Management gurus, late C K Prahalad and Venkat Ramaswamy, introduced the concept of co-creation in 2000 in one of the Harvard Business Review articles. Co-creation is the philosophy of involving the customers and consumers in the product or service creation and delivery processes. It requires a new form of interactions between the company and the customers. Customers are no longer passive. They are part of the product creation process. The value created through co-creation is shared by both the customer and the company. Customers get personalized products and unique experiences. Companies enjoy enhanced revenue, superior market performance and learn new things about the consumers. This is a win-win situation for all.
Co-creation is the heart of open source software movement. Nike embraced this concept by giving the customers online tools to design their own sneakers. Evolving social media and Web 2.0 technology brought co-creation to the center stage. Other companies that engaged customers in the service creation and delivery process are Harley Davidson, Apple, Starbucks, and Cisco. Another concept, crowdsourcing, introduced by Jeff Howe in June 2006 in a Wired magazine article, builds on collaboration and co-creation. Crowdsourcing exploits knowledge of a large community for generating better ideas, designs or solutions. No doubt it is the evolving technology which fuels the developments of these concepts.
Though co-creation is the process of collaborating with the customers, companies could use it within the organization as well. Co-creation within the organization means involving employees at every level in the strategic decision making and service creation processes. It calls for a bottom-up approach rather than a top-down one. Changing traditional corporate activities like training, performance management, and communications into co-creative endeavors results in better employee engagement, sparks innovation, cuts cost. This effectively empowers all employees to become change agents. As the employees create the environment they work in and participate in devising solutions to existing challenges, they naturally are motivated and take ownership of success as well as failure. Companies like Nike, Nokia and IBM are at different stages of this transformation. Co-creation is a shift from industrial age mind-set (control) to people engagement mind-set (empowerment). Needless to say, technology companies would find it easier to adopt than the others. The sooner they do the better it is for them.