Prof. Dr. Frank T. Piller speaking at major German Association of Engineers conference about Internet of Things

Customer Co-Creation

Customer co-creation, in short, is open innovation with customers. It is a product (or service) development approach where users and customers are actively involved and take part in the design of a new offering. More specifically, we define customer co-creation as an active, creative, and social process, based on collaboration between producers (retailers) and customers (users). The idea of co-creation is to actively involve customers in the design or development of future offerings, often with the help of tools that are provided by the firm.

Co-creation activities are performed in an act of company-to-customer interaction which is facilitated by the company. The manufacturer is either empowering its customers to design a solution by themselves or is implementing methodologies to efficiently transfer an innovative solution from the customer into the company domain. Examples for methods include ideation contests, lead user workshops, consumer opinion platforms, toolkits for user innovation, or communities for social product development.

Your Contact

Christian Gülpen
Head of Industry Relations
Head Digitalization / Industry 4.0 / Smart Services

RWTH Aachen University
Technology and Innovation Management Group

Mail: guelpen@time.rwth-aachen.de
Tel: +49 241 80 96660

Frequently Asked Questions on Customer Co-Creation
(Answers by Professor Frank T. Piller)

Is open innovation a business imperative yet? What would happen if companies continue to remain closed and locked into the traditional way of generating ideas and products without external collaboration at the society level?

Well, I would say truly closed innovation is not possible anyway. All innovation built on existing knowledge and some form of networking. But the term open innovation suggests that a company build dedicated practices to make the connection with the best external knowledge for a given innovation task better and more efficient. So for me, open innovation is not a business imperative, but a set of practices and organizational capabilities to connect with a firm’s periphery for innovation.

Customers are often considered the source of external input for innovation. But the source of bright ideas – as proved by many idea contests, come from the “common man”. How can company identify and engage the “common man”?

Here we have to make an important distinction. Research, originating by the path-breaking work by Eric von Hippel at the MIT has shown that many commercially important products or processes are initially thought of by innovative users rather than by manufactures. Especially when markets are fast-paced or turbulent, so called lead users face specific needs ahead of the general market participants. Lead users are characterized as users who (1) face needs that will become general in a marketplace much earlier before the bulk of that marketplace encounters them; and (2) are positioned to benefit significantly by obtaining a solution for those needs.

But lead users are NO average customers or users. There are only very few lead users. Average customers are in general neither innovative nor do they want to enage in innovation. Hence, it is the task of a company to identify these lead users by specific search and screening methods. There is not enough space here to describe these methods, but they are very well documented (look at Eric von Hippel’s MIT homepage for some examples).

In a way co-creation can be defined as outsourcing idea generation to the society. What is your exact definition of this concept? And what is the main benefit for companies?

Customer co- creation has been defined as an active, creative and social process, based on collaboration between producers (retailers) and customers (users) (Piller and Ihl 2009). Customers are actively involved and take part in the design of new products or services. Their co-creation activities are performed in an act of company-to-customer interaction which is facilitated by the company. The objective is to utilize the information and capabilities of customers and users for the innovation process.

The main benefit is to enlarge the base of information about needs, applications, and solution technologies that resides in the domain of the customers and users of a product or service. Examples for methods to achieve this objective include user idea contests, consumer opinion platforms, toolkits for user innovation, mass customization toolkits, and communities for customer co-creation.

Being open about problems are not yet a norm in the market place, where companies are conversing predominantly about what they know, more than what they do not know. What are your comments?

God question! This indeed is one of the largest challenges we see in the field today. Many companies know about the tools or methods to co- create that I named in the previous as answer. But they are not ready to internally exploit the knowledge generate with their customers and users. Here I believe we still need plenty of change management to change this mindset you mention!

This is a field where I believe we also need more research. Firms need more information and better guidance on how to assess whether their organization and branch is suited for customer co-creation. This information is crucial in order to build specific competences that aid firms in identifying opportunities and ultimately in using the right method. Managers need a clear picture of their own organizational settings and capabilities before being able to answer important questions during the implementation of one’s own customer integration initiative. This could include answers to questions like how do innovation projects have to be reorganized, which kinds of projects are suited for customer integration and how do the internal development processes have to be adjusted in order to allow optimal customer integration.

The internal readiness of companies – such as having a co-creation team/department, methodology, etc – is often lacking in companies that spend huge sums on co-creation project, which are mostly managed by corporate communication departments or marketing departments. Do you advocate the formation of a multi-disciplined co-creation team that can do the job of creating, running co-creation projects? Is it not an exclusive, specialized professional/managerial skill – like branding, marketing, finance – by itself?

Yes, you already provided the answer by yourself. The problem, however, is that there are still very few companies that have such a co-creation team in place, many even don’t have one functional manager taking care of the initiative. But this will change, and I that the the first organizations are building exactly these interdisciplinary teams you are talking about.

What is the link between the success of a co-creation project and the performance of the base product or initiative?

To answer this interesting question, we only have anecdotal evidence that co-creation provides value. But large scale quantitative research is lacking. However, I know that several researchers are just in the progress of conducting this research, and so I hope that in a few years or so, we will get a better answer on the performance effects of co-creation. But I personally have seen many companies profiting from co-creation, if it is executed correctly and the results are used internally in the right way.