Value Co-Creation

Crowdsourcing used by BMW

2012-02-02T03:48:00.000-08:00

In German marketing magazine "Horizont" Andreas-Christoph Hofmann, Head of BMW Brand Communication, speaks about the role crowdsourcing plays at BMW and the Co-Creation Lab based on HYVE IdeaNet.

Andreas-Christoph Hofmann (Leiter BMW Markenkommunikation) über das BMW Group Co-Creation Lab (Horizont 37/2011, 15.09.2011):

"Crowdsourcing bietet der BMW Group die einzigartige Möglichkeit, externen Input als zusätzliche Ideen- und Impulsgeber unter anderem in die Modellentwicklung zu integrieren. Dazu hat die BMW Group mit dem Co-Creation Lab (Bmwgroup-cocreationlab.com) eine dauerhafte zentrale Plattform für alle Kundenintegrationsprojekte etabliert, auf der bereits mehrere sehr erfolgreiche Projekte durchgeführt wurden. Das Co-Creation Lab ist dabei als virtueller Treffpunkt für alle Automobilinteressierten gedacht, die ihre Ideen und Meinungen zur automobilen Welt von morgen teilen möchten."

Andreas-Christoph Hofmann (Head of BMW Brand Communication) on the BMW Group's Co-Creation Lab (Horizont 37/2011, 15.09.2011) [own translation]:

"Crowdsourcing offers the BMW Group a unique opportunity to integrate additional external input as triggers for ideation and inspiration in the development of new models. For this purpose, the BMW Group established the Co-Creation Lab (BMWGroup-cocreationlab.com), a permanent central platform for all customer integration projects, on which several very successful projects have already been carried out. The Co-Creation Lab is designed as a virtual meeting place for all car enthusiasts who want to share their ideas and opinions on the automotive world of tomorrow."

Crowdsourcing Examples: Presentation at the KnowTech 2011

2011-10-20T12:36:00.001-07:00

I have posted pieces of the presentation before but here is a selection of slides presented at the KnowTech Conference 2011 in Bad Homburg.

Crowdsourcing and Innovation Contests

View more presentations from Volker Bilgram

Innovate with Consumers: Collaborative Product Innovation in 8 Acts

2011-10-16T03:15:00.000-07:00

Taking the case of NIVEA's deodorant innovation, we guide you through 8 acts of collaborative innovation with consumers:

Act 1: Who is talking about deodorants anyway?
Act 2: Yellow, crusty, moist, green deodorant stains?
Act 3: Blow-drying against deodorant stains?
Act 4: The Undershirt Guy - weirdo or expert?
Act 5: Creative minds at work.
Act 6: The queen of all ideas.
Act 7: An idea leading to success.
Act 8: The new product becomes part of consumer discussions online.

Collaborative Innovation with Consumers

View more presentations from Volker Bilgram

(soon to follow in English)

Crowdsourcing: What Companies Hope to Get from the Crowd - part 2

2011-09-25T11:52:00.000-07:00

Crowdsourcing initiatives are used by companies to obtain knowledge or creativity from external users. Today I will show examples of crowdsourcing for the purposes of labor, capital and evangelism.

3. Labor
Computers have taken over a lot of tasks once performed by men. The idea of labor as a resource has significantly changed since then. Still, there are tasks out there which can be more reliably or easily fulfilled by human beings. Amazon’s Mechanical Turk offers a platform designed to crowdsource labor-intensive ‘Human Intelligents Tasks’ (HITs) which are also called ‘pico-jobs’ or 'micro-task'.
A prominent example of how the Mechanical Turk platform can be used is the search for Jim Gray, a renowned Silicon Valley computer scientist. Jim Gray disappeared on a sailing trip outside San Francisco Bay. Friends coordinated the search utilizing Amazon’s Mechanical Turk platform and “turned the eyes of the global network onto the Pacific“. Up-to-date satellite images of the area were posted on the platform with a reference image showing the size/shape of the boat on a satellite image. Users were asked to go through images and mark those which may contain a boat to be further inspected by experts. In total, 12.000 volunteers signed up, screened 30.000 square miles of water captured in approximately 100.000 assignments. Despite the efforts, Jim Gray was not found.

source: http://hoppsan.org/jamesb/blogger/uploaded_images/JimGray-797616.png

4. Capital
Any entrepreneur needs it at some point to realize his/her venture: capital. Usually, venture capitalists or business angels support start-ups. More recently, ‘crowdfunding’ platforms such as Kickstarter use crowdsourcing principles to gather capital for entrepreneurial projects from individuals.
Scott Wilson from a Chicago-based design agency had the idea to turn Apple’s iPod Nano into a multi-touch wrist watch. In order to realize it they placed their project on Kickstarter and asked people to fund their idea. Six different investments could be done starting at $1 pledges (idealistic support with no return) up to $500 pledges (serialized signed edition including iPod Nano plus additional 5 regular holders). The goal of collecting $15.000 was topped by far: 13.512 backers invested $942.578 and really did kickstart this project.

source: http://www.kickstarter.com/projects/1104350651/tiktok-lunatik-multi-touch-watch-kits?ref=live

5. Evangelism

The crowdsourcing initiatives so far have focused resources and skills people possess (knowledge, creativity, labor, capital). One last benefit for companies arising from crowdsourcing is evangelism or positive word-of-mouth which results from people's position within a social network (both online and offline). People's network centrality in their community or opinion leadership among peers are qualities which may constitute evangelism for a product or a company. It is key to crowdsourcing initiatives designed to create word-of-mouth to (1) contain game-based elements inducing a playful way of interacting with a brand and (2) provide share functionalities so that individuals can spread the word in their network. Quite often, evangelism is a side-product of crowdsourcing initiatives primarily aiming at people's creativity or capital. However, some examples out there managed to come up with a compelling narrative without asking for any of the other benefits.
Edding's Wall-of-Fame is an inspiring example of how crowdsourcing can make use of the crowd's evangelism. The platform provided a big blank virtual wall and several Edding markers inviting users to contribute a little sketch or drawing. Individuals can then share their drawings in social media applications or via e-mail. On the platform people can also interact with others who are drawing at that moment via a chat functionality. A small fraction of the crowdsourced wall full of scribbles and drawings can be seen below. Due to the perfect brand-fit of the "story" behind the campaign, both engagement levels and reach were impressive.

source: http://wall-of-fame.com/

Also look at my previous blog post on crowdsourcing for knowledge and creativity.

Crowdsourcing: What Companies Hope to Get from the Crowd

2011-09-24T11:36:00.000-07:00

Crowdsourcing describes the act of outsourcing tasks to a crowd and harnessing certain ressources of this crowd.

What do companies hope to get when they address the crowd?

Looking into more than 50 cases in which crowdsourcing had been applied, I identified five major cases in which the crowd can offer something to companies. Companies crowdsource in order to use people’s

knowledge
creativity
labor
capital
evangelism.

The list does not claim to be complete but proved to serve as a framework to subsume the more than 50 crowdsourcing examples that had been taken into account.

I will refer to each of the five resources that companies aim at when using crowdsourcing principles in the following.

1. Knowledge
According to Joy’s Law “no matter who you are, most of the smartest people work for someone else”. Following this maxim, companies use intermediaries to tap into the rich and widely distributed sources of knowledge. InnoCentive or NineSigma are examples of intermediaries that offer marketplaces to companies to crowdsource for knowledge.

A nice example of crowdsourcing for knowledge beyond official marketplaces of intermediaries is the Goldcorp Challenge. Goldcorp is a gold mining company which had been in serious trouble financially in 2000. Goldcorp engineers and geologists could not determine where exactly and how much gold was to be found on the area of the mine. In an attempt to increase the productivity of the gold mine, the company decided to publish 400MB of date on the site online and make it available to everyone who visited the website. The reward for those who could help find significant amounts of gold on the site: $575.000. More than 1.000 visitors on the website from 50 countries viewed the documents and contributed their knowledge to locate gold deposits on the site. As a result, 8 million ounces of gold were discovered worth approximately $3 billion. Goldcorp’s share value has increased almost 100 fold since then.

2. Creativity
Addressing people’s creativity, companies usually do not look for the solution to a problem per se. Rather, they search for ideas on how to develop business in the future. User ideas submitted on crowdsourcing platforms express a certain need, suggest possible directions for future solutions without necessarily providing the technical solutions themselves. Idea contests companies conduct on branded websites supported by co-creation enablers such as HYVE, the company I work for, are a good example for crowdsourcing initiatives aiming at the creativity of the crowd. Another example are agency-hold platforms whose business model it is to offer any company to post on their platform and utilize the creativity of the agency’s community.

German FMCG giant Henkel, for example, conducted a contest aiming to search for ideas in the field of adhesive packaging. Within 8 weeks 1.041 users registered on the platform and contributed 385 ideas (see winning ideas below).

In my next post I will write about crowdsourcing examples in which companies aim at people's labor, capital and evangelism.

Now on YouTube: The World's First Co-Creation Video

2011-09-12T10:06:00.000-07:00

The Scraplab - new products made from scrap

2011-07-29T06:37:00.000-07:00

In our economy a lot of waste is produced unavoidably. A lot of the materials, however, are still excellent resources and can be incorporated in new designs by creative minds. Some of our creative folks at HYVE have used the platform to showcase their chair designs made from scrap. Take the chair "Mybach" below as an example. It is made from steel panels which are used in the manufacture of Maybach luxury cars. The parts used in the Maybach production are punched out of panels leaving a patterned skeleton. Two of these parts have then been flexed and put together without any additional fixation to be seating and back rest. For more designs made of scrap go to www.scraplab-community.com.

Video on Co-Creation

2011-07-29T03:24:00.000-07:00

There are videos out there on crowdsourcing, social media and almost any other current management trend... however, one of the usual suspects has been missing so far!

We've put together a simple short video on our understanding of co-creation in new product development (just click on the film strip below or go to http://hyve.de/video.php:

Performance Measurement of Open Innovation Projects [Controller Magazine]

2011-07-10T09:35:00.000-07:00

In the current issue 4/2011 of the German controlling magazine "Controller Magazin" my colleague Gregor Jawecki and I provide an overview of the current status of open innovation measurement in academia as well as in practice. Drawing on examples of open innovation projects in various phases of new product development published in academic journals as well as a case at the BMW Group, we provide some insights into measurement dimensions, specific innovation metrics and potential metrics capturing the value of open innovation initiatives with end consumers beyond the innovation outcome.

The four cases from literature that we refer to in our article are shown in the figure below:

Open Innovation Measurement - Part 4: Online Idea Contests

2011-06-11T14:13:00.000-07:00

A very popular form of open innovation using the principle of crowdsourcing and tournaments are idea or innovation contests which have been recently employed by companies such as Google, SAP, BMW, Daimler, Netflix, Swarovski, Siemens or Volkswagen. In the context of performance measurement of idea contests, Blohm et al. (2011, 100f) have adapted the general conception of a balanced scorecard (Kaplan and Norton 1992) to idea contests. Drawing on the example of SAP’s SAPiens online community they divide the measures into four dimensions: innovation, customer, internal and finance. Additionally, the authors suggest a number of quantitative as well as qualitative measures for each dimension of the idea scorecard, for example, page impressions per member (customer dimension), the number of comments per idea (innovation), the number of recruited new employees (internal) or the efforts for community management (finance). The authors also show how in the innovation dimension the number of submitted ideas can be further specified. For instance, the quality of ideas assessed by a jury of experts or the number of comments are adduced. Additionally, the customer perspective capitalizes on metrics known from website analysis and monitoring. For example, in addition to the number of users who registered on the platform, the number of visits, page impressions and user characteristics serve as proxies for the activity and retention of users. The scorecard also provides cross-category metrics uniting two perspectives, for instance, the number of ideas per registered user (innovation process and customer perspective). In the internal process dimension, Blohm et al. (2011) also suggest two often neglected values of idea contests. First, the extensive user conversations and comments on ideas bear a lot of potential for consumer insights and further need information beyond the actual idea output. This potential may be unlocked by netnographic content analyses for example. Second, the benefit of idea contests for recruitment is suggested to be measured by the number of recruited employees/interns through the platform. To capture the absorption and integration of ideas within the organization, the involvement of SAP employees is measured, e.g. via the metric page impressions of company representatives. Blohm et al. (2011) also emphasize the role of user evaluations of the submitted ideas. Additionally, the authors go beyond the output stage and address outcome measures. For example, the further processing of ideas within the organization, e.g. by budgets allocated to further develop the idea (Blohm et al. 2011), can be considered a very first form of outcome. A further outcome metric which however could not be measured yet is the number of realized ideas. Referring to the input dimension, the authors highlight the costs of rewards, platform implementation, costs for activation and community management as well as the costs of the expert evaluation jury.

Previous posts on open innovation measurement:

Lead user method at 3M

Problem broadcasting at Innocentive

Mass customization in various industries

From Insights to Market Launch - Nivea's First Co-Created Deodorant

2011-03-07T13:35:00.000-08:00

The Co-Creation Story behind Nivea's New Deodorant

2011-02-18T09:26:00.000-08:00

Nivea has launched a new deodorant called "Invisible for Black & White". The deodorant provides a solution for a consumer need which has long been unanswered. It helps avoid yellow deodorant stains on white clothes and white deodorant stains on black clothes. The innovation process that led to this new product is remarkable in two respects:

1. The deodorant may be the first co-created product on the German market resulting from a continuous co-creation process within R&D.

2. Internal R&D excellence and consumer needs and initial solution information were closely intertwined in the process.

Here is video (source: nivea.de) about the new product highlighting the R&D work at Nivea and the underlying consumer research listening to consumers in social media:

In the current issue of the Marketing Review St. Gallen we provide some insights into the co-creation process and some of the methods applied. Here is an excerpt from the article "Getting Closer to the Consumer - How Nivea Co-Creates New Products":

Nivea is the best-known brand of the multinational skin care corporation Beiersdorf based in Hamburg, Germany. The company is a worldwide research and development leader in the area of skin care. Innovation efforts at Nivea have long been predominantly technology-driven, harnessing superior internal R&D capabilities. Even though open innovation is not a new concept to Nivea, consumers had not been incorporated as co-creation partners in open innovation activities until recently. In the last few years Nivea has recognized consumers as valuable sources of innovation (Bartl et al. 2009). In order to integrate the consumers’ voice beyond traditional market research techniques like concept tests or focus groups, the Nivea Deodorant and Antiperspirant Division instituted a holistic co-creation approach with users in the fuzzy front
end of innovation.

'Stain Manual' derived from Netnography

The case study outlines the way leading to the new deodorant starting with listening to consumers in online communities (Netnography). The analysis revealed a few surprising insights into users' needs and concerns. Among others the social media analysis resulted in a 'stain manual' encompassing the various stains types perceived by users, assumed causes and potential remedies posted by users.

After an ideation phase, users were again involved in an online study. They were asked to evaluate and enrich the visualized ideas. Also leading-edge users such as the Undershirt Guy, who had been identified as a valuable source of information during the Netnography, were approached to help co-create the Invisible for Black & White deodorant. More than 700 user ideas and suggestions for refinement were condensed to further shape the initial idea.

For more details please read the "Customer Centric Company" issue of the Marketing Review St. Gallen.

Innovation Detonation - ESOMAR Innovate 2010

2010-11-30T08:53:00.000-08:00

a review by Gregor Jawecki

With the startling topic “Innovation Detonation” and the objective to “explore the mechanics of innovating” this year’s ESOMAR Innovate conference lured both practitioners and researchers to beautiful Barcelona. As part of the conference the questions how companies can co-create value with consumers and other partners as well as how firms can align their business models to manage, nurture and measure innovation was addressed. While the conference in general was a great opportunity to see impressive case studies and exchange experiences with innovation managers, consultants and academics, to me some presentations stood out.

"Observatory" Co-Creation at Deutsche Telekom
Mr. Raimond Schmolze of the Deutsche Telekom Laboratories had a great presentation and rightfully received the best presentation award. His refreshing and entertaining speech entitled “Innovation Detonation @ Deutsche Telekom – Co-Creation starts in the living rooms of our customers” impressively showed how the so-called Creation Center of Deutsche Telekom, a small interdisciplinary unit, helps the company’s innovation managers be creative, e.g. by asking them to spend some time in the living rooms of their typical consumers (overnight-stay on the sofa included). The presentation was particularly intriguing as it illustrated that even when the methods that were used were not entirely new (interdisciplinary workshops, ethnographic observations), their systematic application ignited a fundamental change in the conception of consumers within the typically technology-oriented company.

"Active" Co-Creation at Coca-Cola
Another presentation that catched my particular interest was “The Coca-Cola Ritual – Mixing Consumers’ Creativity and Innovation”. This inspiring case showed how the company asked bartenders, waitresses and consumers to develop new drinks based on Coca-Cola. While the applied process of different research methods was well conceptualized, the fact that the drink resulting from the co-creation project was also served to the conference participants made the presentation – literally speaking - “refreshing”.

Continuous Co-Creation at BMW Group

The Deutsche Telekom as well as the Coca-Cola case (as well as many other presentations during the two-day conference) showed that the success of co-creation initiatives strongly depends on finding and integrating the “right” group of individuals. Therefore, I think my presentation “The BMW Group Co-Creation Lab - Managing an Innovation Hub for a Panopticon of Users" met the pulse of many participants. Together with representatives of the BMW Group I showed how the BMW Group Co-Creation Lab, a web-based platform which unites different co-creation projects along the innovation process, enables to use synergies between single co-creation encounters. Since its launch in November 2010 more than 1.800 individuals have registered to the platform and submitted more than 1.200 ideas. The main advantages for members of the Lab are that they can stay informed about upcoming innovation projects and can participate more conveniently. For the company, the platform enables to bundle co-creation expertise in one central location and to establish long lasting ties to different user groups.

What's next in Co-Creation?
Based on the vivid discussions during the course of the conference, I can say that for all participants the event provided a lot of food for thought and inspiration. It was interesting to see that many companies (independent of size, industry etc.) face similar challenges, in particular with regard to generating deep consumer insights, conveying them into the innovation process and adopting the right co-creation mindset.

The introduced examples showed that co-creation comes in many different forms. For instance, while in the aforementioned Telekom case the observation of consumers helped company managers to better develop innovative business ideas themselves, in the Coca-Cola case the co-creation task was handed over to users, such as barkeepers and waitresses, creating an active co-creation experience.

Without a doubt, selecting the right method to co-create value along the process is one of the key success factors when engaging partners from outside the company (methodological perspective). However, the insights and experiences shared by managers during the conference also showed that often the real challenge lies in the stimulation of the right mindset which places the consumer in the center of value-creation (strategic and organizational perspective). With regard to this more strategic view, I can say that the question “what’s next in co-creation research beyond single co-creation initiatives” is indeed in many companys' mind. Many innovation managers have the challenge to use synergies between single co-creation encounters on their radar and recognize its importance. Some major players such as Procter & Gamble with its Connect + Develop initiative or BMW with its Co-Creation Lab have already implemented solutions which meet their requirements. It will be interesting to see how other companies, including those with less powerful brands, approach the topic and find ways that work for them.

From Piloting to Continuous Co-Creation

2010-11-26T14:54:00.000-08:00

https://www.bmwgroup-cocreationlab.com/home

Toyota, BMW, Volkswagen, Local Motors, Smart, Ford, Opel, Fiat... in hardly any other industry has crowdsourcing been used as prevalently as in the automotive industry. The goals vary widely ranging from design contests as in the case of Smart or Opel, corporate social responsibility initiatives (Toyota) and app development for car infotainment systems (Volkswagen) to idea contests (BMW) or the joint development of an entire car (Fiat).

The BMW Group has recently launched its Co-Creation Lab in an effort to unite various user integration projects on one central platform and to emphasize relationship-based co-innovation. It may be considered a "next step" in co-creation evolution as after years of experimenting and piloting in the "crowdsourcing sandbox" BMW takes the step towards continuous co-creation. In an ongoing co-creation approach it will be crucial for companies to find the right "innovation mix", i.e. the balance between traditional, often "technology push" innovation and more open approaches. However, it's not only about traditional or open innovation but rather about interfaces allowing for ongoing interaction, value co-creation and alignment between internal and external parties . So far, examples in the automotive industry show the firm offering a platform or infrastructure and something you might want to call a "briefing" or inspiration for the crowd. In return, users submit ideas, designs, source code or any other form of information or idea which more or less suits the initial "briefing". In some cases I saw company representatives or community managers specify the goals or submit own ideas to discuss and elaborate them with the users. Beyond those sequences of coordination, joint value creation over a longer period with several iterations and back-and-forth information exchanges are still very rare. It will be interesting to see whether platforms will find viable mechanisms to extend the joint value creation chain to a real co-creation process.

Using value co-creation terminology in a co-production domain, one could call the infrastructure/platform and "briefing" the operand resource and the users' creativity and knowledge the operant resource. The users co-create "value-in-use", e.g. experience their creativity or a sense of community realizing the value inherent in the set-up of the social application. Vice versa, users create value for the company, e.g. ideas, solutions, information or visibility, which need to be channeled inside the company to capture the whole value. For example, ideas need to be screened, evaluated and further developed by R&D departments. High potential users need to be identified and contacted by HR and the PR effect of a co-creation initiative should be fully harnessed and monitored by corporate communications.Hence, the various value dimensions of co-creation can only be realized if the right recipient inside the company is involved in value generation and capture.

In order to establish enduring co-creation processes rather then one-time projects, it will be vital for both users and firms to develop capabilities to realize the value propositions of each other.

Platforms mentioned in this post:

BMW: Co-Creation Lab (platform for two innovation contests so far)
https://www.bmwgroup-cocreationlab.com/home

Fiat: Fiat Mio
http://www.smart-design-contest.com/

Ford: Your Ideas
http://www.thefordstory.com/your-ideas/

Local Motors (platform for several design contests)
http://www.local-motors.com/

Opel: Car Design Contest
http://www.cardesigncontest.com/

Smart: Style Your Smart Design Contest
http://www.smart-design-contest.com/

Toyota: Ideas for Good
https://www.yourideasforgood.com/

Volkswagen: App My Ride
http://www.app-my-ride.com/

Open Innovation Measurement - Part 3: Mass Customization

2010-10-31T07:52:00.000-07:00

Research on mass customization has examined the value accrued by co-creation in a stage of the value chain very close to commercialization. The value increment of mass customized products was measured collecting data on consumers’ willingness to pay (Franke and Piller 2004; Schreier 2006; Franke et al. 2010). Users were found to be willing to pay a price premium of more than 100% for a self-designed watch on average (Franke and Piller 2004). Studies in the field of cell phones, t-shirts and scarves were able to confirm the value increment initially found (Schreier 2006; Franke et al. 2010). The value increment that could be realized by companies co-creating the product via an online configuration toolkit was explained by four user benefits. In terms of the mass customized product users profit from a product better tailored to their needs, i.e. a functional benefit and the product’s uniqueness to express their individuality (perceived uniqueness). The other two benefits are positioned in the experience domain of co-creation. Users derive hedonic value-in-use as proposed in the service-dominant logic literature from a ‘flow’ experience (Csikszentmihalyi 1990; Csikszentmihalyi 2002) and rewarding activity itself when configuring the product themselves (Schreier 2006). The co-created product also has additional value increased by the ‘pride of authorship’ effect, i.e. the favorable effect resulting from having created something by oneself. Due to the fact that value is co-created in the phase right before commercialization, i.e. no more (or at least few) subsequent steps in the value chain before consumption, experiments allow researchers to rather precisely assess the extra value created through the interface between customer and production. Similiar to brand measurement, the construct of the price premium paid is applied to capture the value co-created in a mass customization environment.

Open Innovation Measurement - Part 2: Problem Broadcasting at InnoCentive

2010-10-21T13:31:00.000-07:00

As opposed to co-creation initiatives with end users (previous post on, 3M's lead user projects) open innovation platforms try to make use of the technological know-how and solution information of experts outside the firm. Lakhani (2006) analyzed the performance and efficiency of so called broadcast search, i.e. broadcasting problems to individuals outside the organization via a knowledge broker or intermediary (in the case of the study it was InnoCentive.com, an independent venture of Eli Lilly). In contrast to co-creation approaches aiming at finding the right users to create value with them, ‘seeker’ companies using broadcast search pose a rather specified and concrete problem to a globally dispersed network of ‘solvers’ (Sawhney et al. 2003; Terwiesch and Xu 2008). In the case of InnoCentive, this networks consists of about 80.000 ‘solvers’ who help to overcome the preference of local information which can be found when searching for information within organizations (Birch and Rabinowitz 1951). It was found that 29.5% of 166 problems previously unsolved within the companies could be resolve by external individuals on the platform. Lakhani (2006) conservatively calculates that on average companies may be able to realize a benefit of more than 20.000$ in comparison to employing the solver of a problem for the time needed to solve the problem. The value of solutions provided by external individuals is especially remarkable in this study as the problems could not be solved within the company. The performance of problem broadcasting as one form of co-creation is comparatively easy to measure as it does not have to be qualitatively evaluated or projected but has either been solved or not. As InnoCentive is a marketplace for very well defined and market-ready solutions, metrics such as the success rate can be applied. In the context of crowdsourcing platforms aiming at the generation of ideas earlier in the innovation process, it seems that performance measurement has to take a different approach in order to capture the success of the initiative taking into account the uncertainty of success. In Lakhani’s study additional side effects from a potentially good co-creation experience have not been explicitly measured. Side effects are not very likely to occur except for the ‘seeker’ company establishing itself as the partner of choice for external experts in open innovation.

Open Innovation Measurement - Part 1: Lead User Method at 3M

2010-10-20T14:15:00.000-07:00

Very few academic papers have dealt with open innovation measurement, even though open innovation and co-creation are on the verge from a 'management fashion' to implemented continuous programs. Performance measurement and controlling systems for open innovation projects are required to provide the metrics to support this movement. Today I will start with a short overview of examples of co-creation measurement.

A comprehensive study on innovation projects at 3M was conducted by Lilien et al. (2002). Information was gathered based on both a cross-sectional and a longitudinal sample (1950-2000) consisting of ‘traditional’, i.e. non-lead user, innovation projects and projects in which lead users had been integrated to co-create new products. In the cross-sectional sample lead user projects were found to have projected annual sales which are eight times higher than non-lead user projects and exceed non-lead user projects regarding metrics such as novelty and originality. The longitudinal sample revealed that the rate of major new product line ideas resulting from lead user projects is significantly higher than in traditional innovation projects at 3M.

The study is remarkable as it shows one of the very few attempts to tie financial performance measured in sales directly to the method applied to create new products as the unit of analysis. The value co-created by a company and users in the form of radically innovative ideas which are to be subsequently realized as new product lines is captured and thus allows managers to justify the lead user method within the organization. For instance, from a return on investment point of view, costs of lead user projects exceeding those of traditional innovation projects by more than a factor of three, may still appear to be economically reasonable. In the study, innovation metrics are derived from initial qualitative ethnographic research within 3M and gained and adopted from innovation research literature. These are employed to gain insights into the quality and characteristics of ideas. The measurement of lead user co-creation projects is based on a natural experiment. One major limitation of the measurement approach is manifested in the purely prognostic assessment of future sales from an ex-ante perspective. Unfortunately, to my knowledge a verification of the prognosis is still lacking.

Consumer Co-Creation at Nivea

2010-10-12T15:37:00.000-07:00

The case study was presented at the MRS Research Conference 2010 in London depicting Beiersdorf / Nivea’s continuous co-creation initiative throughout the early phases of new product development. In particular, the case study focuses two projects within the innovation process:

1. social media analysis via netnography as a method of "opportunity seeking" to investigate potential innovation spaces

2. an online co-creation study with playful and interactive tools to engage the customers and select the most promising ideas

View more presentations from HYVE AG.

Virtual Co-Creation of New Products and Its Impact on Consumers' Product and Brand Relationships

2010-08-17T12:52:00.001-07:00

... is the title of a recent paper Johann Füller presented at the Academy of Management 2010 Annual Meeting in Montreal. Johann provides insights into the side-effects of co-creation on customer relationship, brand image, word-of-mouth etc. which could pave the way for a new marketing paradigm.

Here's the abstract:

Virtual co-creation is considered as promising means of successfully developing new customer-centered products. This article argues that an enjoyable and compelling co-creation experience also serves as a new means of establishing and intensifying the consumer-company relationship, as well as the consumer-product relationship. The results stemming from surveying 727 consumers who engaged in virtual new product development projects show that virtual co-creation strengthens the customer relationship. An enjoyable virtual co-creation experience cultivates trust, supports a desired brand image, and fosters positive word-of-mouth communication. In addition, it offers a unique opportunity to evoke consumers’ interest in a new product before it even exists. Consumers’ personal characteristics such as gender, web usage, and novelty seeking moderate the impact of an enjoyable Web 2.0 experience on aspects of the relationship. The results contribute to a better understanding of virtual co-creation and advance the theory of value creation as a new marketing paradigm.

Diving for Pearls: Value-in-Creation

2010-07-03T04:45:00.000-07:00

Source: http://www.flickr.com/photos/jannem/4637578514/

Reading about the different conceptions of value I came across a nice aphorism expressing the interconnectedness of value-in-use (or value-in-context) and value-in-exchange. In his book "The Cause of Business Depression" Hugo Bilgram quotes Bishop Whately's statement

"Pearls are not valuabe because men dive for them, but men dive for them because they are valuable"

and slightly adapts it:

"Men dive for pearls because they are useful, and being useful, they possess value because they cannot be obtained without the effort of the diver."

User innovation as observed in the fields of outdoor sports and open source software, for instance, is predominantly driven by the utility motive. On a use-level, value appears to be largely dependant on the context of usage. Users invent products to meet their own very specific needs and thus create value for themselves. Often, very few other users have similar needs initially, e.g. in an emerging market. Consequently, the user innovation is not considered useful by a great deal of other users and the market is not yet appealing to commercial providers. The value-in-exchange is nonexistent or low. In the non- or only moderately commercial realm of user innovation value-in-use is the dominant conception to measure the output of user-driven innovation activities. A market comes into being when other users face the same needs or companies start to foresee a considerable market, i.e. a larger group of individuals who the invention would be of value for.

Firm-initiated open innovation initiatives, in contrast, focus on value capture, e.g. in the form of intellectual property rights exploited via business models. Companies are geared to extract value both by purchasing external knowledge and by selling internal knowledge to outside entities which are in a better position to generate profit. Hence, market places do exist to trade knowledge. Value is driven by supply and demand in a specific market and by the anticipation of the value-in-use for the actors in the market.

In a co-creation context, another conception of value is prevalent in my opinion. Value-in-creation is what I suggest to call the value users derive from the act of co-creating a new product in a community or with a company, for example, due to a flow-like experience, a sense of community or firm/peer recognition. In this case the potential value-in-use of a product which might result from a co-creation initiative is still a distant prospect. At that point in the value chain value-in-creation seems to be the driving force of collaborative innovation.

Can diving for pearls be of value itself?

Costless Co-Innovation?

2010-04-05T11:47:00.001-07:00

source: http://www.flickr.com/photos/lwr/2257899794/

Co-creating value at the core of the value-added chain involving users in the development of new products "can offer important (and often hidden) benefits beyond the innovation outcomes"(Nambisan/Nambisan 2008).

The usual outcomes of co-creation initiatives such as ideas, concepts or market-ready solutions, are often the only results companies consider when coordinating projects and then measuring the performance of these. The valuable impact co-creation initiatives have, for instance, on brand perception or the customer-company relationship is often ignored or not deliberately fueled. Online co-creation platforms or virtual customer environments serving the purpose of co-innovating with external stakeholders in the first place can be considered massive interactive marketing campaigns due to the sheer number of contact points with potential customers.

Pine/Gilmore proclaimed the experience economy and adviced companies to create experiences that sell not just products. I would like to see more co-creation and open innovation initiatives situated in an experience-rich environment to fully capitalize on the multiple effects beyond innovation. Even when an experience is not intentionally staged by a company, nevertheless, there is a unique experience created through the co-innovation initiative anyway just waiting to be proactively addressed. However, co-creation initiatives are often coordinated by a company's innovation team only instead of aligning the initiative with the marketing, branding or HR department.

Besides, both concepts experience co-creation and innovation co-creation appear to be mutually beneficial as, for instance, users' willingness to collaborate in the future was found to be positively influenced by the experience (Nambisan/Baron 2007). In an experience-rich co-creation environment users are also more likely to immerse themselves in the innovation task and attain a "flow"-like state conducive to their creativity. Besides, experience co-innovation helps companies to establish themselves as a preferred co-creation partner for innovative users. Likewise, co-innovating or designing new products also are very genuine activities to stage a co-creation initiative which is far more credible and compelling than a mere contrived campaign set up for customers to spend time with a brand or product.

Companies usually measure the performance of a co-creation project from an innovation perspective alone neglecting the remarkable side effects which may even exceed the actual innovation performance in value. In light of the "extra" benefits arising from co-creation initiatives, collaborative innovation with consumers may be a cost-efficient or even costless way of innovating. You could also think of them as compelling interactive marketing campaigns which yield significant innovation outcomes free of charge. No matter which way you want to put it, innovation managers are adviced to integrate all value dimensions into performance measurement to allocate the costs of co-creation initiatives according to the value and outcomes created in both the innovation and the experience domain. As a consequence, return on investment might be significantly higher and value created in the experience domain may be internally sold to the marketing or branding division at transfer prices reducing the actual costs of co-innovation.

A Definition of Co-Creation - Simply Put

2010-02-17T13:24:00.000-08:00

In preparation for the "Big Brands and Co-Creation" Session at the MRS Annual Research 2010 Conference in London I had an interesting telco with my fellow session speakers from Face, Sense Worldwide and Promise. One major aspect our discussion revolved around was the question as to how we can draw a coherent, graspable and inspiring picture of co-creation at the conference and at the same time shed light on the multiple shades and perspectives of co-creation. We figured that the co-creation cases we are going to present are quite different with regard to the methods we apply or the partners involved in co-creation but still have basic aspects in common.

A definition of co-creation

I asked myself how co-creation could be defined to best explain it to an audience that hasn't necessarily come across that term before and to whom co-creation may still be an unknown quantity. Should I take the plunge into the ocean of different concepts, approaches, perspectives, buzz words and bodies of literature? I decided to ask my imaginary friend Joe who apparently had never even heard the term co-creation before. I asked him what he would think that co-creation means in a business context and what a company that co-creates would probably do. Here's what he said:

In the term co-creation there is the "co" and the "creation".

What's the "co" in co-creation?

"Co" means together with a person or a group of people that are not part of your entity because otherwise it would not be necessary to stress that it is "co". If there is band it goes without saying that the musicians in the band play together. Assuming, however, the band would involve the audience, that would be worth mentioning. Thus, the "co" requires that you team up with a partner and that you and your partner don't form a unity by some definition anyway.

What's the "creation" in co-creation?

"Creation" is probably one of the most general and universal words which can be used in almost any context. It means that there is an action, an active doing, which generates or produces something, something that is not specified in the term itself. The action itself may be structured and guided by a method or a simple plan but the term co-creation doesn't provide an indication of what the method, approach or plan might look like. In combination with the "co" it appears to be necessary that all partners have to contribute in one way or another. A band may, for instance, create a song by writing down the chords, tune and beat and may resort to certain techniques to be creative and proceed with their composition.

What's the object of co-creation?

The mere term co-creation doesn't include an object yet which is co-created. Co-creation might go with objects such as the very broadly phrased "value" or a little bit more concrete objects such as "experience" or "innovation". Adding an object would specify co-creation regarding the goal and the aspired output. Other than that, co-creation should not be reserved for one particular object. Anything can be the goal and result of co-creation. Of course, it seems to be plausible that the object will determine the specifications of the "co" and the "creation", i.e. partners in co-creation should be chosen accordingly as well as the right method. Referring to the example of the band again, the band may co-create an improvised live-recording involving its audience or the band cooperates with the director of a movie to co-create the soundtrack for the movie.

I think Joe's naive attempt at a definition may help to take a step back and have a simple view on co-creation. At times, leaving aside academic theories or etymology may help to focus on the core of co-creation that many interpretations have in common anyway. In doing so, I hope that co-creation will be less confusing and become more widely accepted and appreciated.

Online Platforms for Open Innovation and Co-Creation

2010-02-15T12:35:00.000-08:00

I've always enjoyed link collections of open online platforms for collaborative innovation or experience co-creation such as http://www.openinnovators.net/list-open-innovation-crowdsourcing-examples/. They provide nice insights into the open approaches of companies, the policies (e.g. IPR management) companies apply when co-creating with users, the look&feel of the platform, the innovation task or co-creation experience, the incentives or the involvement of company representatives. Those link collections, however, have been primarily focused on examples from the US. I have put together a list of a few open innovation and co-creation examples that we at HYVE have conducted for German and Austrian clients.

The majority of platforms are organized as so called idea or design contests in a community environment. These platforms address external users, are usually online for a given duration and are structured along a timeline with various phases, e.g. submission or enrichment phases. In some of the platforms playful toolkits are featured to create a compelling and enjoyable experience. For further information please take a look at the publication on idea contest by Prof. Belz et al.: http://www.stiftung-industrieforschung.de/images/stories/dokumente/forschung/inno_manag/ideenwettbewerbe.pdf (German)

Smart (Daimler): http://www.smart-design-contest.com/

Bombardier: http://yourail-design.bombardier.com/

Lattea (Melitta): http://www.lattea-design-contest.com/

Swirl (Melitta): http://www.smellfighters.com/

BMBF/TUM: http://www.saveourenergy.de/start.php

Siemens Osram: http://www.led-emotionalize.com/

Spar: http://bagdesign-contest.com/

Swarovski: http://www.enlightened-jewellery-design-competition.com/

Swarovski: http://www.enlightened-watch-design-contest.com/

SAP: http://www.sapiens.info/

Fujitsu Siemens Computers: no longer available online

Netnography - Harnessing Online-Communities and Social Media

2010-02-15T10:38:00.000-08:00

Netnography is a qualitative exploratory research approach allowing to systematically analyze social media. It proved to be a nice entry for any co-creation project as it provides in-depth consumer insights and an understanding of the true needs and wishes of consumers.

Netnography - Insights2.0 derived from Online-Communities

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Partners in Co-Creation - a Hybrid Model

2010-02-13T03:11:00.000-08:00

When a company decides to embark on a co-creation strategy one major challenge is the sourcing of the right people to co-create with. Depending on the innovation task which is to be collaboratively tackled or the experience the company intends to co-create with users, the people to address may vary, e.g. customers, heavy users, lead users, academics, suppliers or experts can be valuable partners, to name just a few.

Besides the people directly involved in the act of co-creation per se, companies may be advised to involve further partners who accompany the co-creation initiative. Since co-creation and open innovation are fairly new concepts managers are dealing with, companies are still at the very beginning of a learning curve. Thus, initiatives are often experiments and trial and error process which is even more true for open initiatives than traditional approaches. This learning curve bears a lot of potential for companies to outstrip their competitors and build up knowledge in the field of co-creation. Even companies with more sophisticated programmatic approaches are still in for enormous potential for improvement.

How can those learning effects be reinforced and accelerated? From my personal experience an academic partner in co-creation may be very helpful to “co-create the co-creation know-how and expertise”. In doing so clients, for instance, have learned about the core motivations of users and the impact co-creation has on the user-company relationship, the image of the brand or the potential of positive word-of-mouth (see my prior blog post). Companies also learned about the influencing factors and determinants of those effects which could be translated into actions and directly addressed to execute the following co-creation projects more effectively and efficiently. At the same time, integrating users into research by listening to them and showing interest in their experiences of a particular co-creation initiative yields a further advantage. It communicates the importance a company attaches to strengthening and improving its relationship towards users and the appreciation of the partnership and the users’ input in co-creation initiatives.

I like to call this kind of “vertical” integration of different partners a hybrid co-creation approach as it is not only about co-creating experiences or new products with users but also about co-improving co-creation accelerating the learning process and boosting the effectiveness and efficiency of future co-creation projects. It’s virtually a triad of co-creation.

IKEA's Branded Community - a Virtual Place for Experience Co-Creation?

2010-02-07T07:52:00.000-08:00

Source: http://www.flickr.com/photos/library_mistress/1183221372/

IKEA has launched a branded community: http://www.hej-community.de

According to marketing director Claudia Willvonseder the IKEA community primarily aims at strengthening brand loyalty and gaining insights into customers' perception of the brand (source: Horizont 5/2010). Apart from the obligatory user profiles the community, for instance, offers flash-rich drag&drop features allowing the user to furnish and individually decorate his/her virtual room in the community and visit one another.

It will be interesting to see how the concept of a brand community will be able to attract users' interest. Will users become active members in yet another community that is not interconnected with one of the established social networks? Finally, it will all boil down to the question: Will the experience co-creation be unique and compelling enough to permanently attach users to the community?

I look forward to seeing what metrics IKEA will release (at least publicly) to measure the success of the community. Will we see a connection to an open innovation program embedded in this community-based experience co-creation environment at some point to realize the overlap of open innovation and experience co-creation?

... or how can you co-create experiences with your customers in the 1.440 minutes?

2010-02-06T14:23:00.000-08:00

Dr. Erich Joachimsthaler (Founder & CEO of Vivaldi Partners; Author of "Brand Leadership" & "Hidden in Plain Sight") at the InnovationCampus09

The Timeline of Co-Creation

2010-02-06T05:56:00.001-08:00

A glimpse of the more comprehensive overview I'm working on in my research project. Examples and academic contributions are rather randomly picked to outline some of the milestones in co-creation.

The Overlap of Open Innovation and Experience Co-Creation

2010-02-04T13:46:00.000-08:00

In my post on „The Value of Co-Creation“ I pointed out a couple of value dimensions beyond the innovation-related benefits, for instance, the effect co-creation initiatives have on employer branding. Following up my observations I took a closer look at two major underlying domains: new product development and experience marketing. Both fields have started to opened up towards consumers and have become more interactive and compelling particularly in virtual environments. Two terms have been coined for the open approaches: open innovation and experience co-creation.

I just took a quick shot at delineating my understanding of the overlapping of the two realms both academically and in practice (figure above). Please feel free to comment or share your adaptations and alterations.

Open innovation and experience co-creation – like Romeo and Juliet

So far I only see new product development and experience marketing intertwined to some extent. Usually co-creation initiatives serve one purpose or the other. To a large extent a lack of awareness but also departmental self-interests and the more time-consuming process of coordination between different departments may account for open innovation and experience co-creation initiatives often being carried out separatly. Open innovation initiatives are designed to provide the outcome demanded by R&D or product management not proactively utilizing their impact on experience and relationship marketing, for instance. The benefits which remain unused or only partially used are remarkable considering that these benefits are not directly addressed in the planning and execution phase. In many cases those effects are nothing more than side-effects – often unnoticed, almost never sufficiently appreciated.

Why experience co-creation favors open innovation

Both sides of co-creation appear to be deeply interconnected and prone to mutually benefit from each other. A unique and compelling co-creation experience, for instance, allows users to immerse themselves in the innovation task putting them into a flow state conducive to perform creative tasks. Since recruiting the right people to contribute to an open innovation initiative it is crucial to inspire users so that they might become brand evangelists who spread positive word-of-mouth. Thus, a captivating user experience helps to establish a company as a co-creation partner of choice.

Why open innovation favors experience co-creation

Being closely tied to an open innovation context means for users to become part of the core of the value-added chain – of new product development itself. Imagine how much more intriguing an experience is to users in such a setting being confronted with a real task as opposed to a blatantly contrived branding initiative. Open innovation initiatives utilizing crowdsourcing principles, i.e. to co-innovate with a huge number of user, also offer a lot of points of contact with (potential) customers and, hence, are a great opportunity to develop a closer relationship with those users. Notably, experience co-creation in the stage of product development is a powerful tool when the co-created product is going to be market as a „community-generated“ product. Tchibo Ideas, the open innovation platform of the German consumer goods retailer Tchibo, is an excellent example of experience co-creation spanning the stages of new product development and marketing/sales (examples of new products conceived by the Tchibo Ideas community can be found (and bought) here: https://www.tchibo-ideas.de/index.php/loesungen/realisierte).

Social Brand Value Study

2010-02-03T05:45:00.000-08:00

A study on the social brand value conducted by HYVE and Vivaldi. Apple is leading the ranking of community brands...

Social Brand Value

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The Value of Co-Creation

2010-01-16T08:26:00.000-08:00

Have you ever received a job application from a customer? A customer you involved in a co-creation project such as an online idea contest? A customer who has already submitted a couple of outstanding ideas, fully visualized? This is one example of a by-product that have occurred to many of our clients when co-creating with consumers.

Value dimensions of co-creation

Companies are increasingly using co-creation approaches as a means for collaborative new product development or market research. Quite often a virtual online world is the locus of co-creation harnessing the power of hundreds or even thousands of consumers. Helping companies to co-create with consumers we noticed remarkable by-products or spillover effects on the consumer-company and consumer-brand relationship which have also proactively been addressed for a couple of years now. Besides the described spillover effect on employer branding, further effects have been found to result from a compelling co-creation experience. For instance, consumers have been found to be willing to pay a price premium and promote the brand virally via word-of-mouth. From a CRM standpoint a captivating co-creation experience may increase consumers’ engagement and the way consumers perceive a brand.

How to utilize spillover effects of co-creation

Co-creating with consumers offers you a bundle of positive effects coinciding with your actual goals – whether you embrace it or not. Due to hundreds of highly involved consumers becoming partners in co-creation this is a great opportunity to purposively leverage those spillover effects. See the big picture. Meet your customers in a highly conducive atmosphere and strengthen the relationship with your customers. Even if your co-creation initiative primarily aims at collaborative new product development or co-creation research, it calls for a project planning and execution across company units to tap the full potential of co-creation. Involving other departments in your company helps to proactively address side effects, utilize spillover effects and amplify them.

The actual costs of co-creation

Tapping the full potential of co-creation actually reduces the costs allocated directly to the innovation facet of co-creation. If you break down the total costs of a co-creation initiative and apportion them according to the co-created value (new product development, branding, CRM, HR etc.), collaborative innovation eventually turns out to be cheaper than thought.

HYVE meets Chesbrough

2010-01-16T08:18:00.000-08:00

HYVE co-founder Johann Füller at the Open Innovation Speaker Series (Berkeley).

Swarovski Co-Creating with Users

2010-01-16T07:57:00.000-08:00

Learn about co-creation with users in an online environment. A case presented at the ESOMAR conference 2009 in Chicago.

How to be successful in Co-Creation Research

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