If Sir Isaac Newton stood on the shoulders of giants, the
pioneers of co-creation stand together with their customers and
collaborators to innovate. So goes
a rather
grandiose comparison used to define co-creation in Wikipedia,
itself a product of collaborative working. Such froth may prompt
any right-thinking business strategist to throw the idea out the
window with other internet-related hyperbole.
However, when the world's largest consumer goods firm gets in on
the act, maybe there's something in it. Since 2001, Procter &
Gamble has used a secure internet portal to collaborate with
chemicals and biological science firms to create new products.
According to Gartner the programme now accounts for 35% of the
company's innovations and has increased R&D productivity by
nearly 60%.
Bruce Brown, P&G chief technology officer, says:
"Historically, P&G relied on internal capabilities and those of
a network of trusted suppliers to invent, develop and deliver new
products and services to the market. We did not actively seek to
connect with potential external partners.
"Similarly, the P&G products, technologies and know-how we
developed were used almost solely for the manufacture and sale of
P&G's core products. Beyond this, we seldom licensed them to
other companies."
With its website
Connect &
Develop, P&G uses innovation from outside the firm, and
allows its own creations to be exploited by other companies. This
can encompass everything from trademarks to packaging, marketing
models to engineering, and business services to design, Brown
says.
Although not quite the revolution created by Newton, P&G's
efforts in co-creation have led to new products including Bounce,
the world's first dryer-added softener, which it created after
acquiring the product technology from the independent inventor who
developed the innovative fabric-care solution. Meanwhile, P&G
found the perfect complement to the Swiffer brand in a hand-held
duster developed by a Japanese competitor. P&G bought the
product, leveraged elements of existing manufacturing processes and
advertising components, and launched Swiffer Dusters within 18
months.
Untangling the intellectual property rights from collaborative
working can be complex, but worthwhile, says Jeff Le Roy, a P&G
spokesman for Connect & Develop. "IP rights are determined on a
deal-by-deal basis," he explains.
"Normally a collaboration is viewed like a marriage you keep
what you bring to the relationship, we keep what's ours, and we
need to determine who 'gets' what we create together. IP rights are
one of the most difficult things to negotiate. That said, we closed
91 deals last year alone, so our primary motivation is not owning
the IP it is how we can create the most value with our
partners."
P&G has mainly sought to collaborate with other R&D
departments and businesses, rather than directly with its
consumers. But Lego, the Danish firm behind the omnipresent
children's brick system, has done just that and invited its most
enthusiastic customers to design products.
Since Lego's last patent ran out in 1988 it has had to survive
the onslaught of copycat firms while competing for children's
attention with the burgeoning market for video games and consoles.
However, the internet has allowed the company to reach its loyal
customer base in a new way. With the
online Lego
Factory system, they can design and order their own products
using a downloaded virtual design environment. Consumers can also
browse and buy products created by other customers.
The front end of this process now includes social networking
systems so Lego customers can get to know each other and share
design ideas. Meanwhile back-end fulfilment and product packaging
systems required re-engineering to help the concept of mass
customisation bear fruit in the real world. Essentially, though,
Lego was already making all the components in these products.
To launch the concept Lego ran a competition using its Lego
Factory system to allow consumers to enter their own product
designs. After sifting through 200,000 entries, Lego chose 10
designs to create three new products to launch into the mass
market. The firm paid a 5% royalty to the winners.
Eight million people a month use the system and the community
produces its own journal to keep its members abreast of the latest
developments. Lego's aim in supporting these activities is to
enhance its customers' play experience by encouraging their input
and innovation.
According to Gartner, using the social networking system to
gather customer ideas on innovation could have widespread
applications. "The majority of mainstream organisations could
benefit from contained low-cost experimentation with non-routine
interaction technology," says its research note on co-creation.
While IT departments will be expected to develop and support the
systems that enable and manage the co-creation process, they can
also benefit from it. As software has become more modular and
re-usable, it has become more like Lego. It's not surprising then
that software firms are working with customers and partners to
develop their products - and those customers engaged with the
process can be the first to reap the benefits.
Netezza, a supplier of datawarehouse infrastructure and
appliances, has opened up its technology to allow partners and
customers to build applications code close to the data repository,
with a radical improvement in performance.
With amazon.com, HBOS and Orange among its customers, Netezza
launched its
Developer
Network last year, which provides customers, developers,
systems integrators, technology partners and academics with
widespread support for the creation of new analytics software.
Netezza's vice-president of product management and marketing,
Phil Francisco, says: "We have opened up the internal of the
[datawarehouse] appliance to allow programmability beyond SQL. This
allows [people to] program in very high performance analytics."
With direct access to the appliance code, one Netezza Developer
Network member, an analytics service provider, was able to reduce a
batch process of data analysis from 49 hours down to 45 minutes,
according to Francisco. "That's a game change for them and allows
them to differentiate their offering. The firm can now offer low
latency analytics," he says.
The Netezza Developer Network now has around 90 members, from
universities, end customers and partners, each with an interest in
advanced analytics. For a nominal administration fee, they get a
development toolbox, containing four of Netezza's Snippet
Processing Units and a software development kit, which effectively
opens the technology to outside innovation.
At the moment the network itself is cost neutral. The fees cover
the overheads but Netezza does not charge licensing fees for any
technologies built from knowledge of its source code. The firm
hopes to derive value from the project, through, because customers
will get more value from Netezza's products with these add-on
features, and it will help its datawarehouse appliances gain market
share.
"It's about building a community," Francisco says.
"What's good for the community is good for us. Success breeds
success."
While co-creation is becoming well established in biological
sciences, engineering and other high-tech industries, cultural and
procedural barriers can stop the concept catching on elsewhere,
according to Gartner vice-president and distinguished analyst,
Carol Rozwell.
"Sometimes there is a fear of negative feedback if a business
opens its gates to customer ideas. But you should really see this
as an opportunity to create better products," she says.
Measuring the wrong things also prevents co-creation catching
on, according to Rozwell.
"If you measure the number of new concepts that come out of the
design team, then there's no driver. But if you look at the fastest
time to market for an idea across the whole institution, then
co-creation begins to look like it has something to offer," she
says.
However, changing the way an organisation measures its
performance can be difficult in itself. "This can come from a
visionary CEO," says Rozwell. "However, the change only usually
comes when the company is in dire straits, through a poor financial
position or fierce competition."
With the economic climate getting bleaker by the day, by
Rozwell's reckoning it is likely more companies will be forced to
develop new products and services using the process of
co-creation.
Co-creation websites
Lego
Lego allows customers to develop Lego bespoke kit, which they
can buy. Kits are built in a virtual Lego environment created in a
software tool downloaded from Lego's website. You can also view and
buy creations of other customers on the website. Lego also uses
social networking tools to encourage innovation among its customer
base.
P&G
Connect and Develop is a website and community dedicated to
encouraging collaboration between chemicals and biotech firms,
either those who want to sell their inventions to be used in
P&G products, or use ideas from P&G to develop their
products. External innovation now contributes to around half of
P&G's products.
Innocentive
Innocentive is an online ideas marketplace. Creative thinkers,
such as engineers, scientists and business people can join a
solver's community to address some of the world's toughest
challenges. Meanwhile 'seeker' organisations post their challenges
on the Innocentive website, and offer registered solvers
significant financial awards for the best solutions.