Market and Non-Market Co-Creation

It is important to identify that co-creation is not just about firms improving their social marketing, open innovation, community-building and learning efforts to generate new proprietary and valuable knowledge with/from their customers.

Rather, there is also a form of co-creation that is largely independent of markets, where individuals willingly come together to create and share self-generated information, knowledge and content independent of any mechanisms of market exchange. In The Wealth of Networks, Yochai Benkler explores the dimensions and potential of such non-market co-creation / collaboration in some depth.

Making the distinction between the two types of co-creation primarily depends on how we define a market… Put simply, i would suggest that a market is where there is some kind of economic mechanism or price for the value exchanged between two parties and where the value is proprietary, that is, it is produced and owned by one party who expects some value in return for its exchange.

But in a non-market context, there is no economic mechanism or price for exchange and no ownership of information or goods. In a co-creation sense, such environments are characterised by the collaborative creation and sharing of knowledge and information by individuals in decentralised communities. The “value” derived by individuals in such communities is not moderated by an economic price but by social factors, experiential elements, meaning, learning, attention and shared values. Importantly, the co-creation that occurs here is independent of any market mechanism or desire for ownership by any party. We can see these forms of co-creation in open source software, media, journalism, blogging, entertainment, gaming and other digital environments. e.g Wikipedia..

As Yochai Benkler argues, such self-organising communities pose a threat to established firms seeking to use tweaked old market approaches to bolster their brands, innovation efforts and levels of social engagement – mainly because there is a limit as to how far such firms can “own” channels of knowledge production and are able to manage engagement when they apply a market-based logic and its associated capabilities.

Paul van Blokland just drew my attention to a related essay by Michel Bouwens on peer2peer and human evolution which can be found (http://integralvisioning.org/article.php?story=p2ptheory1). In a comment to an earlier blog of mine on this subject, Paul provides excerpts from Michael Bouwens paper:

Markets do not function according to the criteria of collective intelligence and holoptism, but rather, in the form of insect-like swarming intelligence. Yes, there are autonomous agents in a distributed environment, but each individual only sees his own immediate benefit.

Markets are based on 'neutral' cooperation, and not on synergestic cooperation: no reciprocity is created.

Markets operate for the exchange value and profit, not directly for the use value.

Whereas P2P aims at full participation, markets only fulfill the needs of those with purchasing power.

Paul writes that the paper's overall conclusion is that p2p aims at participation while markets "which are proprietary, secret and restricted are opposed to this aim of participation."

Rather, there is also a form of co-creation that is largely independent of markets, where individuals willingly come together to create and share self-generated information, knowledge and content independent of any mechanisms of market exchange. In The Wealth of Networks, Yochai Benkler explores the dimensions and potential of such non-market co-creation / collaboration in some depth.

Making the distinction between the two types of co-creation primarily depends on how we define a market… Put simply, i would suggest that a market is where there is some kind of economic mechanism or price for the value exchanged between two parties and where the value is proprietary, that is, it is produced and owned by one party who expects some value in return for its exchange.

But in a non-market context, there is no economic mechanism or price for exchange and no ownership of information or goods. In a co-creation sense, such environments are characterised by the collaborative creation and sharing of knowledge and information by individuals in decentralised communities. The “value” derived by individuals in such communities is not moderated by an economic price but by social factors, experiential elements, meaning, learning, attention and shared values. Importantly, the co-creation that occurs here is independent of any market mechanism or desire for ownership by any party. We can see these forms of co-creation in open source software, media, journalism, blogging, entertainment, gaming and other digital environments. e.g Wikipedia..

As Yochai Benkler argues, such self-organising communities pose a threat to established firms seeking to use tweaked old market approaches to bolster their brands, innovation efforts and levels of social engagement – mainly because there is a limit as to how far such firms can “own” channels of knowledge production and are able to manage engagement when they apply a market-based logic and its associated capabilities.

Paul van Blokland just drew my attention to a related essay by Michel Bouwens on peer2peer and human evolution which can be found (http://integralvisioning.org/article.php?story=p2ptheory1). In a comment to an earlier blog of mine on this subject, Paul provides excerpts from Michael Bouwens paper:

Markets do not function according to the criteria of collective intelligence and holoptism, but rather, in the form of insect-like swarming intelligence. Yes, there are autonomous agents in a distributed environment, but each individual only sees his own immediate benefit.

Markets are based on 'neutral' cooperation, and not on synergestic cooperation: no reciprocity is created.

Markets operate for the exchange value and profit, not directly for the use value.

Whereas P2P aims at full participation, markets only fulfill the needs of those with purchasing power.

Paul writes that the paper's overall conclusion is that p2p aims at participation while markets "which are proprietary, secret and restricted are opposed to this aim of participation."

Comments

[Oliver]

I’m not sure that I agree with Benkler that non-market based co-creation is poses a threat to established firms. In addition the boundaries that Bouwens describe can be overcome if there is a perception of inclusivity. If you build a big enough tent, then the community itself becomes a self-sustaining ecosystem and thusly makes economically beneficial for all participants to contribute to the community. Wikipedia is a good example. It was started by a the non-market co-creators, however it is big enough and has enough of an economic benefit today for commercial entities to contribute to the project.

I am a firm believer of the power of co-creation and my organization has built a platform to facilitate co-creation from our members in the community. We’ve added a market elements to community in order to catalyze co-creation and there seems to be some success in our efforts. For example parts of the community began to aggregate around designs for novel applications of established brands and I would argue that they provide significant economic benefits to these firms. The designs for wearable items suggested by and made by fans of established products are viral marketing items that further reinforce the messaging of the brand. For example:

Miller Beer:
http://www.tapsmack.com/guest/idea/designs/157#DR

Southwest Airlines:
http://www.tapsmack.com/vkapila/idea/designs/478

In short co-creation and markets can co-exist. The challenge is for established firms recognize this fact and embrace the community.

[Graham Hill]

Chris

You can download a free pdf copy of Benckler's 'The Wealth of Networks' at: http://www.benkler.org/Benkler_Wealth_Of_Networks.pdf or a shorter work on 'Coase’s Penguin, or, Linux and The Nature of the Firm' at http://www.yale.edu/yalelj/112/BenklerWEB.pdf

Bouwens is simply wrong when he suggests that markets operate through swarm intelligence as found in insect and other animal societies. A quick reading of any recent book on sociobiology shows clearly that insects do not exhibit the 'self-interest' that Adam Smith described so well and that defines how classical western, free-markets are thought to operate (with at times an unhealthy dose of irrational exuberance).

We must never forget the enormous psychological influence that the exchange of goods or sevices for physical money has on human behaviour. Money in its many forms has a symbolic value of its own which neuroscientists have shown has far-reaching effects on our behaviour. Free markets driven by the price mechanism operate in different ways to free markets, e.g. for knowledge, that operate through other non-monetary currencies like prestige, reputation or influence.

As Bouwens suggests, part of the challenge of cocreation is creating a way to enable it throughout the end-to-end customer experience, particularly the all important post-exchange period when customers extract value from the product in use. Cocreation meets service-dominant logic: the next fronter of customer-driven innovation.

Graham Hill
Customer-driven Innovator