous "little innovation boulder"! And as all this activity continues, the new society of empowered and engaged individuals amasses on the other side of the chasm, conversing in new terms and new ways about their value-goals and the "value-failings" of the organisations on the other side..

Check out this quote from Shosana Zuboff:

"Most 'new' business concepts are simply self-referring. They do not move beyond the rules of a certain way of doing capitalism, and therefore they cannot possibly alter the problems they target. Instead, just the opposite occurs — the status quo overpowers new ideas and turns them into variations on the same old themes. That is why every innovation from quality circles to reengineering to customer relationships turns out to be another road to cost reduction."

There are some "excellent" and “astonishing” examples of marketing’s "little innovation boulders". Some of these brave attempts to breach the chasm have the flavour of Vance Packard's famous expose of the subliminal marketing techniques of the 1950's and 1960's (as described in his book "The Hidden Persuaders") ... Many represent a last desperate attempt to squeeze a little more life out of the adaptive reaches of managerial and market capitalism ...

Here are some quick pointers for an Evil Kneivel style leap across the chasm:

• Build a deeper insight into where value resides for customers – and how it is changing – and critically, how to act upon it

• Put aside conventional thinking

• Think of innovation as though a new entrant to the market

• Focus on unmet needs

• Develop a view that industry conditions can be shaped

• Avoid comparing strengths and weaknesses with the competition

• Distinguish the factors that deliver superior customer value from all the factors that the industry competes on

• Focus less on product features just because that what is your competitor’s are doing

• Free up resources to identify and deliver completely new sources of value

Harness the power of customer advocacy article

I was really delighted to have a recent paper of mine on Customer Advocacy featured as the cover story in a UK publication, Customer Management magazine. I am making a .pdf version of the article available to anyone interested in a copy. The guys at Customer Management did a great job pulling it together.  To access a copy, just click here... ...      

We also have made a version specifically using examples of customer advocacy from financial services. To receive a copy, please send me an email. I think that being an advocate for customers marks a profound strategic shift by companies to provide more meaningful - and sustainable - value. It may not be the complete answer, but I believe it is set to become a "big thing" in customer innovation and certainly worth an exploratory look...

Transformation Design: New paper from UK Design Council

UK Design Council Red has made available a draft excerpt of a new paper on what it calls Transformation Design. Here is an excerpt:

A new design discipline is emerging from groups across the world. It applies traditional design skills in a new way to social and economic issues. It uses the design process as a means for a wide range of disciplines and stakeholders to collaborate. It develops solutions that are practical and desirable. It is an approach that places the individual at the heart of new solutions and builds the capacity to innovate within participating groups.

It could be key to solving many of society’s most complex problems. But the community of practice is small, and its emergence has already caused controversy among those who argue that it’s not design - because here’s the rub: it doesn’t look or feel much like design in the familiar sense of the word. The outputs aren’t always tangible and beautiful, and may be adapted and altered by people as they use them. It is far from the paradigm of the master-designer.

There is not a company or public body that doesn’t have an interest in solving the more complex, ambiguous issues.  At the same time, there is a growing desire among designers, both young and old, to tackle the most pressing problems – for which there is often no clear client, no clear brief and no immediately obvious design solution. The potential market for a new design approach is clear. But is the design industry ready?

This paper is a call to arms. It identifies a growing community of practice and a body of work that begins to set out the characteristics of this emergent discipline. It explores the market and the challenges facing designers wishing to work in this way.

We call it transformation design.

The full excerpt is available here with the complete paper being published in April. This is really worth reading. (Via Experientia blog)

Design2.0: Discussions on Design, Strategy & Innovation

This looks a very exciting event.  The first of a series of discussions on Design, Strategy and Innovation, panellists Kevin Farnham(CEO, Method), Marissa Mayer (Vice President, Search Products & User Experience, Google), Jeneanne Rae (Co-founder, Peer Insight) and Andrew Zilli, Founder, Z-Plus Partners wil talk and debate balancing complexity and clarity in design. Run by Core77 (Industrial Design Supersite) in conjunction with Business Week, the discussion will explore one of the biggest challenges in brand and service design - taking complex systems and representing them to users as simple and clear experiences. From Google to Apple, from Kodak to FedEx, this panel discussion will center on the strategies for developing clear artifacts and experiences from sophisticated palettes.

This event is taking place in on Feb 28th, 1-6 pm at Union Square Ballrooms, New York City. I'd love to be there but OMC is running our own customer experience design workshop for a client on the same day. More details can be found here. Get along if you can!

LIFT06 - Organised Enthusiasm and Variety

Just got back from attending and speaking at LIFT06 in Geneva Switzerland (my first time in the country, really enjoyed walking about Geneva old town at the nightime)

Unfortunately I could only make a flying visit in on the Friday due to work commitments with OMC but nevertheless I think I managed to get a good sense of the great energy and connection surrounding the conference – once I had shaken off the pre-speaking nerves. (Regret not making the whole shindig now)…

After my talk, I met and chatted with several interesting folks including Euan Semple (ex of BBC now freelancing)and his transformative ideas and experience with social aspects of intra-organisational collaboration, Geoff Jones and his efforts on pulling off a similar event with the Cambridge scientific / business community last September (theme: Demonstrating the benefits of the new internet technologies and the benefits of opening up communications with your customers and fellow workers without email!), Amy Clark over at Lausanne based strategic design and comms agency MondoRondo who I don’t think was too impressed with my stories about Michael Stipe, and many others who were keen to share and apply LIFT06 themes and learnings in their organisations such as WTO, Factiva, IBM – so really encouraging stuff…

Since I got back, a number of themes have been running through my head for imminent exploration - such as:

exploring the tension between organisational stereotyping in value-creation (e.g. market segmentation) and increasing individual desire for heterogeneity (a tension I now realised I should have emphasised more, it defines the difference between Zone 2 and Zone 3 as I called it);

elaborating on the differences in co-creation which contrast sources of creativity and value from outside of markets (e.g. from non-market based communities) with those from inside the market mechanism (e.g.Prahalad and Ramaswamy's firm and individual customer interaction perspective), the latter being the only dimension I focused upon;

and, developing the idea that products and services (and styles of value-creation) are evolving from a functional emphasis to a design emphasis and now increasingly, towards an adaptive knowledge or experience variety emphasis – to accommodate heterogeneous demand and uniqueness.

All things I wouldnt have discovered if I hadnt gotten into some terrific discussions at LIFT06.

I was genuinely amazed at how well organised the event was – hats off to Laurent, Steve and the rest of the team for pulling this off. It just goes to show that you don’t need formality and structure to organise something on this scale - but just sheer enthusiasm, honesty and several healthy connections (as well as an overworked laptop). Thanks again to Laurent for inviting me to speak on the basis of my research work on co-creation – I would love to come back next year – for the whole nine yards this time…

PS The video / audio recordings of all speeches are online here.